Few names in the global media industry, if any, are more synonymous with entertainment than The Walt Disney Company. Whether it be for its multiverse of films and programming, beloved animations or the mammoth theme parks that have been developed on the back of its much-loved cast of brands and characters, Disney’s is a name that reverberates around the world.
At the same time, though, a deeply ingrained way of doing things can breed a resistance to change. But sometimes it is the ever-evolving landscape – rather than the company itself - which dictates the direction that even a media powerhouse such as Disney must take.
For all those fields in which Disney has long led the way, the volatile art of taking its vast array of content over the top was one the company had side-stepped, or at least seemed happy to leave for others to experiment with whilst watching with interest from afar. That was, however, up until August 2016, when Disney showed its hand and revealed where its priorities now lie. It was then that the company made a big bet on BAMTech, splashing out US$1 billion on a 33 per cent stake in the live streaming specialist spun off from Major League Baseball Advanced Media (MLBAM). One year later, Disney agreed to pay a further US$1.58 billion for another 42 per cent of the company, upping its total stake to 75 per cent.
As a result, Disney Streaming Services was born, a subsidiary of Disney’s newly created direct-to-consumer and international division. The move, described at the time by Disney chairman and chief executive Bob Iger as an “extremely important strategic shift”, would also see the company end its content licensing arrangement with Netflix in favour of launching its own direct-to-consumer streaming service in 2019, featuring its flagship Disney, Pixar, Star Wars and Marvel titles.
ESPN+ launched in April this year to usher in a new era of content distribution for the self-acclaimed ‘worldwide leader in sports’
More pertinently, though, Disney’s acquisition of BAMTech provided it with the tools to reinvigorate its cash cow, sports broadcasting giant ESPN, which was looking to arrest well-documented drops in revenue and a long-term decline in subscriber numbers fuelled by trends like cord-cutting and the reluctance of younger viewers to splurge on cable packages.
The plan, according to Iger, was to launch an ESPN OTT service in early 2018, equipped with around 10,000 additional live sporting events each year that aren’t offered on the network’s traditional TV channels. As it turned out, ESPN+ launched on 12th April this year, not only ushering in a new era of content distribution for the self-acclaimed ‘worldwide leader in sports’, but also marking the first step in Disney’s ambitious plans to conquer an increasingly crowded streaming space.
“ESPN+ is a major milestone as the first direct-to-consumer service from The Walt Disney Company’s new direct-to-consumer and international segment,” begins Andy Schneider, general manager of ESPN+, Disney Streaming Services. “It represents a new area of innovation for the entire company, so it’s more than just the launch in and of itself – it’s the first endeavour to hit the public market, so that makes it very exciting, especially for us.
“There’s quite a bit of opportunity here. We know that there are a lot of passionate sports out there that have been historically underserved, and ESPN+ offers a new way for ESPN and The Walt Disney Company to connect directly with fans, give them more sports, and provide them with an entirely new kind of digital experience.”
There’s quite a bit of opportunity here. We know that there are a lot of passionate sports out there that have been historically underserved
Andy Schneider, general manager of ESPN+
Indeed, while ESPN+ is offering live events from high-end properties like Major League Baseball (MLB) and the National Hockey League (NHL), both of which have been key drivers of subscriptions for ESPN over the years, the service is also equipped with a broad array of rights including rugby union, cricket, tennis and college sports.
OTT services, by their very nature, aren’t restricted by issues such as schedule clashes and a fixed amount of time to fill, meaning ESPN can afford to pack its streaming platform with those niche sports and events that aren’t regularly available on its linear networks. For Disney, the hope is that this strategy can draw more hardcore fans to ESPN+, consequently plugging the gaps in ESPN’s traditional subscriber base.
“ESPN’s core mission is to ensure that we’re serving sports fans everywhere and anywhere,” explains John Lasker, vice president of digital programming at ESPN. “Because of the restrictive nature of a 24/7 linear television network, we see that there’s an opportunity to achieve or support that mission by serving sports fans at a broader scale, breaking the walls of 24/7 linear television, and being able to serve fans of all shapes and sizes via ESPN+.”
The strategy, then, isn’t solely to reach out to the next generation of consumer, as is often believed to be the case when a new dedicated sports streaming service is launched. Rather, it is to meet the needs of fans of all ages across a wider variety of sports in order to build and diversify ESPN’s audience.
“It’s a combination of all those things,” confirms Schneider, “and really when we thought about the audience for ESPN+, we segmented into three categories. The first being the core ESPN fan who wants more sports, and bringing our big league rights from MLB and the NHL to the service also helps to satisfy those fans.
“But the other two segments were the niche sports fan and the underserved team fan. So when you get into niche sports, we have put together a very compelling offering with combat sports, but also cricket and rugby, and then college sports. The very broad offering we have there really does appeal to those underserved team fans.”
In May ESPN wrapped up a reported five-year, US$1.5 billion deal for rights in the US to the Ultimate Fighting Championship (UFC)
That’s not to say, however, that Disney isn’t putting premium content at the heart of the ESPN+ offering – in fact, it appears to be quite the opposite.
In May, ESPN made one of its biggest moves since launching the streaming service, wrapping up a reported five-year, US$1.5 billion deal for rights in the US to the Ultimate Fighting Championship (UFC). Starting in January next year, the agreement will see the company replace Fox Sports as the exclusive home of 30 events each year, with fight nights set to be split between ESPN’s linear channels and its new digital offering.
The most significant thing for Lasker, though, is that 15 of those bouts will be exclusive to ESPN+, meaning fanatical fight fans will have to be signed up to the service if they want to get their fix of the world’s most popular mixed martial arts (MMA) promotion.
“Exclusivity is absolutely key,” he says. “There are really two things going on. We’re trying to add more to the pie, meaning not necessarily taking anything and moving things from traditional services to ESPN+, but the opportunity is really to do more, and in doing more it’s important to make sure that fans understand what the proposition is and what the value is that they’re getting. So exclusivity from an event perspective, as well as exclusivity from a league and in some cases category perspective, is going to be important for us.
“With the UFC we have a long-term rights agreement that kicks in in January, and it’s worth mentioning that we’ve had a massive amount of success here relative to our subscriber rates and our engagement, and we haven’t hit the ground running yet on the UFC side.
“It’s not just how you agree pieces of content that are exclusive - it’s being able to deliver on a promise throughout the season of any individual property, and the UFC agreement is representative of that. If you’re a UFC fan in the US, come January you most likely have to have an ESPN+ subscription to be equally served as a fan, and that’s certainly part of our goal.”
It’s not just how you agree pieces of content that are exclusive - it’s being able to deliver on a promise throughout the season of any individual property
Serie A, Italian club soccer’s top flight, makes up part of the ESPN+ soccer offer alongside Major League Soccer’s (MLS)
And it isn’t just UFC fans who will have to treat themselves to an ESPN+ subscription if they want to follow their favourite sport. The UFC deal was soon followed by an agreement with Nevada-based boxing promotion company Top Rank, giving ESPN+ exclusive rights to 12 live events annually, with a further 24 ‘premium international events’ to also appear exclusively on the streaming platform.
Around about the same time, ESPN secured an exclusive multi-year deal with Serie A, Italian club soccer’s top flight, to bring more than 340 matches each season to ESPN+. That tie-up was then supplemented by agreements to show Dutch soccer’s Eredivisie, the Chinese Super League (CSL), Australia’s Hyundai A-League and England’s prestigious FA Cup knockout competition.
Add all that to a deal for Major League Soccer’s (MLS) MLS Live out-of-market streaming package, coverage of the United Soccer League (USL), and an exclusive local media rights agreement with the Chicago Fire, and it quickly becomes clear that ESPN+ is also being primed as an essential service for American fans who want year-round soccer coverage.
“All of the different rights around certain categories of content, whether it’s Top Rank and UFC, or the multitude of soccer rights that we’ve brought to the table, we really look at what that definitive offering is,” says Schneider. “With those two categories in particular, we feel like if you are a global soccer fan or a combat sports fan, then we are a must-have offering for you.”
Beyond all the live events, ESPN+ is also blessed with an array of original programming, documentaries and series. The challenge for dedicated OTT broadcasters launching from scratch is to find support programming to complement their live offering, but there is no such problem for ESPN+. With an extensive content pool that includes every episode of the popular ’30 for 30’ documentary franchise, it already boasts a rich archive of content which will draw consumers to the service.
“I would certainly highlight that as what we’re tapping into,” says Lasker. “We’ve got some of the best in the business with our ESPN Films crew, the developers and creators of 30 for 30, so it’s clearly something that we’ve tapped into as a value proposition and as a differentiating factor to any other competitor in the market.
“Just in the past five months we’ve launched 20 original shows and series which we think we have an opportunity outside of the live event content that we’re creating that complements that fan interest with great original storytelling and news and information - a product that again we have not been able to do through our traditional services.”
in the past five months we’ve launched 20 original shows and series which we think we have an opportunity outside of the live event content that we’re creating
John Lasker, ESPN vice president of digital programming
With such a vast array of content on offer – from both a live and on-demand perspective – one would be forgiven for thinking that an ESPN+ subscription fee would force consumers to empty their pockets. However, at the time of launch, fans would have been pleasantly surprised to learn that the service was available for US$4.99 per month or US$49.99 for an annual subscription.
“What we’re trying to do is essentially take price out of the equation,” says Lasker (pictured left). “Any individual piece of value that we’re trying to attract fans with - whether it’s a collection of games or an entire league like MLS, or an individual film - it’s likely that the fan or user would pay US$4.99 for that individual piece of content. So our goal is to attract them with the things that they’re initially interested in, and then try to retain them by showcasing all the other pieces of value and great content that they would get via their US$4.99 a month subscription.”
And if the immediate goal was to arrest the slide and bring subscribers back to ESPN, then early indications suggest that ESPN+ is already serving its purpose. It was announced in September that the platform has already racked up one million paid subscribers just five months after launching – a landmark which Kevin Mayer, chairman of direct-to-consumer and international at Disney, described as ‘an important milestone for any video subscription service’.
“That is a major milestone in the general direct-to-consumer industry and certainly amongst any other sports offerings out there,” adds Schneider. “It is a very significant achievement and I think it’s testament to the compelling content and programming and the incredible user experience that we’re providing fans, and those are things that have helped us achieve that and also stand out from the rest of the competition.”
Standing out from the competition is something which might seem easy to do for a brand like ESPN, which already shares a unique affinity with consumers that new digital players are still trying to build.
But in what is an increasingly saturated market, there is a lot to be said for a service that is capable of delivering a dependable, high-quality stream to a large live audience. Global OTT broadcaster DAZN, for example, which has now launched in the US, was forced to apologise in August to Italian viewers after its opening weekend of Serie A coverage was affected by buffering issues, while Eleven Sports and Amazon were both subjected to criticism during their recent streaming debuts in the UK.
Powered by BAMTech’s proprietary streaming technology, ESPN+ is yet to make headlines for the wrong reasons. As well as supporting the likes of WWE and the NHL on a global basis, BAMTech is also powering the Eurosport Player digital live and on-demand video service across 69 different territories. It is that scalability and capability that Disney had in mind when it made its big investment. Now, ESPN+ appears to be reaping the rewards.
“Streaming video over the internet is still very challenging because at its core the internet wasn’t really designed for video,” says Schneider (pictured right). “Our group here at Disney Streaming Services has really focused on that challenge for quite a long time – even back when we were known as BAMTech – and we have an ability to scale better than anyone else out there, and have been responsible for some of the largest scale live streaming events of all time.
“So we brought a lot of great technology and expertise to offer the best possible video quality and scalability to consumers, and I think that’s one of the reasons why you’ve seen a strong reception from both media and consumers during our launch.”