For sports enthusiasts who either no longer subscribe to a typical pay-TV bundle or never did, Fox, Disney’s ESPN, and Warner Bros. Discovery’s new sports streaming initiative is a major-league play.
During his company’s earnings call on Wednesday, Fox CEO Lachlan Murdoch stated, “There is no product serving the sports fans that are not within the cable TV bundle.”
Disney CEO Bob Iger claims that the more affordable option to the “big fat” traditional cable package will be the skinnier sports bundle, which combines popular live sports from all of the media giants, such as ESPN’s Monday Night Football, Fox’s Sunday NFL games, and Warner Bros.’ March Madness college basketball tournament.
The service will be “substantially less expensive to consumers than the big bundle they have to buy to get those same channels on cable and satellite,” he said, without providing an exact price.
A average monthly cable bundle costs more than $100.
The new joint venture’s launch coincides with an acceleration in the number of people quitting traditional pay-TV. Media behemoths are being forced to enter the streaming market by their customers due to the sharp drop in cable TV subscriptions. They can contend for sports enthusiasts who have shifted to well-liked online alternatives like YouTube TV and FuboTV there.
On Wednesday, Murdoch told analysts, “The opportunity is huge.”
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According to analysts, the number of households in the United States that cut or never use cords ranges from 60 million to 70 million.
“As cord-cutting has accelerated, there has been increasing interest among many media company executives…in creating new bundles of streaming services, in part because there is a belief that perhaps consumers don’t want to manage as many separate subscriptions as they presently have and because bigger bundles might lead to less subscriber churn,” Brian Wieser, media analyst with Madison & Wall, said in a research note.
In the third quarter of 2023, S&P Global Market Intelligence’s Kagan media research department polled 2,500 online adults in the United States and discovered that 51% of them were pay-TV subscribers, 35% were cord cutters, and 14% had never used a cord.
Sports enthusiasts are among the most recent cord-cutters, according to Seth Shafer, senior research analyst at the Kagan media research organization.
“We think there are a lot of sports lovers out there who would like to watch sports on TV but aren’t interested in purchasing the expensive cable and satellite package. Iger stated, “We believe they will be accretive to us,” on his company’s quarterly earnings call. We also think that customers who left the package because it wasn’t fulfilling their needs may do so in the future, so we want to make sure we catch them as well.
The joint venture may hasten the move away from the more established and profitable pay-TV business model.
“It seems highly likely that if an offering were appealing to consumers, it would almost certainly accelerate cord-cutting decision-making among many consumers who were only continuing with their traditional pay TV service in order to access the sports programming that will be included on the new service,” Wieser stated.
Disney is still dedicated to pay-TV, according to Iger. “We plan to stay involved in it. We’re making investments in it by operating the channels we own more effectively, but we also need to consider where customers are going and where they are right now, Iger said in an interview with Julia Boorstin of CNBC.
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Similar remarks were made by Murdoch, who denied that the joint venture will have an impact on pay-TV partners and said that sports fans who do not subscribe to pay-TV are the target market. He declared, “We still think we’re the biggest fans of the classic pay TV package.”
Operators of cable television were not informed about the joint venture’s plans. Fox, Disney, and Warner Bros. anticipate revenue comparable to that which they get from distributors of cable and satellite television.
Because it is profitable for us, the linear business continues to be one that benefits us. And we plan on being involved in it. Although we’re making investments to run our channels more effectively, we’re still in that industry. However, we also need to consider the consumer’s current location and future travels, Iger said to Julia Boorstin of CNBC.
The new sports streaming service will be available as a package deal for customers of streaming services including Disney+, Hulu, and Max.
As early as August, Disney intends to release a standalone ESPN streaming app, according to Iger.
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