Kicking and Streaming: Is ESPN’s Newly Announced Platform Sounding Cable’s Death Knell?

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Long gone are the days when everyone watched their favorite shows and sports through their cable subscriptions, thanks to the rise of streaming TV (a subject we have been tracking for years). At the beginning of this year, 2.3 million US households canceled their cable subscriptions—bringing the percentage of households with cable to its lowest penetration in three decades. Time spent with streaming is also on the rise at 37.7%, beating out cable’s share of 30.6%. 

And recent news from Disney’s ESPN marks yet another milestone along that race towards a CTV-only world.

ESPN’s New Platform Steps Up to the Plate

Sports viewers may have been one of the last true streaming holdouts—choosing to remain on their expensive cable plans in order to watch sporting events—but that behavior has begun to shift over the last year or so. It helps that streaming platforms have finally made sporting content accessible through their services, such as Amazon with the NFL, Apple TV+ with the MLB. And who can forget Peacock with their fingers in almost every sporting pie—from NFL and MLB to next year’s Paris Summer Olympics. 

So when ESPN announced that they will also be launching a streaming platform, it looks like the TV industry is about to take another significant step towards a streaming-only world. After all, ESPN has long been one of the biggest beneficiaries of the cable-based TV systems, summarized nicely by Daniel Kirschner, CEO of Sports Marketing firm Greenfly, in an interview with Forbes, “[ESPN ]has served as a bulwark against cord cutting. The ESPN announcement is an acknowledgment that we are reaching a tipping point in viewing habits where even dedicated sports fans may not maintain a cable bundle, especially as streaming options for sports continue to proliferate.”

But that won’t be the case for much longer. ESPN has been in a bit of hot water this year, with recent news revealing that the Disney owned pay-TV linear channel lost 914,000 customers in the US between December and March. And it looks like the execs at Disney and ESPN are taking notice. James Pitaro, President of ESPN, told Bloomberg that this changeover to streaming would happen as soon as it made sense, “That’s a ‘when,’ not an ‘if’…We’re only going to do it when it makes sense for our business and bottom line.”

(Now you may be wondering right about now: Doesn’t ESPN already have a streaming service, ESPN+? The answer is yes. Disney launched ESPN+ five years ago, and many viewers bundle that service in with their Hulu and Disney+ subscriptions. But the content on that platform is intended to be complementary—not competitive—to ESPN’s linear content, and doesn’t include everything one could watch through a cable subscription.)

And who will ESPN be partnering with to get this streaming service off the ground? One potential partner is Apple, according to Yahoo! Finance. Bob Iger, CEO of Disney, mentioned a new collaboration between the two brands at Apple’s Worldwide Developer Conference (WWDC) in June, saying Apple’s new VR headset would “lend itself to sports.” Other sources, however, seem to believe that ESPN may find a new partner in the form of the sports leagues themselves.

Do Viewers Even Want Sports-Only Streaming?

Some analysts have concerns that the way viewers watch sports may not be conducive for a year-round subscription to a streaming service. Many people are only really interested in tuning in to a couple sports at most (if they even follow more than one), and so signing up for an entirely new service just won’t be worth it. In fact, Macquarie analyst Tim Nollen says that ESPN may have to provide incentives for viewers to keep them from turning their subscriptions on and off as sports seasons begin and end, “There are a lot of people that might be sports specific. So you might not necessarily want the thing year-round, or you might only want it for the first two months of the season.”

And with predictions for the price of a stand-alone ESPN service at around $30 a month, how many streamers are even willing to spend that much (despite still being less than the price of their cable subscription)? One survey says not many, according to Brandon Nispel, equity research analyst at KeyBanc Capital Markets.

“From our survey work, we found consumer interest in sports is relatively high in linear, though willingness to pay in streaming is low: we found >25% of subscribers would not be willing to pay for a pure sports streaming service, 46% of subscribers would be willing to pay <$10/month, and 26% would pay >$20/month,” Nispel told Yahoo! Finance.

If ESPN doesn’t take those pricing preferences and behavior into consideration, it’s possible that viewers will find other ways to watch their favorite sports that dodges the streaming service altogether. After all, viewers can still partake in the long-honored tradition of watching their favorite sports at a bar or at a friend’s place. And with newer social media platforms like TikTok making it easier than ever to catch the highlights of a game, an ESPN streaming service will have to be a slam dunk of a platform in order to make it worth the subscription fees.

In Space, No One Could Hear You Stream (Until Now)

ESPN isn’t the only brand planning to ‘launch’ their own streaming service in the near future. To the joy of all their fans, NASA (yes—that NASA) just announced that they are looking into getting their own platform up and running later this year. While it may seem a little out of left field, maybe we should have seen this move coming considering all of the extraterrestrial news making headlines over the last few weeks. 

Back on planet earth (and fine, probably closer to the topic at hand), FIFA is also expanding the reach of their streaming platform. The soccer association just announced an expansion of FIFA+ on five new CTV apps and five FAST channel platforms. Charlotte Burr, FIFA’s Director of Strategy, Digital and FIFA+, says their goal is to connect with fans from every corner of the world, “We are excited to bring FIFA+ to fans through these connected TV apps and FAST channel platforms, extending our reach and making football more accessible to a wider audience.” 

Strike Out! 

Despite all the excitement surrounding these announcements, ESPN’s new streaming platform likely won’t launch until 2025, so why should we care? The truth is that the recent upheaval of the TV industry in the form of the WGA and SAG-AFTRA strikes are about to make any live content—but especially sports—extremely valuable to networks, viewers, and advertisers alike. 

Sports has long been seen as key content to lure in new viewers, and now Fox, Paramount, and NBCUniversal are reporting that they expect to rely on sporting content to help supplement their advertising flows after disappointing Upfronts. Not only does sports circumvent the restrictions of scripted content, they also will likely start to see a larger volume of interest from viewers as they start to “run out” of content to watch as the strikes drag on. Adweek anticipates that the Superbowl next year will have even more importance than ever for the branding campaigns of big advertisers, and even for smaller sporting events they recommend that brands lock in their buys as far in advance as possible.

Sports’ ongoing shift to streaming will also (surprise, surprise) benefit streaming platforms. Last week, Roku revealed that despite adding 1.9 million active accounts to their platform in Q2, their advertising revenue wasn’t exactly up to snuff. This is in part because one of their more popular ad units—the units available as part of the Roku City screensaver—have mainly been reserved by entertainment companies to promote their new TV and movie content. And with the strikes putting new content on hold for the foreseeable future, Roku and other streaming platforms that double as ad publishers will have to find a new source of ad dollars until TV content returns to a status quo pace—maybe in the form of promotions for sporting events.

Other CTV News You Need to Know:

• Netflix Brings CPMs Down to Earth, Loosens Microsoft Exclusive, To Accelerate Ad Growth
• Programmers Are Zeroing In on FAST 
• Here Are Three Ways the Hollywood Strikes Will Impact the TV Business From the Media Buyer’s Perspective