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Will ESPN's new streaming service be worth it?

Will ESPN's new streaming service be worth it?
Posted at 6:45 PM, Feb 07, 2018

Disney wants sports fans to fork over $4.99 a month for an ESPN streaming service.

The problem is that it won't give you all of ESPN.

ESPN Plus, which launches this spring, will offer thousands of hours of live sports that aren't available on national TV -- baseball, soccer, hockey, boxing, golf, rugby and cricket.

But if you want to stream the big games featured on traditional ESPN networks, including the NFL and marquee NBA and college football matchups, you'll still need a subscription to cable or another existing service.

For people thinking about cutting the cable cord, ESPN Plus might not be enough.

"If they were including the core ESPN at a higher price, I think there would be a lot of demand," said Rich Greenfield, a media and technology analyst for the financial services firm BTIG. "I honestly think it's a very niche audience."

One reason ESPN Plus might not appeal to cord-cutters: The target audience -- serious sports fans -- are the same people who are already willing to shell out a lot of money for a big cable or satellite package.

And even if they sign up for ESPN Plus, their commitment isn't guaranteed. Fans of a sport featured on the service might only sign up during the season.

"We just don't think they can have their cake and eat it, too," Greenfield said of Disney. "They either have to be all in on streaming, or they're going to fail."

Steven Cahall, a media analyst at RBC Capital Markets, said he thinks Disney knows that ESPN Plus feels like a niche service.

"I don't think that they're necessarily trying to build a base of 50 million subscribers," he said. "I think they're looking to experiment on how they can monetize a lot of those sports through different pricing setups."

He said selling the ESPN TV channels as part of a standalone subscription service might not make sense. The multi-billion-dollar rights to many major sports leagues are split among more than one network. The NBA also airs on TNT. The NFL also airs on Fox and CBS.

As long as that's true, any direct-to-consumer TV sports product will be limited.

"An ESPN subscription doesn't give you all of football or all of basketball," Cahall said. "It only gives you a piece."

ESPN is struggling with declining ad revenue as more people cut the cord. Last year the network laid off hundreds of employees.

While plans for the streaming service have been public for months, Disney CEO Bob Iger finally revealed a few details about it on Tuesday, including the price. Other information, including the service's release date and the exact games that would appear on it, are still unclear.

Disney, which owns ESPN, has been planning to get into streaming for a while, and its decision is significant. It's one of the largest media conglomerates in the world, and it's a bastion of traditional cable programming.

Subscription streaming services are more synonymous with new media heavyweights like Netflix and Amazon Video, which attract cord-cutting younger viewers.

ESPN Plus is something of an initial attempt for Disney. The company plans to launch another Disney-branded streaming service sometime next year.

The company is also buying most of 21st Century Fox for $54 billion, which would give it another movie studio, regional sports networks and some cable channels.

Another perk in that deal: Hulu, another streaming service that competes with Netflix. Disney would get Fox's stake in that platform -- and with it, majority ownership.