The Walt Disney Company is hoping that starting streaming video services will help the company’s bottom line.
This was the week that sports video delivery started to change. CBS has decided to begin a sports streaming video service that will be modelled after the CBS news streaming service and so has Disney which will leave Netflix in 2019 and start two streaming video services. One of the Disney streaming channels will be dedicated to sports which may seem a bit odd as Disney owns ESPN. But ESPN is on cable TV and ESPN is facing a difficult time as people are moving away from cable television and leaving the so-called World Wide Sports Leader behind. Disney invested in a sports streaming service and now owns 75 percent of Bamtech, a streaming service that was created by Major League Baseball. Disney has seen millions upon millions of cable TV subscribers end their reliance on cable TV.
ESPN was been hard hit by the defections as the loss of millions of subscriber fees may approach $700 million per year. ESPN has some really high end TV contracts including a recently signed deal with the NBA that requires the cable TV network to pay the league $1.4 billion annually through 2025. ESPN pays the NFL billions and has a large commitment to college sports either through TV rights or TV partnerships with conferences. The model appears to be unstainable in terms of profit. Since the news of Disney establishing a sports streaming service came down just this week, it is too early to see how the business will actually operate. The first question is this. Are there enough sports fans who will be willing to pay money for ESPN’s services? How much will ESPN and CBS charge for sports streaming. How will the business partners, the NFL, the NBA, Major League Baseball, the colleges react. The cable TV gravy train has left the station.
ESPN has been losing subscribers.