Over the last several years, there has been interest in ESPN launching a direct-to-consumer platform to reach its fans who do not subscribe to a traditional television provider, something that is going to become a reality this fall. ESPN recently revealed that the platform will have two subscription plans, including an unlimited option for $29.99 per month, and that its reveal will be accompanied by enhancements to the ESPN app. Recent estimates from Nielsen Media Research cited by John Ourand of Puck conveys that the ESPN flagship channel currently reaches 62.7 million homes, reflecting a greater trend in the television business as more consumers opt to cut the cord.
ESPN chairman Jimmy Pitaro has described the direct-to-consumer launch as the biggest transition in the history of the company and contextualized such as taking “parallel paths.” While the company is not abandoning its audience on cable television, it is trying to reach cord-cutters and cord-nevers with the new optionality. Pitaro recently expanded on his thoughts regarding the new platform during an appearance on The Grill Room podcast hosted by Dylan Byers, a founding partner and senior correspondent for Puck.
“The way we’re looking at this is being additive,” Pitaro explained. “This is a service that is really going to be marketed to the folks that are on the sidelines. That being said, we are somewhat agnostic in terms of how you subscribe to ESPN. If you want to subscribe, if you want to access us through the traditional way, that’s great. By the way, in the traditional side of the business, what we see is folks signing oftentimes multi-year contracts, right, whereas on the direct side, you’re going month to month, so there is a concern of churn. So you can argue it both ways in terms of which side is more valuable.”
Pitaro represented the value of having a direct relationship with the consumer rather than going through a third-party provider because of the data the company will be able to parse. The company does not have the necessary data at the moment, restricting its ability to accurately and effectively personalize content in the ESPN app based on consumption trends. Even so, Pitaro contends that the network is not trying to go after consumers using the traditional model.
“The goal is not to get people to cut the cord,” Pitaro said. “From our research, there are many millions of households that are very happy with the traditional ecosystem with having one username and password, not having multiple charges on their credit-card statement every month. They see the value of having or being in this multi-channel environment.”
Part of being able to minimize churn comes through ESPN having compelling, year-round programming through its live sports rights, which is part of the reason Pitaro explained the company agreed to a new 11-year contract with the NBA. Combined with its broadcasts of NFL games, the College Football Playoff, the NHL and championship events within the NCAA, Pitaro believes that the portfolio of rights has never been stronger.
Starting next season, ESPN is no longer going to be televising Major League Baseball games after both sides exercised a mutual opt-out in its deal. Although this was a tough decision for him to make, Pitaro articulated that the company’s position has not changed in that it hopes to be in business with the league on the proper terms. NBCUniversal reportedly submitted a bid for the package of rights ESPN will no longer hold starting next season, which includes Sunday Night Baseball, the T-Mobile Home Run Derby and games within the Wild Card Round of the MLB postseason.
“We have made it very clear to the league office that we love the game and we’d like to remain in business, and we are willing to be creative here and look at things like local in-market games in addition to national, in addition to the Home Run Derby,” Pitaro said. “We remain ready and willing to engage, but as I sit here right now, we are not engaged. The ball is in their court.”
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