The Big Lebowski?

by: The Nattering Naybob


Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:

Slingbox: Application, Technology, History, Customer Service Issues.

Industry Convergence, Cable and Satellite, Cord Cutting Implications.

SlingTV, DISH Network in Pain? Demographic's Changes Industry.

Last Time Out

With regard to the widely misunderstood Italian Constitutional Referendum and the fallout thereof...

With additional spread widening in a self reinforcing process, many expect and have placed their bets accordingly on further downside for Italian bonds and bank stocks. Which could precipitate a domino effect or chain reaction within Euro based bond, equity and currency markets. This spread widening is cause for concern as already stressed Italian bank balance sheets hold €286 billion of toxic NPL's, and a large amount of Italian bonds. - Once In A Lifetime?

Today's headlines from Italy... Not more than 72 hours AFTER the YES vote was quashed by the public in Sunday's referendum, NOW an ugly Italian banking crisis rears it head in the MSM narrative for public consumption. Funny thing how leading up to the vote, any potential fallout was largely ignored in local media. But it gets better, as it always does.

Early Retiree indicates there exists a not widely known twist to the story, which has been reported in some newspapers and has been subject to public prosecution. Any "bail in" might also be for many depositors. As public investors these bank customers were either forced and or conditionally CONNED, into buying and holding the bank debt by their local branches.

Hence, any attempted bail in would probably be denied from the EU seat. Timing is everything, the flot plickens and Machiavelli is smiling ear to ear. Indeed, times like these call for a...

Big Lebowski?

The 1998 Coen Brothers cult classic, The Big Lebowski, has spawned all things Dude, Dudely-ness, The Tao of The Dude, Dudisms and even annual festival's around the globe celebrating the "Dudely Lama" himself. In 2014, the film was selected for preservation in the National Film Registry by the Library of Congress, being deemed "culturally, historically, or aesthetically significant."

As a result of mistaken identity, "The Dude" aka Jeffrey Lebowski (Jeff Bridges), a bachelor slacker and avid bowler, is assaulted in a "shake down". After which The Dude learns that a millionaire also named Jeffrey Lebowski was the intended victim. The Dude, a shambling version of Philip Marlowe, (the film is set in Los Angeles and most Chandler-esque) seeks restitution for his ruined rug and enlists his bowling buddies to help get it.

The millionaire Lebowski's trophy wife is kidnapped, and he commissions The Dude to deliver the ransom to secure her release; but the plan predictably goes awry in unpredictable and unimaginable fashion. John Goodman, Julianne Moore and Steve Buscemi also star in this ensemble cast with Ben Gazzara, David Huddleston, John Turturro Philip Seymour Hoffman, Sam Elliott, Tara Reid, David Thewlis and Flea appearing in supporting roles.

As I watched this film for the first time, I wondered what the director and screenwriter, were on or thinking during production? Bowlers sitting around, drinking and smoking while engaging in inane conversation? Anything but, as that "suits the retro side of the movie, slightly anachronistic, which sent us back to a not-so-far-away era, but one that was well and truly gone nevertheless." - Joel Coen

The laid back, seductive and surrealistic nature of this farcical crime drama reels one in and prevents them from pulling away. By the end of film, one has laughed their ass off, is surprised that two hours have actually passed, and is left shaking their head in disbelief while craving for more. How addictive is The Dude? One can watch it repeatedly as each time, more subtle nuance based in absurdity is discovered.

The incomprehensible plot and the all too comprehensible visual references, homages to the film noir tradition. With a veritable plethora of idiosyncratic characters embedded in profoundly banal settings, bizarre dream sequences, unconventional dialogue, narration, and eclectic soundtrack, there is always something fascinating about following the Coens' rapt gaze as they peer into the American nut bowl. IMHO, the Coen Brothers masterpiece and one of my all time favorites.

Note: If you encounter strange vernacular while reading this missive, fret and worry not, just let The Stranger, be your guide. Since we are now in the Dude's realm, Dudism's in italics, will be translated from the Lebowski lexicon into English (in parentheses), for your reading benefit and nihilistic pleasure of course. This guy walks (a person is lying).

All The Young Slinging Dudes?

Being fans of all things "The Dude", SlingMedia co founder Blake Krikorian and I, held an affinity for The Big Lebowski and "Dudely-ness". Circa 2002, Blake and his brother Jason missed watching their SF Giant games while on the road, and so Sling was born. Mark it (acknowledging one's success). Proving again, necessity is the mother of invention.

Point in fact, THIS Dude gave some friendly advice to Blake circa 2006. In a perfect world, he could position SlingMedia to license the "Sling" to cable/sat set top and TV appliance manufacturers. However, in a less than perfect world, Sling's blessing would also be it's curse.

Since "Sling" technology was blessed in being able to deliver content across multiple devices, delivery provider turf wars aside, it was likely that content creators and providers would curse it, by requiring cable and satellite providers to pony up an incremental license to make that happen.

Thinning or receding hairlines and margins are against the religion. This "dudely" advice confirmed what Blake already suspected, a litany of Byzantine content licensing schemes and turf wars, would likely muck things up. So in 2007, he and his brother Jason cashed out to Echostar for $380M and rode off into the sunset. Not exactly a lightweight (someone who has achieved something admirable). Small World?

Sometimes you eat the bar, sometimes the bar, he eats you. - The Stranger in The Big Lebowski

Those words of wisdom from The Stranger mean: Oh Well. Jason is now a general partner at a "Silly-con" Valley venture capital firm. Blake went on to venture capital investments, ID8 and heading a division at Microsoft. In 2016, at the age of 48, Blake tragically passed away from a heart attack while surfing. RIP Dude. Moving West...


The Slingbox is a TV streaming media device made by Sling Media that encodes local video for transmission over the Internet to a remote device (sometimes called placeshifting) anywhere in the world. This "Dudely" practice of "placeshifting" is not unlike that of timeshifting...

[placeshifting] has been upheld in courts across the world due to the personal nature of a timeshifted rebroadcast, which is deemed "non-infringing fair use". Furthermore, Sling Media's technology limits access to a single authorized user, which prevents unauthorized or multi-user access thereby maintaining the personal nature of the placeshifted content. - SlingMedia Wiki

Slingmedia and Echostar sued Monsoon and Belkin related to "place shifting" technology patents, both settled out and withdrew from the market in 2014. SlingMedia is still the only hardware based "placeshifting" game in town for the consumer.

Slingbox Applications?

The Slingbox allows users to remotely view and control their cable, satellite, or digital video recorder system, in their home from a remote Internet connected PC, smartphone, or tablet as if he or she were sitting in their own living room.

Customers have also connected their Slingbox's to other video sources, including Blu ray players and security cameras. Slingbox users can also stream content from their mobile device to Apple TV, Roku and Amazon Fire TV devices as well as to Chromecast adapters. There is also a Facebook and web site embedded HTML app.

In another example of "placeshifting", as a cheaper workaround, some TV stations have installed Slingbox's at remote "towercam" locations to observe remote traffic and weather conditions. Wireless networked using EV-DO via a cellular network (mobile phone) provider, this costs only a few hundred dollars for each site, versus well over $10K for a setup with a remote pickup unit and auxiliary broadcast licenses.

Slingbox Technology?

The traditional Slingbox embeds a video encoding chip to do real-time encoding of a video and audio stream into the SMPTE 421M / VC-1 format that can be transmitted over the Internet via the ASF streaming format. Later Slingboxes also support Apple's HTTP Live Streaming, which requires support for H.264. - Slingbox Wiki

  • Of its U.S. user base, 34% of Slingbox place-shifting is to Europe, followed by Asia (32.6%), and Mexico (9.6%).
  • The longest Slingbox session recorded so far spanned 12,380 miles (from Asunción, Paraguay, to Taipei, Taiwan).
  • About 75% of watched hours via the Slingbox occurs out of the home, and 80% of Slingbox viewing is of live TV, versus 20% from a DVR.

Closely held Echostar affiliate, Dish Network, embeds the Slingbox technology in its new Hopper HD-DVRs, and Arris is Sling's exclusive distributor of a "placeshifting" device optimized for cable operators and telcos.

A Slinging Hardware History?

Generation - Year - Name - MSRP - Model with link to review

1st - 2005 Classic $199; (SB100-100)

2nd - 2006 PRO $249 (SB200-100); TUNER $179 (SB220-100); AV $179 (SB240-100);

3rd - 2007-08 SOLO $179 (SB260-100) (later repackaged as the 120);

PRO-HD $299 (SB300-100); SlingCatcher $199 (SC100-100)

----------------------Above this line LEGACY, Below CURRENT

4th - 2012 350 $179 (SB350-100); 500 $299 (SB500-100);

(SlingTV was a free upgrade to the 500)

============Above TI Chips, Below ViXs Chips

5th - 2014 M1 $149 (SB370-100)

6th - 2015 M2; $199 (SB375-100)

Models above the 1st line are LEGACY, below the 1st line are current. Up till the 4th gen, TI chips were used, since ViXs chips have been used, providing a clear second demarcation for BIOS or Firmware updates.

A Funny Thing Happened on the way to the SlingMedia Forum?

Early AM EST 11/30/16, an automatic Slingbox firmware update was pushed out via internet. All versions (which automatically accept firmware revisions) older than the new M2, became corrupted with an "undocumented feature".

Said bug rendered these Slingbox's non accessible via the desktop software app. Some users can still access their Slingbox via Google and MSIE browser plug in apps, some not.

SlingMedia's firmware release was rolled out naked (unprepared) and the international user base is a bit irked, peeved, pissed and distraught. Needless to say the forums at Slingmedia are filling up with less than complimentary messages from the customer base. Not the rug man! (you've destroyed something of value to me.)

It took me an hour last night to muddle through different scenarios to get it to work, my wife said "just throw it out". Pathetic.... it has made me realize that Slingbox is worthless anyways. As a software developer for 30 years... I cannot believe how bady you fu^=ked up.

Very undude (not calm), but coming from a long term technological and business infrastructure background, I can relate. By all rights, said global firmware update should have been QC'ed properly before being pushed out into production. Or was it?

Let's slam this product and the lousy customer support across all social media forums. Loss of sales will get their attention or put them out of business.

Beware when you suddenly take away a talking monkey's TV and sports programming. God forbid if they had to actually do something else like read a book or talk to one another.

Out of warranty Slingbox's require a $29.99 fee to speak with a support agent. It is reported that repeated calls to customer support have elicited the following responses:

SlingMedia CS says that only the [current] Slingbox M2 is guaranteed to work with the Slingplayer Desktop. Other Sling boxes, including the 500, are not guaranteed to work at all with the Slingplayer Desktop.

Mark it zero (acknowledging one's failure) and not very assuring from a customer support standpoint. However, one user took a very "dude-like" posture...

Relax... I cannot imagine Sling abandoning their installed user base in such a fashion. Such action would be bad business which generates bad press and bad mojo. In the big scheme of things, this is a temporary inconvenience. Chill, have an adult beverage and let's see what comes out in the wash at the end of the day.

One disgruntled customer expressed their depth of concern and hope...

this is a failure of imagination on the part of slingmedia. major pr disaster for them. but they are unaware of the depth of anger and frustration. I hope that they "care."

Just when you thought it was safe to go back in the water, their recent "customer service experience" might have many Slingbox owners feeling like Lebowski did after his "Nihilist" experience .

I'm not trying to tattoo this on my forehead (go ahead and take a stand for a pointless cause,) so let's come back to this Slingbox firmware fiasco later. Perhaps then, it will make business sense, and like The Dude's rug it will "really tie the room together" (also means, I like it).

BTW, I'm not just the hair club President, I'm a customer too. Given my already mentioned "Dudely" affinity, I have not been without Sling since 2005, as it comes in most handy when on the road and in particular, overseas.

Mulder and Sculley discussing alien conspiracies in German is bad enough. Who want's to watch: Sheriff Dillon and Deputy Chester kibitz in Dutch? Much less, Mannix rerun's in Spanish, or Jake and The Fatman, and have to hear Jabba-esque William Conrad bellowing in Italian? Oh, the humanity of it all.

SlingTV Demographics?

With the advent of their SlingTV offering, Echostar and DISH Network are attempting to leverage their $380M investment in SlingMedia's Slingbox technology.

Sling TV's CEO Roger Lynch is targeting cord cutters, "young millennials in urban environments," who are also well educated. Starting at $20 a month with no contracts, one can "cut the cord" and save a few dollars? TBD.

Sling TV is app based, running on Android and iOS devices, Windows and Mac computers. At home, you can also watch it on Roku players and TVs, Amazon Fire TV, the Xbox One, the Google Nexus player and smart TVs from LG and Samsung.

Convergence and Demographics?

In this myriad of technological network convergence (Intel, Cisco, Verizon), consolidating bandwidth, and media content providers, there's a lotta in's and a lotta out's (too much going on) viz. busier than two ticks on a ferret's ass.

Ever notice certain content choices being unavailable through certain providers? There are those that own the pipeline or street, those that own the content and those that own both. Mainstreet programming pimps and media content ho's can get territorial, as in, stay on your side of the street, and what you chargin?

Said provider turf wars can lead to unhappy clientele as in, what do you mean your dropping the 24 Hr Big Lebowski and Underwater Aliens Basket Weaving channels? That's the only reason I hooked up with you; and your charging me more for less service?

Leading some younger, some tech savvy and some discriminating customers to take cord cutting measures while leaving their options, as open and flexible as possible. No funny stuff (you're not dealing with morons here).

Streaming and slinging (or placeshifting) across broadband has become pervasive. Streaming services like Amazon Instant Video, Netflix, DirecTV Now, Sling TV, CBS All Access, Playstation Vue, XBox Video, HBO GO, Yahoo View, et al are proliferating like fleas on a soaking wet marmot.

Dish tried to buy DirecTV in 2001 in a deal that was blocked by regulators. Having purchased Liberty Media's DirecTV for $48.5B, (dwarfing Echostar's Sling investment) , ATT's DirecTVNOW offering is launching into direct competition with Echostar, DISH Network and SlingTV in December 2016.

With that acquisition ATT now has 26.4M cable and satellite TV subscribers, more than Comcast and Charter. Said acquisition combines the largest satellite TV service with the No. 2 nationwide wireless network. DirecTV also has 19.5M customers in Latin America. Is ATT, the Man in the Black Pajamas (a worthy adversary)?

Remember Microsoft TV? Too early, poor implementation. Strikes and gutters (you win some, you lose some). Microsoft, Apple are Google are currently sticking their toes in the pool. Speaking of which, YouTube is launching Unplugged in 2017, and Hulu's (jointly owned by Disney, 21st Century Fox, and Comcast) new service is also imminent.

In this SlingTV commercial Danny Trejo tells us about "the evil's of cable providers" and their bill creep.

In the near future, due to content licensing costs, and thinning margins, will these streaming services be doing exactly what they accuse the cable and satellite providers of? If one thinks not, obviously your not a golfer (you are not getting the point.)

DISH, Entering a World of Pain? (A Serious Warning)

Echostar (also owner of the satellite network for closely held affiliate DISH Network) does not divulge SlingMedia sales or revenue figures. Having been on the market for 11 years, with an initial target market of 3.5M, averaging 300K per year would put an installed Slingbox base at an est. 3.3M.

The sales estimates above do not account for Arris sales or Dish Networks 13.6M customer base, of which Sling TV (subs)criptions increased +49K in Q2 2016.

In Q2 2016 DISH Network reported their worst ever decline of -281K net pay subs. Adding back that +49K SlingTV gain, means they really lost -330K on the satellite side.

Q3 2016, DISH reported its tenth (10) straight decline in net pay subs, with its worst ever Q3 loss at -116K. Sling TV is estimated to have 1M subs; adding +204K in Q3, meaning the satellite side actually lost -320K subs.

DISH has lost -650K satellite subs in the last two quarters. Disturbing? Where's the money? Perhaps somebody, has to Feed the Monkey? (get to work or got to get some money).

Over the Line?

As of year end 2015, Yoy DISH net income fell -20.92% from 944.69m to 747.09m despite relatively flat revenues. A contributing factor has been an increase in the percentage of sales devoted to the cost of goods sold from 70.74% to 74.70%.

Given the above, let's walk in SlingMedia's shoes a bit while thinking about revenue and costs from a hardware, firmware, and software support standpoint.

Probably not typical, (and when would we ever be?) this Dude has made two (2) Sling hardware purchases spanning eleven (11) years and six (6) product generations. Not exactly lucrative for SlingMedia or Echostar, considering all the other tech and product developments during that span of time.

Given the above, let's also think about this from an X-File's conspiratorial standpoint. Apparently a promotional email Slingmedia sent less than 48 hours prior to the systemic user base disruption on 11/28/16, might be taken to heart...

At the special promo price of $89.99, the award-winning Slingbox M2 makes a great gift for the TV lovers on your list who have cable or satellite. It's also the reason you've been waiting for to upgrade your Slingbox if you haven't already. (And by the way, we'd like to take this time to say thank you for being a long-time loyal fan). Order by 11:59 PM PST on December 19, 2016 and get FREE ground shipping with this incredible offer! Limit, two per customer.

Coincidence? With said offer in hand one might invoke Leroy Jethro Gibbs with much Holiday Cheer...

Rule #39: There is no such thing as coincidence.

Rule #39a There is no such thing as a small world.

Perhaps due to a dearth of legacy support revenue, I think the subtle undertone might be, get along with the program little doggy, and upgrade that suddenly non functional legacy Slingbox to the M2. But this is a league game! (you have to follow the rules.)

To avoid further user suffering while QC sorts out the bugs, a responsive SlingMedia could have quickly pushed out the previous firmware version as a roll back. But they didn't, and those mixed smoke signals might indicate, no fix until let's say December 20th (the day after the special offer expires) or never. Either would be over the line (breaking the rules). TBD.

Does one think that Echostar or DISH TV could get dinged up (damaged) by SlingMedia's firmware fiasco? As a parent and sibling, they should care about SlingMedia's legacy user base, because they have a few million reasons to. You got a date Wednesday, baby! (you can run but you can't hide).

The End of The Dude's Trail?

Finishing my coffee (indicates one's determination to see an activity through to its end no matter what). More competitors pushing streaming services means, more downward pressure on prices for that content.

Stuck in the middle are TV content providers such as the networks (PBS, CBS, ABC, NBC, Fox, TBS et al) and conglomerates like Viacom. Years ago, Westinghouse bought old CBS and then Viacom bought them. Which is why Viacom oft show up as a defendant, respondent in asbestos litigation. Ah, nice marmot (that is unexpected, but interesting). But I ramble...

Many networks have exclusive sports contracts, NFL, MLB, NBA, Nascar, etc. Content providers would like to sell to all pipeline providers. At any rate (pun intended), that's a balancing act our Slingin Dude did not want to watch.

With technological convergence, the business model is morphing and the goalposts are getting moved. The existing satellite and cable providers have the difficult task of attempting to manage...

transitioning from a shrinking legacy subscriber base, to a growing subscriber base in newer venues, such as streaming and slinging.

Ultimately these competitors all face the same problem our Slingin Dude did, a litany of Byzantine content licensing schemes and turf wars.

In the long run, those providers are going to have to deal with the transition. As streaming and slinging services proliferate, they are going to cannibalize existing cable and satellite services that do not roll with the punches aka cord cutting. Just cause we're bereaved doesn't make us saps! (you're not taking advantage of us).

Speaking of which, who wants to get cannibalized? Much less cannibalize their own potential customer base? As promised, back to that little firmware fiasco, most of the 3.3M Slingbox users are slinging content currently purchased from other satellite or broadband providers.

With +517K in new Sling TV subscribers over the last four quarters, one would think that Echostar and DISH, might not want to piss off those 3.3M current Slingbox and potential future Sling TV customers with a bug.

Dish closed out Q3 with 13.643M pay TV subs, compared with 13.909M Yoy. Adding back those +517K new Sling TV subs means, Dish really lost -800K Yoy on the satellite side, which would constitute a disturbing and obviously accelerating trend. Maybe others have already come to this conclusion?

On Friday December 2nd, DISH Network Corp recorded an unusually high (504) contracts volume of put trades. Someone, most probably a professional was a very active buyer of the January, 2017 put, expecting serious DISH decrease. With 504 contracts traded and 7774 open interest for the Jan, 17 contract, it seems this is a quite bearish bet. - Frisco Fastball

It isn't this Dude's first goat ropin, but what do I know? Little to nothing, and what I do not know is immense. Along those lines, a man much wiser than I (perhaps that same stranger) once said...

Someday's your the bug, someday's your the windshield.

Maybe SlingMedia think Slingbox customers are the bug? Pun intended. At least The Dude abides. Oh look at me, I'm Nattering again. Howse about an oat soda (a beer)? Better yet, you got a good sarsaparilla??

Hope you folks enjoyed yourselves, catch you later on down the trail.

Would like to thank you folks fer kindly droppin' in. You're all invited back again to this locality. To have a heapin' helpin' of Nattering hospitality. Naybob that is. Set a spell, take your shoes off. Y'all come back now, y'hear!

This is our 112th in a series of thematically related missives which will attempt to identify the macroeconomic forces with potential to adversely effect capital, commodity, equity, bond and asset markets.

I wish to dedicate this missive to one of my mentors, Salmo Trutta, who is a prolific commenter on SA. Without Salmo's tutelage, and insistence on not masticating and spoon-feeding the baby ducks, as in learning the hard way by doing the leg work and earning it, this missive would not have been possible. To you "Proximo"... "win the crowd and win your freedom" - Spaniard.


Investing is an inherently risky activity, and investors must always be prepared to potentially lose some or all of an investment's value. Past performance is, of course, no guarantee of future results.

Before investing, investors should consider carefully the investment objectives, risks, charges and expenses of an investment vehicle. This and other important information is contained in the prospectus and summary prospectus, which can be obtained from the principal or a financial adviser. Prospective investors should read the prospectus carefully before investing.

Market Plays

As for how all of the above ties into the potential and partial list of market plays below... the market as a whole could be influenced, and this could tie into any list of investments or assets. Those listed below happen to influence the indices more than most.

There are many macroeconomic cross sector and market asset correlations involved that affect your investments. Economic conditions, the eurodollar, global dollar debt and monetary policy all influence the valuation of the above and market plays below, via King Dollar's value, credit spreads, swap spread pricing, market making, liquidity, monetary supply and velocity, just to name a few. For a complete missive series listing covering those subject and more,click here.

The potential global economic developments discussed in this missive could affect numerous capital and asset markets, sectors, indexes, commodities, forex, bonds, mutual funds, ETFs and stocks.

A List of Potential Market Plays (Long or Short?):

Apple Computer (NASDAQ:AAPL); Google (NASDAQ:GOOG); Facebook (NASDAQ:FB); Microsoft (NASDAQ:MSFT); Cisco (NASDAQ:CSCO); Amazon (NASDAQ:AMZN); Intel (NASDAQ:INTC); ATT (NYSE:T); Netflix (NASDAQ:NFLX); Disney (NYSE:DIS); Comcast (NASDAQ: CMCSA); Verizon (NYSE:VZ); Yahoo (NASDAQ:YHOO); Time Warner (NYSE:TWX); Charter Comm (NASDAQ:CHTR); Viacom (NYSE: VIA) (NASDAQ: VIAB); DISH Network (NASDAQ:DISH); Echostar (NASDAQ: SATS)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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