It has been discussed for years, and now it is reportedly in the process of finally happening. ESPN is preparing to sell its linear television channel directly to consumers (DTC), according to a report by The Wall Street Journal.
This drastic, yet inevitable shift means ESPN could soon no longer require a cable subscription to view as cord-cutting continues in the United States and abroad. In a recent study, 93% of American adults currently access streaming platforms, while 40% have an active cable or satellite television subscription service.
ESPN collects $9.42 from the average cable television bill through collecting fees from cable companies. However, the dwindling share of cable subscriptions has seemingly necessitated this move.
The move has long been in the making, with ESPN Chairman Jimmy Pitaro recently stating that it would happen when it made sense for the business and bottom line. Although ESPN+ is a direct-to-consumer OTT streaming service that launched five years ago and has drawn about 25 million subscribers, it does not give users access to the linear channel.
This new DTC plan, reportedly titled “Project Flagship,” will aim to transition the cable channel to be streamable, but it will not eliminate the linear option entirely.
The Walt Disney Company’s Chief Executive Officer, Bob Iger, stated at the Morgan Stanley TMT Conference earlier this year that ESPN will transition to become “a direct-to-consumer business,” and he believes the company is in an opportune position to find success.
The exact release date and pricing have yet to be determined, but ESPN is purportedly communicating with cable providers to gain increased flexibility in deals. It is doing similarly with professional sports leagues and has been granted the necessary flexibility from at least two of those leagues.
It should be noted that The Walt Disney Company is expected to explore making a bid to maintain its NBA media rights once they expire following the 2024-25 season.
A variety of regional sports networks either have or are close to releasing a direct-to-consumer product of their own, including YES Network, NESN, MSG Networks, and Bally Sports – and the list is only growing. The latest Nielsen Media Research Gauge Report demonstrates 34.0% of P2+ streaming content, while 31.5% consume media through cable and 23.1% through broadcast mediums.
