Disney had already begun to shift strategy to compensate for the losses. The vMVPD licensing strategy reversed the declines of the previous five years, restoring access to 9 million homes by the beginning of In , vMVPD growth slowed dramatically and is now failing to keep up with the decline in cable, satellite, and telco TV.
Between and , ESPN picked up 4. In , ESPN added just 0. ESPN plus launched in early with an interesting set of non-premium sports content that attracted 1 million subscribers within five months of the release. Since then, Disney has been adding sports content and striking exclusive deals that make ESPN plus essential to increasing numbers of sports fans. For example, early last year, the company struck an exclusive deal with UFC. ESPN has a household distribution of Distribution for both channels has not fallen below 80 million in more than 14 years, which is as far back as our records go.
All rights reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Leaders Group. By John Ourand 1. Shareable URL copied to clipboard! In the near term, selling ESPN separate from the linear bundle isn't feasible. Disney has negotiated digital rights flexibility in almost every major rights renewal in the past few years.
But the company is currently restricted by its linear pay-TV obligations, which require certain premium programming to stay exclusive to the cable bundle, according to people familiar with the matter. David Levy, the former president of WarnerMedia's Turner Broadcasting, said that Disney will have plenty of leverage with consumers when the time comes to bypass the bundle.
With entertainment, every show is hit or miss, and you always have to market content. You never know what will succeed and what won't. That's why sports is the best content to invest in, and it will be no matter what the distribution model is.
But Levy's estimate may be optimistic. A top executive at one of the largest U. That would equal just over 11 million U. The NFL built in early out-clauses to its most recent year deals with the networks, according to people familiar with the matter, allowing the league to bail if the business model stops working. That's why Disney and other networks with live sports want to keep the linear bundle around until they have to let it go.
It's difficult to make up the lost revenue in a reliable way. And while it's certainly possible the amount of subscribers will continue to decline, I don't think the decline ever reaches a point in the coming years that it won't support the current rights deals that we have, both for NFL football and our other sports.
A streaming-only world would also subject ESPN to a challenge that it's never had to worry about: Churn. People who cancel ESPN unsubscribe from the whole linear bundle.
In the direct-to-consumer market, it would be easy for football fanatics to only subscribe during the few months when games are played.
However, a more complete ESPN offering combined with another streaming service would have to cost more, a proposition that would likely scare away the non-sports fans, who are used to paying much less. But the economics internationally aren't the same as in the U.
There is no model I see that works. There's no easy answer. ESPN executives are hesitant about moving their prized programming to directly to consumers because of rampant password sharing among young users, according to people familiar with the matter. Whether younger audiences even want live sports is another issue for Disney.
Other entertainment options, such as social media, mobile games and on-demand entertainment services may be eroding the cultural grip of televised sports.
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