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The Rise and Fall of ESPN (1 Viewer)

Politician Spock said:
If ESPN has live games, people will watch them.

But they could end it being to sports channels what Blackberry is to smartphones. 
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Somebody else brought up a similar comparison to Blockbuster on the last page but neither of you have expanded on the argument.

Blockbuster and Blackberry were both superseded by a superior technology and were slow to react to the market shift.  I don't see that happening to ESPN.  With their stake in BAMtech, Disney owns a state of the art streaming platform that's comparable to Netfiix or Amazon.  ESPN is financially dependent on carriage fees from cable providers but aren't tied to cable as a delivery technology.  They can leverage Disney's streaming platform more efficiently than their competitors will be able to build one from the ground up.

The other potential threat is if the leagues or teams bypass them altogether.  Subscriber data is hard to come by but a Nov 2017 study ranked MLB-TV as the #4 OTT streaming service.  That's pretty impressive but I think there's a ceiling on customers who will pay separately to watch a single sport.  The leagues can't disintermediate the networks while the current contracts are in place.  It'll be a different landscape when those come up for bid but it's tough to envision the leagues going it alone anytime soon.

 
Eephus said:
Somebody else brought up a similar comparison to Blockbuster on the last page but neither of you have expanded on the argument.

Blockbuster and Blackberry were both superseded by a superior technology and were slow to react to the market shift.  I don't see that happening to ESPN.  With their stake in BAMtech, Disney owns a state of the art streaming platform that's comparable to Netfiix or Amazon.  ESPN is financially dependent on carriage fees from cable providers but aren't tied to cable as a delivery technology.  They can leverage Disney's streaming platform more efficiently than their competitors will be able to build one from the ground up.

The other potential threat is if the leagues or teams bypass them altogether.  Subscriber data is hard to come by but a Nov 2017 study ranked MLB-TV as the #4 OTT streaming service.  That's pretty impressive but I think there's a ceiling on customers who will pay separately to watch a single sport.  The leagues can't disintermediate the networks while the current contracts are in place.  It'll be a different landscape when those come up for bid but it's tough to envision the leagues going it alone anytime soon.
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ESPN's problem isn't technology (and neither was Blackberry's). It's definitely the market shift that is ESPN's (and Blackberry's) problem.

ESPN is, and always has been, all things to all sports fans. When they were the only cable sports option, people tuned in because ESPN was their best, and only option, and ESPN formatted itself to give everyone a little something of what they want. But now a sports fan can get 30 minutes to an hour of content specific to their favorite team, not just via streaming, but also from very localized content like Fox regional channels. They don't have to watch or listen to content about other teams they don't care about. A person can filter that out with streaming content, but when those viewers chose streaming content, they choose the personalities they're used to watching on the channels they watch, and that's not ESPN anymore (except for games they have that no one else has). So the fact that ESPN is all in on streaming doesn't solve their problem. What they need to do is get localized even more than their competitors are, so that if I'm a KC Chiefs fan but couldn't care less about anything else, ESPN is where I want to go to get KC Chiefs content, and not the local Fox channel for KC.  

 
Politician Spock said:
ESPN's problem isn't technology (and neither was Blackberry's). It's definitely the market shift that is ESPN's (and Blackberry's) problem.

ESPN is, and always has been, all things to all sports fans. When they were the only cable sports option, people tuned in because ESPN was their best, and only option, and ESPN formatted itself to give everyone a little something of what they want. But now a sports fan can get 30 minutes to an hour of content specific to their favorite team, not just via streaming, but also from very localized content like Fox regional channels. They don't have to watch or listen to content about other teams they don't care about. A person can filter that out with streaming content, but when those viewers chose streaming content, they choose the personalities they're used to watching on the channels they watch, and that's not ESPN anymore (except for games they have that no one else has). So the fact that ESPN is all in on streaming doesn't solve their problem. What they need to do is get localized even more than their competitors are, so that if I'm a KC Chiefs fan but couldn't care less about anything else, ESPN is where I want to go to get KC Chiefs content, and not the local Fox channel for KC.  
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The narrowcasting of sports content isn't a new concept.  ESPN.com tried that with localized microsites but wasn't able to make it worthwhile.  A handful of the huge European soccer clubs have their own networks.  There also used to be a dedicated SF Giants channel that I could only watch when I was flying Virgin America.

For a OTT streaming service to be attractive, there has to be content.  It's not cheap to produce original content, especially for something as fast moving as sports.  I don't think individual teams will want to take that on themselves.  American sports leagues have historically been more collectivized than in the rest of the world.  If big 4 teams make a clean break from national broadcast contracts, that would be a bigger game changer than ESPN (or FS1 or NBCSN) biting the dust.

Let's take an extreme example.  Say the NFL launches their own streaming service and makes it the exclusive home of all games excluding the Super Bowl. 

  1. Would the league be able to match the ~$9B in revenue they currently get from the networks with direct revenues from streaming subscribers plus advertising sales?
  2. Would it be a good long-term strategy for growing the sport?
  3. Would you buy the package?
It's three no's from me but YMMV.

 
Eephus said:
The narrowcasting of sports content isn't a new concept.  ESPN.com tried that with localized microsites but wasn't able to make it worthwhile.  A handful of the huge European soccer clubs have their own networks.  There also used to be a dedicated SF Giants channel that I could only watch when I was flying Virgin America.

For a OTT streaming service to be attractive, there has to be content.  It's not cheap to produce original content, especially for something as fast moving as sports.  I don't think individual teams will want to take that on themselves.  American sports leagues have historically been more collectivized than in the rest of the world.  If big 4 teams make a clean break from national broadcast contracts, that would be a bigger game changer than ESPN (or FS1 or NBCSN) biting the dust.

Let's take an extreme example.  Say the NFL launches their own streaming service and makes it the exclusive home of all games excluding the Super Bowl. 

  1. Would the league be able to match the ~$9B in revenue they currently get from the networks with direct revenues from streaming subscribers plus advertising sales?
  2. Would it be a good long-term strategy for growing the sport?
  3. Would you buy the package?
It's three no's from me but YMMV.
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Your entire post is prefaced by ESPN failing to execute localization. Their competitors are succeeding at it. That's ESPN's problem. 

 
Politician Spock said:
Your entire post is prefaced by ESPN failing to execute localization. Their competitors are succeeding at it. That's ESPN's problem. 
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Disney are selling Fox's 22 RSNs as part of their recent acquisition of Fox entertainment.  If they believed narrowcasting was the future of sports media, they would have held them and spun off ESPN.

RSNs are more dependent on cable carriers than ESPN is.  Carriage disputes with local cable monopolies have made Dodgers and Astros games invisible in recent years.  They don't have the negotiating leverage that a Disney has. 

 
Eephus said:
Disney are selling Fox's 22 RSNs as part of their recent acquisition of Fox entertainment.  If they believed narrowcasting was the future of sports media, they would have held them and spun off ESPN.

RSNs are more dependent on cable carriers than ESPN is.  Carriage disputes with local cable monopolies have made Dodgers and Astros games invisible in recent years.  They don't have the negotiating leverage that a Disney has. 
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Disney had to sell them to get Justice Department approval. 

 
Moe. said:
Which competitors are succeeding at localization? Fox is losing all of the RSNs, no?
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Disney bought Fox, but the Justice Department blocked it until Disney agreed to sell off the RSNs. 

Disney didn't buy Fox for the sports. It bought them for all the entertainment assets Fox owned. It wouldn't shock me if after the RSNs are sold, Disney sells off ESPN too. 

 
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Your initial point was that ESPN is failing at localization where others are succeeding. You even mentioned local Fox channels in one of your posts. Yet Fox is not going to keep those RSNs, and it's doesn't seem like anyone is beating down the doors to buy them. Disney will probably end up selling them off piecemeal. John Ourand said this on a podcast a few weeks ago:

“It’s really an amazing turnaround. Nobody seems to want these RSNs, Abe. This business has been one of the biggest profit drivers for Comcast and 21st Century Fox for years, but it’s plainly obvious that the same problems that are affecting ESPN, shrinking subscriber base, higher rights fees, they’re hitting RSNs as well. …It’s just surprising to me that they’re not as popular as they’ve seemed to be the last couple of years”

 
Eephus said:
DoJ said they couldn't keep both.  Disney could have kept the RSNs and sold off ESPN.
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I don't think they really want to own either of them. They've owned ESPN because it was a such a cash cow. And who doesn't like easy money? But now that things have changed so much, they continue owning simply because they're used to owning them. The money isn't as easy as it used to be, but at least they're experienced owning them. 

Owning FOX RSNs on the other hand would have been a learning curve for them. So if they have to do something to get all of Fox's entertainment assets, the easiest path is to sell off what they have no experience owning.

Given the right offer, I think they'd also sell ESPN without hesitation though. It doesn't really have much in entertainment assets. It's really just a distributor for other entities, and that's not Disney's model at all. 

 
Moe. said:
Your initial point was that ESPN is failing at localization where others are succeeding. You even mentioned local Fox channels in one of your posts. Yet Fox is not going to keep those RSNs, and it's doesn't seem like anyone is beating down the doors to buy them. Disney will probably end up selling them off piecemeal. John Ourand said this on a podcast a few weeks ago:

“It’s really an amazing turnaround. Nobody seems to want these RSNs, Abe. This business has been one of the biggest profit drivers for Comcast and 21st Century Fox for years, but it’s plainly obvious that the same problems that are affecting ESPN, shrinking subscriber base, higher rights fees, they’re hitting RSNs as well. …It’s just surprising to me that they’re not as popular as they’ve seemed to be the last couple of years”
Click to expand...
The RSNs are succeeding compared to ESPN. But sports distribution is a HUGE risk now given how much easier it's become to distribute sports. RSNs are beating ESPN at the game, but the game itself is a HUGE risk now. 

 
rodg12 said:
I wonder how much (if any) of each MLB.tv subscription Disney gets.  They own 75% of BAMTech now, which is what MLB.tv goes through.  I'm not sure they ever released the absolute particulars of that sale.  BAMTech hosts a bunch of stuff besides just MLB.tv.
Click to expand...
Mlb.tv is peanuts compared to rsn

 
Eephus said:
Somebody else brought up a similar comparison to Blockbuster on the last page but neither of you have expanded on the argument.

Blockbuster and Blackberry were both superseded by a superior technology and were slow to react to the market shift.  I don't see that happening to ESPN.  With their stake in BAMtech, Disney owns a state of the art streaming platform that's comparable to Netfiix or Amazon.  ESPN is financially dependent on carriage fees from cable providers but aren't tied to cable as a delivery technology.  They can leverage Disney's streaming platform more efficiently than their competitors will be able to build one from the ground up.

The other potential threat is if the leagues or teams bypass them altogether.  Subscriber data is hard to come by but a Nov 2017 study ranked MLB-TV as the #4 OTT streaming service.  That's pretty impressive but I think there's a ceiling on customers who will pay separately to watch a single sport.  The leagues can't disintermediate the networks while the current contracts are in place.  It'll be a different landscape when those come up for bid but it's tough to envision the leagues going it alone anytime soon.
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This article from last year claimed that mlb.tv had 3.5 million subscribers at the time: http://iveybusinessreview.ca/cms/5744/mlb-top-home-run/

upgrade their 3.5 million current MLB.TV viewers
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No idea if that is accurate, but the article has a lot of numbers so ...

That seems plausible based on that top 10.  Maybe closer to 5 million now.  Hard for me to believe that those other services below it have more than 5 million, although I am also kind of surprised that Sling is that low.  I wonder where they are now.

 
I think Hulu faces a more uncertain future than ESPN does.  It always seemed like a short-term play for the three networks to get a piece of the streaming pie and a way to distribute content outside of cable.  Comcast's acquisition of NBC shortly after Hulu's launch complicated matters but it did offer the parent a foothold in the streaming market.

Hulu was always complex when it had three equal partners but the battle over Fox's carcass pitted the two remaining companies against each other.  Now that Disney has won and is the principal owner of Hulu, it seems like only a matter of time before Comcast takes their business elsewhere.  They recently announced they were picking up Amazon Prime Video content on their cable services.  Perhaps this could become a two way street for NBC's entertainment content.  Or maybe Bezos decides that Amazon isn't a TV network.  I have no idea how to connect the dots.

Hulu has a solid brand and has carved out a niche for itself.  Losing 1/3rd of its TV-based programming would hurt if Comcast opts out but I think Hulu can survive that.  It would make sense for Disney to keep its own OTT product separate from Hulu but the two will essentially be competing with each other.  It's definitely not a zero sum game but I think it'll be harder to position Hulu and Disney streaming services than a clearly defined product like ESPN+.

 
Thanks @Long Ball Larry for tracking down some subscriber data.  I don't know how much to believe it or how important current numbers will be going forward.

A well established brand certainly helps in a extremely crowded landscape but I don't know how much customer loyalty there is in an entirely new market with low cost of change.  Netflix has thrived through two disruption cycles so far and survived the Quickster debacle.  They've done a great job in staying ahead of the market but haven't faced anything like Disney before.

 
I mean look at what MLB.tv is.  Compare it to Netflix.  

In a hypothetical world where you converted every netflix sub to a MLB sub the total annual revenue would be in the 5Billion range.  Now this isn't realistic considering a lot of netflix subs are overseas, but you can see how the money could potentially be there if MLB told the RSN to pound sand.

The problem comes in when you have Dodgers/Yankees raking in bigly on their TV deal where the Rays probably take in as much as a Rachel Ray syndication.  

This is why RSN are going nowhere and MLB.tv is happy where it is.  

 
Today was Jemele Hill's last day at ESPN.  Here is her statement: https://twitter.com/jemelehill/status/1040611137753112579

She refers to leaving ESPN as "the most difficult decision of my career."

I've never seen Jemele Hill's show nor ever heard her speak, because I almost never watch ESPN. I've followed her for years on Twitter though, and usually find her takes worthwhile, even while disagreeing with her much/most of the time.

 
CletiusMaximus said:
Today was Jemele Hill's last day at ESPN.  Here is her statement: https://twitter.com/jemelehill/status/1040611137753112579

She refers to leaving ESPN as "the most difficult decision of my career."

I've never seen Jemele Hill's show nor ever heard her speak, because I almost never watch ESPN. I've followed her for years on Twitter though, and usually find her takes worthwhile, even while disagreeing with her much/most of the time.
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I've never had a problem with her tweets or the points that she wants to speak out on or represent. But as most of her stuff is political in nature, she's targeting the wrong viewerbase, which is understandably grating to affected userbase who doesn't want any of that stuff.

 
I disliked the combination of her and Smith.  Smith I had always liked as a guest commentator, but he didn't really have the personality, voice or delivery to make me want to listen to him for the length of a show.  I didn't think she added very much either.  Never really noticed the political stuff.  If it wasn't for all the reactions places like here I wouldn't know about most of it.

 
ShamrockPride said:
I've never had a problem with her tweets or the points that she wants to speak out on or represent. But as most of her stuff is political in nature, she's targeting the wrong viewerbase, which is understandably grating to affected userbase who doesn't want any of that stuff.
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This says it perfectly for me.  Thanks.

 
Man I thought there would be all kinds of talk in here about how Jason Witten brought politics into the MNF game when he said roughing the passing calls have “gone to the left wing” but there’s....nothing in here. :tumbleweed:   

Nothing at all about how politics are ruining MNF. Weird, that. Can’t imagine why that’s the case. Maybe everybody is just super passionate about mid-day espn programming and not the actual games. ?

http://awfulannouncing.com/espn/jason-witten-says-nfl-roughing-the-passer-calls-going-a-little-bit-to-the-left-wing.html

 
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Capella said:
Man I thought there would be all kinds of talk in here about how Jason Witten brought politics into the MNF game when he said roughing the passing calls have “gone to the left wing” but there’s....nothing in here. :tumbleweed:   

Nothing at all about how politics are ruining MNF. Weird, that. Can’t imagine why that’s the case. Maybe everybody is just super passionate about mid-day espn programming and not the actual games. ?

http://awfulannouncing.com/espn/jason-witten-says-nfl-roughing-the-passer-calls-going-a-little-bit-to-the-left-wing.html
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I think it's more people not particularly caring about what one reporter said in one game vs. the obvious politically oriented reporting that an entire network has been trying for years to persuade its customers it's what they really want.

And which Disney's CEO recently admitted was a mistake.

 
NotSmart said:
I think it's more people not particularly caring about what one reporter said in one game vs. the obvious politically oriented reporting that an entire network has been trying for years to persuade its customers it's what they really want.

And which Disney's CEO recently admitted was a mistake.
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I’m talking more about the breathless rush to get the takes in here every time Jemele Hill said something yet this time, nary a word. 

 
Capella said:
I’m talking more about the breathless rush to get the takes in here every time Jemele Hill said something yet this time, nary a word. 
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That's not really a fair comparison.  People are paying more attention to the actual game than what Witten is saying.  People are solely focused on Hill when she is in front of a camera.  

 
When a person who has suffered multiple concussions complains about things that protect people from suffering multiple concussions.......my general instinct is to back away slowly.

 
I'm just one person, but I can tell you exactly why I didn't come running in here to complain about what Witten said...

...it's because I WASN'T WATCHING ESPN.

 
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