ESPN’s place in a future streaming-dominated sports world could be as an aggregator rather than a broadcaster.
The network is considering adding links to its website and app that would direct users to live sports streaming broadcasts, including ones that don’t appear on ESPN, according to CNBC. The network is reportedly in talks with major sports leagues and media companies to determine their interest.
A hub for sports streaming could address consumer frustration of having to figure out where to watch live sports events. Games have appeared on varying cable networks for decades, but the rise of streaming has added additional platforms in which games can appear. The New York Yankees, for example, will broadcast on eight different networks and platforms this year, including ESPN, Apple (AAPL) TV+ and Comcast (CMCSA)’s Peacock (CMCSA), depending on the game.
Live sports can contribute big profits to media companies. Sports programming accounts for 8 percent of viewing time on traditional television in the U.S. but more than 30 percent of total ad revenues, Nielsen Sports reported last year. But streaming platforms are increasingly securing rights to sports events that cable networks used to own. Apple TV, Amazon Prime Video and YouTube TV all bought rights to show professional sports games beginning this year. Sports leagues can maximize their profits when streaming platforms pay to stream games in addition to television networks.
The future of ESPN as a cable network is up in the air as the trend of viewers canceling traditional television subscriptions continues. The Walt Disney Company (DIS), ESPN’s parent company, launched a sports streaming platform ESPN+ in 2018, which CEO Bob Iger sees as the future of the company. A shift from ESPN’s traditional cable model to streaming is inevitable for the network, Iger said in a February conference call with analysts and investors.
How ESPN could work as a streaming hub
Wells Fargo analysts agree. Disney’s next step should be making ESPN a solely direct-to-consumer platform, analysts said in a report released yesterday (March 2). This could mean all ESPN broadcasts move to its streaming counterpart. By becoming a hub for all links to live sports broadcasts, ESPN could be trying to cement its relevance in the shifting landscape. ESPN didn’t respond to the Observer’s request for comment.
On its app and site, ESPN already links users to ESPN-licensed broadcasts. The company is proposing adding links that will direct users to the broadcasts on other streaming platforms as well. If users purchase a subscription through ESPN’s link, the company could reportedly earn a percentage of the subscription revenue. It would not take a cut when users already subscribe to competitors and use ESPN’s link to access the platform.
Revenues from Disney’s streaming platforms are growing faster than revenues from the company’s linear networking, according to its 2022 fiscal year report. Its linear networks revenue grew 1 percent year over year, contributing $28.3 billion in the year ended Oct. 1. Streaming grew 20 percent, contributing $19.6 billion in the same period. Disney’s streaming business is expected to turn a profit for the first time this year.
