Monday, March 08, 2010

Will the Dish/TiVo case kill Sling Media?

Last week, the U.S. Court of Appeals for the Federal Circuit upheld a previous ruling of contempt of court against Dish Networks in the patent infringement lawsuit brought against it by TiVo. According to this article from Multichannel News, Dish could not only be required to shut down as many as eight million of its DVRs within a month, it may also be prohibited from offering its own DVR in the future. That would mean that Dish would have to license technology from or farm out DVR manufacturing to TiVo or another company whose DVR technology doesn't infringe TiVo's patents.

In late 2007, Echostar, Dish Network's parent, split into two separate companies, with Dish Network providing satellite television services and Echostar maintaining the satellites and building the receivers, DVRs and other equipment. When the split took place, Sling Media was moved into Echostar.

Echostar has been trying to expand its set-top box and DVR customer base beyond Dish Network, but to date the company has had limited success. One of the reasons has undoubtedly been the Dish/TiVo litigation, since anyone using the infringing Echostar DVRs would be subject to the same threat of litigation as Dish. If you're in the set-top box business and you can't offer DVRs, you're stuck in the bargain-basement pricing arena that Chinese manufacturers are dominating.

Sling Media is stuck in the middle. Echostar is no longer focusing on direct-to-consumer sales and instead has retargeted the Sling products for the cable, satellite and IPTV service provider market. If service providers don't want Echostar's set-top boxes, they're unlikely to buy the Sling products either. Given the TV Anywhere initiative and similar services being offered outside North America, the need for Slingboxes and similar devices will inevitably diminish. Sling may be a good idea whose time has come and gone.
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