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Cord cutters and cord nevers: ESPN, Fox and Warner sports streaming platform wants you
View Date:2024-12-24 00:34:47
The new sports streaming venture from Fox, Disney's ESPN and Warner Bros. Discovery is a major-league play for sports fans who are cord cutters and cord nevers, meaning they no longer subscribe to a traditional pay-TV bundle or never did.
"There is no product serving the sports fans that are not within the cable TV bundle," Fox CEO Lachlan Murdoch said during his company’s earnings call Wednesday.
According to Disney CEO Bob Iger, the skinnier sports bundle that combines popular live sports from each of the media giants such as ESPN’s Monday Night Football, Fox’s Sunday NFL games and the March Madness college basketball tournament on Warner Bros. will be a cheaper alternative to the “big fat” traditional cable package.
He did not say how much the service will cost, only that it would be “substantially less expensive to consumers than the big bundle they have to buy to get those same channels on cable and satellite.”
The typical cable bundle runs upward of $100 a month.
The announcement of the new joint venture comes as consumers ditch traditional pay-TV at an accelerated pace. The rapid decline in cable TV subscriptions is forcing media giants to follow their customers into the streaming world. There, they can compete for sports fans who have turned to popular internet alternatives such as YouTube TV and FuboTV.
“The opportunity is huge,” Murdoch told analysts Wednesday.
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Analysts estimate there are between 60 million and 70 million cord-cutter and cord-never households in the U.S.
“As cord cutting has accelerated, there has been increasing interest among many media company executives…in creating new bundles of streaming services, in part, because there is a belief that perhaps consumers don’t want to manage as many separate subscriptions as they presently have and because bigger bundles might lead to less subscriber churn,” Brian Wieser, media analyst with Madison & Wall, said in a research note.
A survey of 2,500 online adults in the U.S. in the third quarter of 2023 from S&P Global Market Intelligence’s Kagan media research group found that 51% were pay-TV subscribers, 35% were cord cutters and 14% were cord nevers.
Recent cord cutters, in particular, are avid sports fans, said Seth Shafer, senior research analyst in the Kagan media research group.
“We believe there are a number of sports fans out there that want to watch sports on television but didn’t want to sign up to the big cable and satellite bundle. We think they will be accretive to us,” Iger said during his company’s quarterly earnings call. “We also believe that consumers who have left the bundle because it wasn’t serving them well or they may leave the bundle and we want to make sure we grab them, too.”
The joint venture could accelerate the shift away from the traditional and more lucrative pay-TV model.
"It seems highly likely that if an offering were appealing to consumers, it would almost certainly accelerate cord-cutting decision-making among many consumers who were only continuing with their traditional pay TV service to access the sports programming that will be included on the new service," Wieser said.
Iger said Disney remains committed to pay TV. “We intend to continue to be in it. We're investing in it in terms of the channels that we own, running them more efficiently, but…we also have to be mindful of where the consumer is now and where the consumers go,” Iger told CNBC’s Julia Boorstin.
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Murdoch made similar comments, saying the target customer is a sports fan who does not subscribe to pay TV and denying the joint venture would affect pay-TV partners. “We remain, I think, the biggest supporters of the traditional pay TV bundle,” he said.
Cable TV operators weren’t briefed on the plans for the joint venture. Fox, Disney and Warner Bros. expect revenue on par with what they receive from cable and satellite TV distributors.
“The linear business is still a business that serves us well, in that it's profitable for us. And we intend to continue to be in it. We're investing in it in terms of the channels that we own, running them more efficiently, but we're still in that business. But we also have to be mindful of where the consumer is now and where the consumers go” Iger told CNBC’s Julia Boorstin.
Subscribers of streaming services like Disney+, Hulu and Max will be able to subscribe to the new sports streaming service as part of a bundle.
Disney also plans to offer a stand-alone ESPN streaming app as soon as August, Iger said.
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