Tuesday, July 28, 2015

What If ESPN Became A Stand Alone Service

Disney/ESPN CEO Bob Iger admitted earlier this week that ESPN could one day offer itself like HBO Now.  Given the loss of cable subscribers, primarily due to cord cutting, Iger expects that they could recapture homes with a streaming sports service.  But sports content is one of the most expensive line items resulting in nets like ESPN charging the highest amounts for a cable network compared to other cable license fees.  And it is those costs that consistently rise annually resulting in cable bills rising as well.  That is one of the likely causes of cord cutting.

So would non-cable customers pay about $30 a month, according to the Huffington Post article,  for a streaming ESPN service?  Those consumers that cannot live without their sports are not likely the ones cutting the cable cord.  So I find it highly doubtful that consumers would pay that much.  It seems that $10 per month might be the threshold that some would pay.  I say that given that Netflix and Hulu are able to get away with fees at that level.  Overall, sports fans tend to retain a cable subscription, while non sports fans are the bigger cord cutters. 

In the meantime, ESPN will likely follow more austere cost cutting measures, with a larger percentage going to the big sport leagues, to counter the loss of cable subscribers and a drop in revenue.  The rising costs of sports programming, leagues, players, games, TV rights, etc. is making access to these games, through broadcast or in-person tickets, more expensive and harder to enjoy.  Over time, fan interest continues to fall, and consumers will be harder to reach. 

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