Dish Sheds Light on How Advertising Will Live On Its OTT Service

Company Hits Snag With Dynamic Ad Insertion

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Credit: Matthew Staver/Bloomberg

Dish network is having some technical issues dynamically inserting ads into the linear networks from its partners for its upcoming digital TV service, Chairman Charlie Ergen said on the company's third-quarter earnings call on Tuesday.

The snag, however, isn't expected to delay the launch of the service, which is still expected to roll out by the end of the year.

"To be able to insert dynamic ads is a fairly complex project even though we've been working for it for a long time," Mr. Ergen said on the call. "We're now actually doing it, and when you start doing it, it's not theory anymore, it's actual practicality and so we are running into a few snags there, but we still plan to meet ... our self-imposed year-end deadline. But whatever we do, we're going to do it right."

While Mr. Ergen doesn't expect the product to change the TV ecosystem initially, he believes in the longer term there's significant advertising opportunity.

"We can stream a personalized ad to everybody," Mr. Ergen said. The availability of data will allow Dish to send individual viewers more targeted messages that are relevant, which Mr. Ergen said means "we can start moving into some of the categories that the Facebooks and the Googles of the world are taking advantage of today."

"I think the advertising piece of OTT is materially higher than it is in linear TV, where in the advent of DVRs, we've said from day one, people do skip commercials and so rather than fight the rhythm and swim upstream with that, we'd rather come up with a different dynamic that attacks it in a different way," Mr. Ergen added.

With the service, Dish will target 18-to-35-year-olds who are currently not paying for TV. "It's going to skew, short-term, more male. It's going to skew more urban. It's going to skew more apartments as opposed to homes. And it's certainly going to skew towards sports enthusiasts," Mr. Ergen said.

"We're not going after the guy who spent $100 a month and got a house and four TVs and three kids, and he's 55 years old. That is not the target market," he added.

Thus far, it has struck deals with Walt Disney and ESPN, A&E Networks and Scripps Networks to carry programming on the platform.

"We won't sign up everybody because it's kind of a skinny down package, so we want to make sure that we can meet a price point of consumers," Mr. Ergen said, confirming the subscription service would cost about $30 a month.

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