The Walt Disney Co (NYSE:DIS) targeted sports betting to revitalize ESPN, which had been gradually losing ground to the streaming service companies, Financial Times reports.
The cable sports network's subscribers steadily shrank from 100 million in 2011 to 77 million by the end of 2021, down 23%. S&P Global sees the figure falling to 72.5 million in 2022.
CEO Bob Chapek said that "the push into betting was "driven by the consumer, particularly the younger consumer that will replenish the sports fans over time and their desire to have gambling as part of their sports experience." He added that the future of sports programming would extend to "sports betting, gaming, and the metaverse."
Goldman Sachs sees the U.S. sports betting market reaching $39 billion by 2033, from $900 million today. A BofA analyst said one of the appeals of sports betting for Disney was that it gives fans a reason to stay tuned into games when many choose to skip the whole match and watch highlights on social media instead.
Reports arose last year that ESPN was seeking billions to license its name to a sportsbook like Caesars, DraftKings Inc (NASDAQ:DKNG), or MGM Resorts International (NYSE:MGM).
LightShed Partners analyst sees the option of merging ESPN with a sportsbook and creating a separate business. A licensing deal would allow ESPN to play a more significant role in the market without handling the mechanics of taking bets.
Rising programming expenses and entry of Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) as competitors for sporting rights has brought ESPN to an "inflection point," as per S&P Global analyst. Sports betting could open new areas for growth, the analyst added.
Price Action: DIS shares traded higher by 1.12% at $134.99 in the market on the last check Tuesday.
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