The Future of Standalone ESPN

Jefferson Graham of USA Today on standalone ESPN:

Don’t look for ESPN to launch a stand-alone streaming service soon.

Speaking at the ReCode Code/Media conference here Wednesday night, ESPN president John Skipper reiterated several times that he wasn’t ready to go down that road yet.

“We will look at direct to consumer…and decide to be more aggressive when we think it will help us grow our business,” Skipper said.

To use a baseball phrase, if you are scoring at home, this seems like a dumb approach. It reminds me of the music industry in the late ’90s and the newspaper industry in the mid ’00s, the ‘ole “we will adjust later” plan. Sports have a huge advantage over TV and movies because they lose so much value to consumers if not watched live. ESPN has which has five traditional television channels to fill with content though. And for those bad at math 5 x 24 = 120 hours per day of content to fill. A rough guess is that about 10-20% of this is actual live sports. That leaves a significant amount of content that is not important to most people. This doesn’t even factor in how much of this content is straight repeated (a lot of studio shows on ESPN later re-air on ESPN2), or in the case of ESPN News, just repeated over and over again for hours.

ESPN only broadcasts one NFL game per week. While they show a lot of baseball, fans with MLB.TV can directly watch any out of market game they want on the service. The NBA has started granted online access to NBA games as well. It’s only a matter of time before this starts becoming more common place.

As we have seen with HBO Now, it’s not bringing in an earth shattering amount of subscribers, but it has laid the proper groundwork for the future, and let’s customers know that HBO is thinking forward. ESPN makes tons of money off the cable companies, and that is the main reason they like the current model. But don’t undersell how much the cable companies love ESPN. They know that without live sports they would be seeing many more customers move on from traditional cable. The truth is that they both badly need eachother to survive, the difference being that ESPN can potentially survive on their own, while the exit of subscribers to a standalone service would be a huge blow to cable companies.

ESPN already has the infrastructure in place to handle a standalone service, they pushed their (now replaced by the main app) WatchESPN app like crazy for the last couple of years. At some point they will give the cable companies some sort of ultimatum, but they are sure making it seem like that is still a ways off. If they aren’t smart enough to make that move sooner rather than later though, they could be in trouble.