With DraftKings link, ESPN firms up position in Disney’s lineup
ESPN appears to be solidifying its position in the lineup of Walt Disney subsidiaries, on continuing strong results for its ESPN+ streaming service and reported interest in an expanded partnership with sports book DraftKings.
ESPN and Disney are among Connecticut’s larger employers at the sports broadcaster’s headquarters campus in Bristol, with 3,800 people there under Jimmy Pitaro, president and chairman. Hearst Corp. holds a minority investment stake in the sports broadcaster.
Last week, Bloomberg reported negotiations were proceeding between ESPN and Boston-based DraftKings on a major expansion of their partnership, which would not involve people being able to place wagers through ESPN’s websites. ESPN also partners with Caesars Sportsbook.
Speaking two weeks ago at an investor conference sponsored by Axios, Pitaro expressed enthusiasm for the possibilities while adding “it’s not appropriate” for ESPN to be opening a fullfledged sports book that would take bets and pay out winnings directly. In 2019, FoxSports partnered with DraftKings rival FanDuel to create the FoxBet Sportsbook which is active in New Jersey, Pennsylvania, Michigan and Colorado.
“If we did absolutely nothing in this space, it would be good for business — the more people that are placing bets, the more invested they are in games [and] the more likely they are to watch,” Pitaro said during the Axios conference.
“We’ve done a ton of research in this department, and what we’ve seen is that our fans are not just OK with us doing more — they’re actually expecting it.”
ESPN+ garnered record views on Oct. 30 with its first NFL game, featuring the London matchup between the Denver Broncos and Jacksonville Jaguars. As part of Disney’s new broadcast agreement with the NFL, ESPN+ will get exclusive rights to one NFL game a year.
Over three months through Oct. 1, ESPN added 1.5 million subscribers to its ESPN+ streaming service to give it 24.3 million in total. That equates to a 7 percent gain in a single quarter, which exceeded the bump that Disney+ achieved in the United States and Canada.
ESPN+ growth easily outdistanced Disney’s Hulu streaming service as well. The Anaheim, Calif.-based giant continues to see its biggest streaming additions overseas. Entering October, Disney had nearly 236 million subscribers across its streaming services, compared to 223 million for Netflix. The Wall Street Journal reported Tuesday that Netflix may soon enter the bidding wars for sports streaming rights, on the heels of Amazon and Apple.
On Tuesday afternoon, Disney CEO Bob Chapak emphasized the importance of ESPN+ in Disney’s streaming bundles that include Disney+ and Hulu. Months earlier, Chapak had told investment analysts Disney has received dozens of queries on any interest in selling off ESPN, at the time expressing the intent to keep ESPN in house.
“It’s ... important to look at ESPN in terms of an important part of the overall Disney portfolio or synergy — it is an integral part of the bundle itself,” Chapak said Tuesday. “When you take the fact that it’s a great brand, we have the opportunity to grow it into different avenues.”
Next month, Disney is creating an ad-supported tier for Disney+ and its broader bundles. Subscribers who want to watch Disney+ and Hulu without ads will be paying $240 a year; those who take the ad version save $77 annually. ESPN+ includes ads on both sides of the bundle.
Disney has seen average revenue per subscriber erode in the past year for Disney+ even as ESPN+ has recorded a 2 percent gain.
As the case with rival broadcasters, ESPN offers only a selection of live games on ESPN+ that it carries on its other networks. Chapak said the company continues to experiment on that front with the goal of driving subscriber numbers up.
Pitaro took up the topic as well last month during the Axios forum, saying for now the plan is to maintain “parallel paths” in his words between traditional ESPN networks and ESPN+, and take things from there.
“If you want to access ESPN through DirecTV or Comcast, we’re going to be there and you’re going to be able to,” Pitaro said. “Today we have ESPN+ — there might come a point in time the ESPN flagship is available a la carte. We’re not there yet — as I sit here right now I will say, without any reservation, we are not there yet. We are very happy with what we are doing on ESPN+.”