Walt Disney Co. is taking large strides to appease its cord-cutting sports fans. By the end of the year it will release an ESPN streaming service, omitting some channels but including a large range of games and programs.
On Tuesday, Disney announced an investment in BAMTech for $1 billion—a third of the company—and a chance to eventually take ownership of the entire corporation. BAMTech is a big streaming business that gives service to HBO, NLB, NHL, and a handful of other networks. Alongside the tech giant becoming a possible asset for Disney in the future, the two companies are teaming up on an ESPN streaming offering, where ESPN original content will be played online directly to its consumers.
Disney CEO Bob Iger said he wants his company to fall out of a marketplace that encompasses only single channel television programs and into one that expands its horizons into streaming territory.
“This is a whole new world where distributors are going into the content space and content owners are going into the distribution space,” Iger said in an interview with Bloomberg TV. “The service will feature content provided by both BAMTech and ESPN, and include live regional, national and international sporting events.”
With the rise of streaming services like Netflix, Hulu, and Amazon Prime, it’s no question that there has been a recent drop in subscriptions to satellite services and cable channels. Consumers feel no need to pay extra money for what could be available to them on any device, not just on their big screen at home. Disney, whose most lucrative contributors are ESPN, ABC Family and Disney Channel, is intimidated by the snowballing cord-cutter population. Investing in streaming services will hopefully help remedy that, Iger says.
“This provides us opportunity to jumpstart other branded business in the direct-to-consumer space,” he said. “We are looking at a marketplace that is so dynamic.”
Last week, Disney fell to 1.9% in trading. But immediately after plans to team up with BAMTech was announced, the shares shot back up to 2.7%, which was the biggest rebound in stocks the company has had in almost half a year.
Tim Nollen, Macguire Capital analyst, proposed that Disney will greatly benefit from partnering with BAMTech in terms of profit and popularity.
“Disney owning this technology gives it the ideal mechanism to offset cord-cutting at ESPN, and across its networks,” Nollen said in his interview with Bloomberg TV.
BAMTech will not only give Walt Disney Co. the opportunity to stream ESPN but also to stream its original content, such as Marvel content and Pixar films. The ESPN programs to be aired through Disney’s new streaming platform include MLB and the NHL, which BAMTech already has licenses for. College football, basketball, tennis, and cricket are also likely to be streamed. Iger suggested that big games ESPN and ABC air live will not be included in the new streaming package, as well as those games available on the WatchESPN service available only to cable subscribers.
National sports games is the only televised entertainment left to leave millions of viewers tuned in live. Iger said it is pertinent to the future of Disney to hop on this bandwagon as early as possible.
“Live sports has really thrived, even in a world where there is so much more for people to do and to watch,” Iger said. He added that the acquisition of streaming bundles could help reclaim subscribers and draw attention back to the conventional sports services. “The inclusion of Disney product, particularly ESPN, on these over-the-top services is quite meaningful,” he said.