ESPN and its Premium Streaming Endeavors

Onn April 12th, ESPN will launch its new premium sports streaming service, ESPN +, another step in major traditional broadcast companies pushing toward more direct-to-consumer content, and generating revenue from a potentially massively untapped market.

The streaming industry is risky, but already has proven to be a soluble method of selling music and movies to a larger market. Now additional a la carte streaming services marketed as cheaper alternatives to traditional cable providers are becoming even more popular.

The $4.99 a month ESPN streaming service is integrated directly into the already existing ESPN app but is missing one key component, ESPN itself. The main channel is absent from this service, instead providing users with more on-demand content, as well as access to one free game a day from MLB or NHL along with streaming other smaller-scale sports.

ESPN is surely reacting to monster revenue numbers from companies like Netflix which exceeded a modest $11 billion in revenue for Q4 2017 while also adding 24 million memberships in that quarter. A worry many streaming services experience is losing customer loyalty and the serious impact of a drop in subscriptions. Netflix, however, is the prime example of generating the most money without losing significant numbers of subscribers.

Periodically news will release about a hike in Netflix subscription prices. In its early years a Netflix subscription started at a humble $7.99. Subsequently Netflix began charging more for their monthly subscriptions. Subscriber rates did have periods of slower growth, yet the company never experienced a drop in subscriber rates. From Dec 2016 to Dec 2017, average ROI doubled for stock holders. There are now so many different streaming services available from traditional broadcast and internet media companies competing for consumer attention, it’s clear that streaming quality content simply works for consumers in 2018.

ESPN competes with Fox Sports and CBS Sports streaming apps among several others. Without providing the main sports channel, ESPN tries to compensate. For example, the Khan vs Lo Greco boxing bout, PGA events, tennis tournaments and a plethora of college sports are available on ESPN + If the service garners traction it could be a big win for ESPN and its parent company Disney, and make it much easier for sports fans to cut the cord on their existing cable subscription.