Prepaid satellite television startup Orby TV announced on Monday it was shutting down its operation and pushing customers toward Dish Network.
The announcement came in an open letter distributed to customers and published on its website.
“We are sorry to announce that Orby TV has closed its doors, and the Orby TV service has ended,” an Orby TV spokesperson wrote.
The spokesperson said Orby TV had partnered with Dish Network to provide existing Orby TV customers with an exclusive offer to switch customers over to the legacy satellite service.
The news came as The Desk was preparing an exclusive report after learning from multiple sources that Orby TV was running out of cash and had recently laid off many of its non-essential employees.
Launched in 2019, Orby TV brought to market a prepaid pay television service delivered by satellite for $40 a month. In an interview with The Desk, Orby TV’s chief executive Michael Thornton said the company was able to keep costs low by avoiding expensive programming bundles and by leasing transponder space from Eutelsat instead of managing its own fleet of satellites.
In a follow-up interview last year, Thornton said Orby TV was near its break-even point, telling The Desk the company was on track to add 100,000 subscribers by the end of the year. (Those details were not reported in the final version of the story and are being revealed here for the first time.)
But behind the scenes, Orby TV executives were juggling with a cash crisis, according to people familiar with the situation. Executives deferred their own paychecks, and in November, the company laid off its regional territory managers and ended its contractual relationships with some third parties.
Eric Becker, a public relations executive who provided some marketing services to Orby TV, confirmed in a phone call last weekend that his company had not represented Orby TV for several months. He refused to provide additional information beyond that — even on background — citing his respect for Thornton and Orby TV’s other executives.
When contacted by The Desk, other sources spoke with equal admiration about Orby TV’s management staff, with many expressing disappointment that the company was experiencing a financial strain. They say Orby TV was a good idea that they believed would resonate with customers, but ultimately did not for reasons that, in retrospect, seemed obvious.
One source said the company leaned too heavy on its partnerships with brick-and-mortar retailers Best Buy and Target, where Orby TV sold its set-top boxes and DVRs to customers for between $100 and $200 a pop. (Orby also sold its hardware directly to consumers through its website.) While these boxes were often discounted, they came with additional installation fees that resembled traditional cable and satellite.
Orby TV’s strategy was to create a sense of legitimacy by getting in front of customers at Best Buy and Target. But those stores are often located in urban and suburban markets where broadband Internet is abundant, the source said, and Orby TV’s boxes were often sold next to or near cheaper streaming TV devices like Roku boxes and Amazon Fire TV sticks that customers often preferred over Orby TV’s hardware.
Orby TV also lacked some features that are considered staples in the pay TV space, including TV Everywhere support that allows customers to access streaming apps associated with the cable channels in their subscription. Last August, Orby TV’s chief executive said TV Everywhere support was slated for the end of the year, but the feature never rolled out.
The company’s closure comes at a time when certain elements of the television industry have been hurt by the ongoing coronavirus health pandemic while others in the space have been helped. Orby TV painted the pandemic as a quiet blessing for two reasons: Customers were starting to consider entertainment dollars more carefully, which made Orby TV look attractive with its budget-friendly plans, and Orby TV’s television marketing budget — which had been committed before the pandemic — went farther as other companies pulled their ad spending, which led to an abundance of inventory.
“The big thing that’s changed during the pandemic, people are watching more TV, so the ratings are going up, but advertisers were leaving television because they didn’t know what was going on and certain categories weren’t up and running,” Thornton said in an unreported portion of the interview. “So the demand for advertising went down, and the costs went down. So using the same spend prior to the pandemic, we’ve been getting more bang for our buck.”
Thornton said the company had committed a small amount of marketing dollars to digital advertising, but didn’t see a significant return on that investment. A source who spoke with The Desk on background said the company eventually realized its miniscule presence on social media and lack of digital advertising commitment in favor of traditional television ads likely hurt the company as the pandemic progressed.