Advertisement
U.S. markets open in 1 hour 55 minutes
  • S&P Futures

    5,193.50
    -21.25 (-0.41%)
     
  • Dow Futures

    39,136.00
    -87.00 (-0.22%)
     
  • Nasdaq Futures

    18,128.00
    -103.50 (-0.57%)
     
  • Russell 2000 Futures

    2,042.10
    -7.70 (-0.38%)
     
  • Crude Oil

    82.71
    -0.01 (-0.01%)
     
  • Gold

    2,158.60
    -5.70 (-0.26%)
     
  • Silver

    25.16
    -0.11 (-0.44%)
     
  • EUR/USD

    1.0850
    -0.0027 (-0.25%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.78
    +0.45 (+3.14%)
     
  • GBP/USD

    1.2691
    -0.0037 (-0.29%)
     
  • USD/JPY

    150.4230
    +1.3250 (+0.89%)
     
  • Bitcoin USD

    62,882.65
    -5,458.94 (-7.99%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,704.70
    -17.85 (-0.23%)
     
  • Nikkei 225

    40,003.60
    +263.20 (+0.66%)
     

Disney is playing the long game with ESPN Plus streaming service

UPDATE: In September 2018, Disney announced ESPN+ has topped 1 million paying subscribers.

ESPN launched its ESPN+ streaming service in April.

The platform costs $4.99 per month and is not quite what sports fans initially hoped: It does not have the content that airs on ESPN on cable. Rather, it has all the things that do not go on cable: additive sports like boxing, rugby, MMA, and golf, and a wide range of college sports, but not from Power Five conferences. ESPN+ also has the entire “30 For 30″ movie library. This week, ESPN also cut a new deal with Serie A soccer that will bring more than 340 Serie A games to ESPN+ including Cristiano Ronaldo’s debut with Juventus.

So, how is ESPN+ doing? On parent company Disney’s (DIS) Q3 2018 earnings call on Tuesday, Disney CEO Bob Iger gave his feedback. He said more than he had ever said publicly about ESPN+ before.

We feel good about it,” Iger said. “It’s a marathon, it’s not a sprint. The product is working well technologically, it’s quite stable from a streaming perspective. It’s still early days, but conversion rates from free trials to paid subscriptions are strong, and subscription growth is exceeding our expectations.”

Disney’s Chief Executive Officer Bob Iger attends the opening event of Disney-Pixar Toy Story Land, the seventh themed land in Shanghai Disneyland in Shanghai, China April 26, 2018. REUTERS/Aly Song
Disney’s Chief Executive Officer Bob Iger attends the opening event of Disney-Pixar Toy Story Land, the seventh themed land in Shanghai Disneyland in Shanghai, China April 26, 2018. REUTERS/Aly Song

“Modest expectations”

“Exceeding expectations” sounds exciting, but then Iger cautioned, “We had relatively modest expectations… in part because of the nature of the product offering. But actually we’ve added nicely to that product offering.”

That was a somewhat surprising admission.

Iger is saying that Disney didn’t expect much from ESPN+ at the beginning, because of its lack of must-have content. He is acknowledging that ESPN+ does not yet have mass appeal, and that it’s experimental.

On the other hand, Iger sounds pleasantly surprised with the new content ESPN+ has already added since launch. “Boxing is probably the primary example, but there has been other good programming as well… We’ve got a huge lineup of college football—200 games this coming season, 70 in the first three weeks—UFC kicks in, and today we announced the inclusion of the very attractive Italian soccer league Serie A, Cristiano Ronaldo’s first match with his new team will be on ESPN+, which is exciting… So we feel really good about how we’re positioned, and we’ll continue to look opportunistically in terms of what rights will be available.”

Converting free trials to paid subscriptions

As for conversion rates from free trials to paid accounts, Iger said the company is “heartened by the fact that conversion rates from free to pay have been quite strong. And the trends that we’re seeing in terms of churn are modest in nature, in the sense that they’re manageable.”

Disney won’t share the actual ESPN+ subscriber numbers, and Iger playfully acknowledged how frustrating that is to the analysts and reporters who care. “I realized when I said that the subscriber numbers are exceeding our expectations, it was probably going to beg the question: ‘Well, what are they?’ And we haven’t been specific,” he said. “I can only tell you that we’re telling the truth, but that doesn’t do you much good… I’m not going to be specific on numbers. We’re just not ready to get into that.”

Regardless of how many paying subscribers ESPN+ has, the service is of major significance to Disney’s future. It is Disney’s first ever direct-to-consumer (DTC) offering, a toe-in-the-water before it launches its own Disney streaming service in late 2019, which will be much more publicly scrutinized as it will have Star Wars, Marvel, and Pixar content, and will mark the end of Disney movies going to Netflix.

Both ESPN+ and Disney’s forthcoming streaming service are, as Pivotal Research puts it in a note, “efforts to future-proof the business that separate Disney from its peers.”

Disney doesn’t need ESPN+ to be an instant money-maker. It will use its learnings from ESPN+ to inform the Disney OTT product.

Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite.

Read more:

ESPN Plus is aimed at a very specific kind of sports fan

ESPN is rethinking SportsCenter for the smartphone age

Amazon Prime, YouTube TV are in a sports streaming race

The lone loser in Disney’s big quarter: ‘A Wrinkle in Time’

How MLB’s video arm got so big that Disney had to buy it

Advertisement