Bloomberg BusinessWeek takes a deep dive into the past, present and future of the Worldwide Leader in Sports.
After peaking at 100 million subscribers in 2011, ESPN has lost 12 million homes since then. Why pay $100 a month for a cable package when I can get highlights and headlines from social media?, the thinking goes. But ESPN didn’t spend $175 million on a state of the studio and billions more for sports rights for nothing.
“There is a conventional wisdom that ESPN is going to be somehow disrupted by everybody else,” says John Kosner, ESPN’s head of digital and print media. “But most of these things are opportunities.” So innovation is key:
Kosner is planning to roll out a Netflix-like interface for a section of the ESPN app that’s limited to cable customers. It will be customized to user tastes and will put live games side by side with episodes of [SportsCenter host Scott] Van Pelt’s show and ESPN’s documentaries, such as the Academy Award-winning O.J.: Made in America. “The beauty of Netflix to me is that they’ve said, ‘We’re going to make our best stuff available to you anytime you want it,’ ” Kosner says. “They do it brilliantly, but it’s not rocket science.”
ESPN, and parent company Disney, have said the network may also enter the OTT fray, which has proven successful for traditional cable networks like HBO and fan-supported brands like WWE.
Although ESPN executives acknowledge that this could happen years from now if cable continues to decline, the plan for now is more modest. In February, Iger characterized the new service, which doesn’t yet have a name, as “an add-on or adjunct product that consumers can buy on top of what is their normal multichannel package.” Executives at both ESPN and MLB say the offering will likely include a mix of baseball and hockey games—though not the marquee matchups that appear on national telecasts today.
“I think it’s a learning exercise more than anything,” says Rich Greenfield, a media analyst at BTIG Research. “This is really them starting to learn the direct-to-consumer business and dealing with customer service, churn, retention, and marketing.”