As a company, Disney is very generous when it comes to its streaming services ... to a point.
Disney+ features “Star Wars” and Marvel-based shows that many fans consider on par, or even superior to, the films. It also has exclusive films like “Turning Red,” and if you’re just not sure if the latest Marvel or Star Wars film is worth paying $12 or more for, they’re usually in theaters 45 days later.
(So if you still haven’t seen just how crazy “Doctor Strange in the Multiverse of Madness” gets, you can check it out from home soon.)
Hulu is also fully stocked with everything from reality TV guilty pleasures to more high-brow awards fare, and this month it has the new Emma Thompson-starring comedy “Good Luck to You, Leo Grande” and the Bowen Yang-starring “Fire Island,” both of which are earning major buzz. (And both of which can serve as an unofficial retort every time someone complains that Disney has flooded the market with franchises at the expense of everything else.)
But Disney’s (DIS) generosity is not limitless, a point that sports fans know all too well.
Disney’s streaming service ESPN+ is a companion piece to the ESPN sports channel.
For $6.99 a month, sports fans get access to 75 exclusive NHL games, college sports from 20 conferences, the 30 for 30 documentary series, the Masters Tournament, archival material MLB games, and exclusive original shows such as “More Than An Athlete with Michael Strahan.”
So that’s a lot. But it’s not everything, as fans often complain. Many major sporting events are not available on ESPN+, including NBA and NFL games. For those, you still need a cable subscription package.
Fans have been clamoring for an all-in, direct-to-consumer service for years, and in a recent earnings call, Disney CEO Bob Chapek hinted that one may be coming … eventually.
Why Doesn’t ESPN+ Carry Some Games?
Sports fans have long been asking for a version of ESPN+ that carries everything on the cable channel.
The problem is that the subscription fees made by cable packages are very lucrative; in an earnings call from the first quarter of 2022, Disney revealed that its channels ABC and ESPN earned $2.8 billion in the quarter that ended April 2, 2022. Most of this money was from the subscriber fees ESPN charges cable companies.
Disney is likely reluctant to lose those cable subscription fees and just go direct-to-consumer just yet. Disney’s streaming services are doing great, but they’re not so lucrative that the company can just walk away from the cable package fees just yet. As noted by Deadline, is that “the economic returns on streaming are much more uncertain than in pay-TV.”
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So Is a Direct-to-Consumer Version of ESPN+ Going To Happen?
While streaming has been called the future of television for years now, we all haven’t collectively made the switch from cable channels to streaming platforms just yet.
But in a recent earnings call, Chapek acknowledged that at some point, Disney will no longer be able to fight the inevitable. But he also made it clear that won’t happen overnight, either.
“So as you know, on all of our linear networks, they're huge cash generators for us. So to some extent, we're doing a really good job of chopping down some of the debt that we've had to accumulate due to either acquisition or through the COVID challenge,” he said in a recent second quarter earnings call. “And so, the hesitancy to move too fast away from those is really a cash flow situation that I think puts our company in a healthier overall situation.”
So at the moment, those cable fees are just too valuable, especially as Disney continues to recover from covid closing down all its theme parks for a year and seriously disrupting its film schedule.
But Disney has been experimenting with the service lately. On Oct. 30, ESPN+ will air the Denver Broncos and Jacksonville Jaguars matchup, the first time it’s ever had a NFL game. While the company slowly begins to transition into ESPN+ into a more all-inclusive service, look for more moves like this.
“At the same time, we're very conscious of our ability to go more aggressively into the DTC area of ESPN. And so, what we're doing is sort of putting one foot on the dock, if you will, and one foot on the boat right now,” added Chapek. “But we know that at some point when it's going to be good for our shareholders, we'll be able to fully go into an ESPN DTC offering the way that you described,” he says. “
And we fully believe that there is a business model there for us that's going to enable us to regain growth on ESPN+ in a full DTC expression. But at that point, obviously, that will have ramifications on immediate cash flow that we get from our legacy linear networks.”
So the phrase “at some point” is doing a lot of work here. So now the question is “will ESPN+ ever go all in” has been answered by Disney’s CEO with a yes. But the question “when will that happen?” is still very much up in the air.
