ESPN Says New DTC App Might Make Life Easier For Sports Fans In the Streaming Era

Image courtesy of ESPN

A milestone in the movement of televised sports to streaming was passed as ESPN provided details of its new direct-to-consumer product.

For years, the cable business has resisted making networks available a la carte. But now in the age of streaming companies like Disney and ESPN must find ways to reach the millions of people who have cut the cord or never became pay-TV customers.

This fragmentation of the TV business has made life difficult for the traditional player because doing business the traditional way still brings in so much revenue, especially for ESPN. But a tipping point has been reached.

Called simply ESPN, the DTC product–never again to be referred to by its code name “Flagship” –will give sports fans who are cord-cutters or cord-nevers access to all of ESPN including its multiple networks, studio shows, documentaries and 47.000 live games and events

The price for this unlimited plan, announced Tuesday, is $29.99 a month. It is also available as part of the Disney bundle–along with Disney+ and Hulu–for $29.99 for the first 12 months, $35,99 a month afterwards and $44.99 a month if you choose the ad-free versions of Disney+ and Hulu as part of the bundle.

Subscribers will get access to ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNews and ESPN Deportes, as well as ESPN on ABC. The unlimited package also includes ESPN+, ESPN3, SEC Network+ and ACC Network Extra.

There is also a select plan, priced at $11.99 that provides access to basically what is now available on ESPN+. Current ESPN plus subscribers will automatically become ESPN select subscribers with the option to upgrade to unlimited at any point. ESPN will be working to get folks to upgrade from the select to unlimited plan.

Jimmy Pitaro,ESPN Chairman, said the new product was aimed at the universe of 60 million viewers who do not subscribe to cable, which means they can’t watch ESPN.

Jimmy Pitaro (Photo courtesy ESPN)

Back in 2011, ESPN had about 100 million subscribers. Because of cord-cutting, that’s down to about 64.2 million now. By introducing a streaming version, ESPN hopes to return its subscriber count to glory-day levels.

Pitaro declined to share a forecast for how many subscribers ESPN expected its unlimited plan to attract, but he said the company will be judging its success by its total number of subscribers, steaming and traditional.

“We are platform agnostic. We want to serve the sports fan, anytime, anywhere. We want to be available across platforms, across price points, and at the end of the day, we'll evaluate ourselves based on that totality,” he said.

Linear ESPN subscribers will have access to the app if they authenticate, and will be able to use the apps bells and whistles, including stats, gaming and personalized versions of SportsCenter.

From a financial perspective, setting the price at $29.95 is designed to make the company agnostic fiscally as to whether a viewer was subscribing to ESPN through a cable or satellite operator or buying directly through the app. Historically ESPN has gotten the biggest slice of the money cable subscribers pay operators. It is worth noting that going forward, when a consumer subscribes to ESPN directly, ESPN gets all of the money, not just the wholesale fee it gets from distributors.

Cord cutting has driven up the cost of sports rights as companies like Amazon, Netflix, Alphabet and Apple use sports to attract subscriptions and advertising dollars Just as Warner Bros. Discovery, which lost the NBA to Amazon.

But the rise of streaming has also made sports fans' lives more difficult. For years, the cable bundle was great at delivering all NFL games, all NBA games, all Major League Baseball games, all National Hockey League games, not to mention soccer, racing etc., for the price of a single subscription.

Now ESPN subs can’t get certain NFL games if they don’t subscribe to Amazon, Netflix, Peacock. Next season, some NBA games will be on ESPN, but most of the rest will be on Prime or Peacock.

Sports fans are frustrated by not being able to watch their favorite team play because that game is on some streaming service they have decided not to pay for. Sometimes just finding a game when it could be on any of a number of services is enough to drive one batty.

While ESPN has a ton of sports content, it doesn’t have it all, so there will be NFL, NBA, and NHL games that aren’t on ESPN, even on its expanded unlimited plan. But maybe, just maybe, ESPN can play a role making it easier for sports fans to watch all the games they want to see,

Pitaro acknowledged the issue and said that ESPN is open to making deals with other entities with sport rights so that sports fans and ESPN subscribers can get as much sports via om a single app as possible.

He didn’t name names, but that could include ESPN’s erstwhile partners in the never-launched streaming service Venu, Fox and Warner Bros. Discovery. WBD has some sports on its Max app and Fox plans to launch a Fox One streaming , with NFL and baseball in the fall. Like ESPN, Fox is trying to reach cord-cutters to help recoup the money they’re shelling out for expensive deals with sports leagues.

Pitaro said he envisions making those types of partnerships. He’d prefer for ESPN to be able to ingest games and stream them using ESPN technology. That would give viewers the smoothest experience. But he’s also open to arrangements where ESPN and the ESPN app can connect users to the service that’s streaming the game and the team the customer wants to see.

PItaro said ESPN is also interested in having its app be the source for local broadcasts.

“We don't have anything to announce today, but I will tell you, we are more interested than ever,” he said.

One way that could work would be having an ESPN subscriber pay extra to access a team’s local games.

As with the national rights holders, on the local front “You can upsell and then drive to the third party app, and we are very much open to that, but our preference would be to upsell and have the content sitting on our servers, and so it would be a more seamless, frictionless experience,” Pitaro said.

Team revenues for local broadcast rights have been declining, forcing some teams to cut payroll. “We feel like we could be part of this solution for them as dealing with some headwinds on the [regional sports network] side, and I'm hopeful that we ca get something done there,”

As it gets ready to launch the direct-to-consumer version of ESPN, the company is also looking to work with cable operators, to keep them in the ESPN game.

Deals have already been made to make the streaming version of ESPN available to subscribers of Charter Communications and DirecTV.

Pitaro said that ESPN has been talking to distributors about its DTC plans for a while.

“This is not a new initiative. We've been working on this for several years,” Pitaro said. It’s been on the table as ESPN negotiated traditional carriage deals, preparing for the DTC launch.

“We've been an open book. We've been very transparent with distributors that this product is coming so they understand that,” he said. “This isn't just an ESPN priority, it's a Disney wide priority, meaning the full power of the Walt Disney Co. is going to be behind it.”

In addition to selling subscriptions, ESPN is in the business of selling ads, and the new DTC product will create more opportunities, said Rita Ferro, president of global advertising at Disney.

Ferro noted that ESPN ad revenue was up 29% in Q2. “That's a clear reflection of our continued demand for sports, for the quality, the scale and the innovation that only we deliver, and that demand is translating to streaming.”

Disney will be selling some ads that will run on both ESPN’s traditionally distributed networks and on the new DTC product.

But Disney will be able to use Digital Ad Insertion technology to make commercials on the DTC product more personalized, more targeted and more effective.

“Over time, it's going to give us more flexibility,” she said, and unlock more ways marketers can sponsor programming on ESPN, including interactive and shoppable applications.

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In other ESPN News, Pitaro said ESPN is not in talks about a new contract with Major League Baseball at this time. ESPN opted out when its exclusive negitiating window ended, in part because companies like Apple and Roku were playing for less for MLB games than ESPN was paying for its package of games.

“When the league is ready to have a conversation, we are ready,” Pitaro said. “I don't know for sure, but I'm assuming they are out there testing the market, which is their right to do. But we, we love the game of baseball, and we would like to figure something out with them, ultimately. But there are no conversations happening right now.”

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ESPN also confirmed that Rich Eisen is returning to ESPN and that The Rich Eisen Show will be on Disney PLus and ESPN Plus this fall. Eisen will return his role at NFL Network.