Stock market experts watch out for the business moves made by some of the major players in the market as they would influence stock performance and the overall market as well.
The Direct-to-Consumer Approach to Win Back Subscribers
Walt Disney CEO Bob Iger had revealed last year that ESPN would directly sell services to consumers. Sure enough, sources indicate that ESPN is looking to launch a live programming package to enable consumers to directly buy from the source. But, you won’t find mainline sports such as NFL or MLB matches in this package but rather some college sports and niche leagues which you wouldn’t usually find on television or online broadcasts.
This move is born out of a sudden desire to set things in order since ESPN has lost seven million precious subscribers between 2013 and 2015. And ESPN is a significant member of Disney, part of its most profitable segment. This latest move could lead to further direct-to-consumer offerings from Disney and ESPN if it manages to raise huge customer demand, which is what ESPN would be intending.
Being Part of Lighter Channel Packages
Iger had identified the loss of ESPN’s subscribers as the result of not being present in lighter or thinner packages. Disney is therefore in discussions with new platforms such as Sling TV as well as traditional distributors to make its networks available in those smaller packages that would cater to a greater number of audiences. YouTube is intending to launch its live streaming service in 2017 and, sure enough, ESPN is expected to be part of it. Hulu is also around, and is planning to get a live streaming service launched next year too.
But it remains to be seen whether ESPN would reduce its usually high affiliate fees in these deals with platforms, which is essential if it needs to benefit from thinner package deals. These deals cater to the value-conscious consumer who may not be willing to cough up just any amount for his or her sport. It must be noted that in spite of the exodus of subscribers from ESPN, the sports broadcaster has actually been able to grow its subscription revenue. But if it needs new subscribers, which would eventually translate to more revenue, it needs to reduce its affiliate fees.
Direct-to-Consumer Approach Could Bring Similar Results
In effect, the direct-to-consumer approach is similar to the lighter package option since the consumers of both the schemes want to watch high quality programming without having to pay for channels they’d never watch. Though ESPN’s direct-to-consumer approach would not make available the same pay-TV programming, it is a step in the right direction since it will set in place the required infrastructure.
Iger has revealed that many Disney brands including Marvel, Star Wars, Disney and ESPN have been customized for app-based, direct-to-consumer video products. Disney also acquired a 33% stake in the streaming technology provider BAM Tech which provides the technology for the WatchESPN app. Disney could acquire more of the company in the coming years. ESPN also has deals with NBA for digital streaming rights not requiring a cable subscription.
It therefore seems that ESPN is fully focused on the direct-to-consumer approach, and hopefully that should endear it to more and more consumers which would help it grab a larger chunk of the market.
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