Walt Disney Co’s (NYSE:DIS) ESPN is among the many cable channels that have been dramatically impacted by the cord-cutting trend. However, the company is taking the necessary steps to insure it remains relevant as the transition to streaming content only intensifies.
Motley Fool takes a look at ESPN’s digital strategy.
Disney acquired the majority stake of Bamtech in 2017 to build out its streaming presence, and ESPN has used the technology to offer ESPN Plus, a $4.99-per month streaming service. Unfortunately for sports fans, live-broadcast content is significantly limited when compared to the traditional cable networks as popular leagues have been apprehensive about wide-scale streaming, fearing it will devalue content.
However, ESPN’s league agreements afford it essentially unlimited usage of sports clips, athlete interviews, and other non-live content that it can monetize. Pitaro’s plans appear to use this to bring exclusive content to its app, finally treating looking at the app experience as separate from cable content.
As subscribers ditch cable for other options, that results in a hit to the bottom line of cable channels. For ESPN, which is on the hook for expensive rights deals with various sports leagues, that’s far from a welcome development. In fact, there could be serious pain ahead if the company is unable to turn the tide.
That’s where its digital strategy comes into play, and early returns have been promising. If the worldwide leader is able to attract enough subscribers – and more importantly, get them to stick around – then the damage can at least be somewhat offset.
Walt Disney Co shares were trading at $106.83 per share on Wednesday morning, up $2.50 (+2.40%). Year-to-date, DIS has declined -0.63%, versus a 5.08% rise in the benchmark S&P 500 index during the same period.