ESPN's new standalone streaming service will be separate from WatchESPN and will not require a cable subscription.
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The transition to digital streaming services has exploded over the last few years. Previously, fans would have to tune in each week for their favorite shows or live TV events, but it seems as though entertainment sources are realizing the value of 24/7 streaming capabilities. Now, new trends have emerged where producers simply upload entire seasons of a show all at once or offer a one-time payment to watch a specific sporting event.
As this trend has taken off, other global cable and satellite television companies have noticed a decline in their services. ESPN has experienced firsthand this increase in households forgoing cable packages as they are rapidly losing customers. From 2013–15, ESPN lost around 7 million subscribers, equating to about $1.3 billion in revenue. Sadly, ESPN predicted steady cable company growth overtime like usual, but now they seem to have learned their lesson and are making a move towards streaming.
“There have been some losses due to cord-cutting,” ESPN president John Skipper told Variety. “ESPN has been hit doubly hard by this trend because some consumers have been trading down to smaller packages that don’t include ESPN.”
This is why ESPN is preparing to reveal its own streaming TV package that won’t require a cable subscription. Of course, entering this market will make ESPN a little fish in a giant pond, so they do not intend to include their prime content like basketball or football. Instead, it will aim to include “niche leagues” and “possibly some types of college sports.”
“Rights are not an issue,” Disney CEO Bob Iger told The Orange County Register. “It can be done, but there are issues we face doing it. Pricing is one of them.” Clearly, ESPN majority shareholders want to ensure a profit will be realized with making this huge switch to streaming.
ESPN’s goal with the new service is to convince fans who currently do not have to a cable package to purchase a sports streaming standalone service. This idea reflects those of other streaming services that offer programming you can get on TV, such as HBO Now and Hulu. With this business model, ESPN may effectively make people switch directly from their cable bundle to streaming.
In order to successfully make this jump, ESPN must accept that cable TV is declining. They may already offer quality services like WatchESPN, but using that service requires cable subscription credentials, and that is exactly what consumers are trying to avoid. Cord-cutting has become an unavoidable truth in this industry, so ESPN making this small move poses incremental growth for the future of streaming sports.