ESPN and Disney announce plans for a new streaming service.
Network bidding to make content easily available to non-subscribers
ESPN next year will launch a multi-sport streaming service that will make 10,000 games and events available to viewers who do not subscribe to a cable or satellite service that includes ESPN’s traditional networks, the Walt Disney Company said Wednesday.
Cable, satellite and streaming service subscribers who have access to ESPN channels also can access games and events through ESPN’s mobile app, but the primary impact will be the availability of some sports content to cord-cutters and cordnevers.
The ESPN streaming announcement came as Disney also said it has paid $1.58 billion to increase to 75 percent its controlling interest in BAMTech, the direct-to-consumer streaming and marketing company founded by Major League Baseball, and said it will stop making new Disney movies available to Netflix in 2019 when it launches a Disney streaming service.
Pro-active strategy
“It’s not just a defensive move, it’s an offensive move,” said Bob Iger, Disney’s chairman.
Coming in the wake of months of speculation about ESPN’s future in the wake of declining viewership and shrinking subscriber bases as consumers turn away from cable and satellite, analysts said the Disney announcement helps strengthen ESPN’s competitive status in the era of digital distribution.
“This is ESPN’s way of saying it will not be outflanked by the new technology companies,” said Neal Pilson, the former president of CBS Sports. “They’re saying that ESPN will be one of the new technology companies and will continue to control the balance between linear TV networks and over-the-top distribution.”
Iger did not comment on pricing for the service, available through the ESPN mobile app.
“This will be a one-app experience,” he said. “You can go to one app to look at scores, watch highlights, authenticate to watch linear networks or buy additional live sports programming.”
Disney said the service will include games from Major League Baseball, the NHL, Major League Soccer, Grand Slam tennis, and college sports. Individual sport packages will also be available for purchase, including MLB.TV, NHL.TV and MLS Live.
The service will not provide access to the traditional ESPN channels unless the user subscribes to a pay TV package that includes ESPN, so viewers might have to continue subscribing to pay TV to have access to “SportsCenter,” studio shows and documentaries.
Iger said Disney considers ESPN to remain a must-have service for multi-channel providers such as DirecTV, Comcast and Sling. But streaming games and events “gives us yet another way to reach consumers in a fairly compelling way and in an incremental way to monetize sports rights,” he said.
He acknowledged the risks of moving to a new distribution strategy but added, “We believe that ultimately, and I can’t give you an idea when or how long, the profitability, and the revenue-generating ability of this initiative is substantially greater than the (current) business model.”
Going mobile
Pilson, the former CBS Sports executive who is an industry consultant, said streaming also will capture more out-of-home viewers and to prevent itself from being outflanked by Amazon, Facebook or Netflix in distributing sports content to mobile viewers.
Television consultant Lee Berke said the announcement “is where (ESPN) has to be, given the growth of OTT and the shrinkage of the pay TV universe.”
“Consumers benefit, as cord-cutters and cord-nevers — the next-gen viewers that have not and most likely will not subscribe to traditional pay TV — will be able to access ESPN content. The announcement allows ESPN to better reach a new generation of viewers for whom television may be a phone, tablet or desktop.”