There’s been plenty of discussion about how ESPN’s issues have affected Disney’s stock price, but Disney CEO Bob Iger has been consistent both in his support of the network’s future and his discussion of ESPN’s plans to self-distribute with a standalone over-the-top offering. In fact, it’s now looking like over-the-top may come even sooner than initially planned, but it may start with a small offering of mostly WatchESPN/ESPN3-only products and then potentially grow into tiers that cover ESPN’s big TV rights. AA’s Ben Koo heard discussion of “a more limited and leaner service at a much lower price point” back in January, and Iger’s recent interview with The Hollywood Reporter (after he was named to the top of the THR 100) appears to indicate plans along those lines may be in the works:
Everyone asks, what is the fix for ESPN? You’ve said an improved digital offering is coming. Can you give a timeline for the ESPN digital rollout and what’s going on there?
Well, first of all, when people say “fix,” that usually suggests something is really broken, and it’s not. ESPN is not broken at all. ESPN, like a lot of other media entities, is facing challenges that they haven’t faced before that are due to some very obvious circumstances, which is technology’s effect on media both on the creative side, the distribution side and the consumption side. There’s more competition, the [power] shift from the distributor and the creator to the consumer is pretty apparent. And it’s critical to be as present as possible on all platforms, which ESPN is — but also to monetize them in as effective a way as possible. So what ESPN is exploring, they’re creating more product that can be sold directly to the consumer, while at the same time doing what they can to make the product they sell to the distributors as vital as possible. In terms of timeline, I can only tell you there’s a significant amount of work going on as we speak to move more ESPN product onto new platforms as fast as possible.
So there will be a stand-alone, live-sports, ESPN equivalent of HBO Now or CBS All Access?
I’m not going to say that. Is it inevitable that ESPN will have a more direct consumer product in the marketplace? Yes. What that product is, to what extent it mirrors the product they have now and to what extent it is … I’ll call it an offshoot. I can’t get into those details. I don’t think it’s safe to assume ESPN is going to take the product it has now and immediately take it over the top like HBO did to sell directly to consumers.
It’s even more complicated because many believe ESPN is propping up traditional distributor businesses as people subscribe to their bundle to get live sports.
ESPN plays a vital role in the health of the multichannel bundle, yes. That goes back to the old question of, to what extent are you a disruptor, to what extent do you allow yourself to get disrupted? That’s a debate we have all the time.
So, there aren’t any specific answers in there, but Iger’s comments of an “offshoot” and not taking ESPN’s entire product over-the-top do appear to support a leaner model at least at first, and that might be something that keeps the network’s distribution partners happy. It’s notable that ESPN has been pushing for inclusion of some form in various skinny bundles, and a limited stand-alone service might be the next logical step along those lines. It’s not just about ESPN getting into the distribution business, either, as Iger notes that the likes of Comcast have done plenty to get into Disney areas of business (such as theme parks and movies). We’ll see if ESPN winds up launching a OTT service any time soon (AA sources suggest it may come within the year), and just how extensive it will be if so, but Iger does seem keen on the idea, and the April exit of Disney COO (and presumed Iger successor) Thomas Staggs may help clear that path, as Staggs reportedly wasn’t big on the idea. It will be interesting to watch ESPN’s OTT efforts and how important they wind up being to the company.