2025 will be a year of massive change for ESPN. Principle among those changes, the launch of its direct-to-consumer streaming service internally dubbed “Flagship” that will allow consumers to access the entire suite of ESPN networks without a traditional pay TV subscription.
The timing of such a launch has been a heated point of discussion, both inside and outside of ESPN. Undoubtedly, the launch of Flagship will accelerate the erosion of the traditional cable bundle as subscribers cut the cord in favor of the standalone product.
But ESPN’s chairman Jimmy Pitaro believes that the product’s launch is necessary for ESPN’s long-term success, despite the short-term pain it may cause.
Appearing on the Corporate Competitor Podcast, Pitaro said, “This could be disruptive to the traditional ecosystem. Now, we’ve done more than just about anyone to protect that ecosystem. It has been very good to us, and it will be a priority for us going forward. This is parallel paths. At the same time, we see declines month after month, year after year, and you get to some point where you have to disrupt yourself, and that’s where we are right now.”
ESPN’s TV penetration has dropped somewhere between 30-40% since its peak of being in over 100 million households about a decade ago. While there’s never a “right” time to undermine your primary driver of revenue, which ESPN will do when it launches Flagship next year, there are times in business where you must take strategic risks. And Pitaro thinks this one will pay off.
Pitaro estimates that “there are 50 or 60 million households right now that are not subscribing to the traditional ecosystem.” That’s a lot of potential subscribers for a new direct-to-consumer product.
And the ESPN chairman thinks the personalization inherent in a direct-to-consumer product is something the network can capitalize on. “We will know what our sports fans, what our customers are consuming, and as a result, we will have the ability to present to them a more compelling digital sports experience – a more personalized experience, a more interactive sports experience – and that’s exciting to me,” Pitaro said.
One key to the success of Flagship will be the price point. Prior reports indicate a starting price of between $25 and $30, substantially steeper than what a Netflix or Max charges but much cheaper than a service like YouTube TV. The challenge will be convincing consumers to sign up for a product that only includes ESPN programming. While ESPN is essential for any sports fan, so are networks like Fox, NBC, and CBS, which won’t be included in the streaming service.
That may be where a product like the currently stalled Venu Sports comes in, if it can eventually convince regulators to approve the venture.
For now, the launch of Flagship seems like a necessary reality of the declining media business. In a world without compelling options, sometimes you have to choose the one that is least bad. There is definite upside to Flagship, the question is whether or not it can be realized in the current media environment.
