Can Disney Create a Netflix of Sports?
Bob Iger’s plan to launch two streamers — one for family fare, another for ESPN — carries huge stakes for the media giant and the future of the cable bundle itself.
Since Disney announced on Aug. 8 that it would ditch Netflix and launch its own over-the-top video channel for family fare, more than $3 billion in market capitalization has vanished at the world’s largest subscription streaming service to date. Such is the clout of the dominant film and TV studio and its plan to build a digital home for anticipated blockbusters such as Toy Story 4 and Frozen 2. But it may be separate plans to launch a new ESPN stand-alone streaming service that could have quicker and more meaningful implications for the future of television.
ESPN has been losing subscribers since about 2013, though it has been making up for those declines with ever-increasing fees, now at about $7.54 per sub — more than consumers pay for TNT, NFL Network, Fox News, USA Network, TBS and Nickelodeon combined. But ESPN’s defections recently reached roughly 3 percent of subscribers annually, according to Nielsen, so the conglomerate clearly feels it needs to do something drastic, given that, by some Wall Street estimates, the sports network is responsible for roughly one-quarter of Disney’s profit each year.
While much is in flux, Disney CEO Bob Iger said the new ESPN service will stream 10,000 hours of live sports annually that customers won’t get from the ESPN cable channel, including MLB, NHL and Major League Soccer matches as well as Grand Slam tennis tournaments and a plethora of college sports. Additionally, Iger said the ESPN digital service will offer individual sports packages for purchase.
Iger wants the new content to be accessed through ESPN’s existing app. Consumers who pay for ESPN through their cable or satellite bill will still get it via authentication, but ESPN also will offer freestanding subscriptions to those who don’t get ESPN that way (though the premium content will be reserved for TV subscribers).
It sounds simple enough, but investors are wondering first, if Disney will cannibalize its existing ESPN customers and second, whether this move by cable’s most popular channel will hasten the demise of the cable TV bundle, thus damaging all of Hollywood.
Read more from The Hollywood Reporter here.