Warner Bros. Discovery, Fox, and Disney-owned sports broadcaster ESPN have announced they are forming a new joint venture to create a sports-specific paid streaming service in the US. The three companies will each own one-third of the new business, and plan to launch a new app this autumn.
The service will combine live streams of linear sports networks currently owned by the three stakeholders, including ESPN, ESPN2, SECN, ACCN, ABC, FOX, TNT, TBS, and truTV. It will also include content from ESPN+, Disney’s existing sports streaming service.
The three owners say this mix of channels will give the new service comprehensive coverage across major sports and sports leagues in the US. Leagues and competitions covered will include the NFL, NBA, WNBA, MLB, NHL, UFC, Formula 1, FIFA World Cup, college sports, and major golf and tennis competitions.
“At WBD, our ambition is always to connect our leading content and brands with as many viewers as possible, and this exciting joint venture and the unparalleled combination of marquee sports rights and access to the greatest sporting events in the world allows us to do just that,” said Warner Bros. Discovery CEO David Zaslav. “This new sports service exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value and we’re thrilled to deliver it to sports fans.”
Preparing for the streaming-first future
There are many implications, and potential motivations, for this new joint venture.
On one level, it can be viewed as an effort to prepare for a digital-first future for TV. Sports has generally been slower than other types of TV to migrate to streaming, due in part to the technical challenges of delivering a smooth live experience. But those challenges are less of a problem nowadays. Streaming specialists including DAZN, Amazon Prime, and YouTube have shown that streaming can by-and-large deliver a quality experience for live sports.
Which leads to a second point. The three players all already live stream sports themselves. But the joint venture may be designed in part to protect against encroachment from tech players.
By combining all their content in one app, they can offer a better experience for users, a more compelling overall package, and potentially gain from cross-pollination as fans browse new sports which they couldn’t previously access, growing overall fanbases. This in turn may help protect the overall reach for individual sports and leagues, since consumers don’t have to decide whether to pay for continued access to each sport – it comes as one big package. And preserving reach is obviously key from an advertising perspective.
It’s a bold strategy, Cotton, let’s see if it pays off for ’em
Early comparisons have been made with Hulu, which was originally a joint venture between News Corp, NBCUniversal, and Providence Equity, which Disney later joined.
But Freely – the upcoming UK joint service which will combine linear channels from the UK’s major broadcasters, might be a more accurate parallel. With Freely, UK broadcasters hope to maintain relevance in a streaming-first world by owning the go-to hub for linear content. This new joint venture may be similarly motivated, creating a go-to hub for linear sports owned by major US broadcasters.
It’s a bold strategy. While the long-term aim may be to keep a big chunk of sports viewing unified within one major service (which could have benefits for ad reach and frequency measurement too), in the short term it will create more fragmentation, splitting viewing between traditional TV and this new service. Brian Wieser, principal of consultancy Madison and Wall, argued in his newsletter that the new service could actually decrease overall sports viewing, since casual fans who have sports channels included in wider pay TV packages likely wouldn’t pay for a sports-specific service. And it may also hasten the decline in traditional pay TV viewing in the US – where live sports has been one of its last remaining unique strengths.
On the flip side, broadcasters have often been accused of being too slow to respond to the growth of streaming, and too protective of their traditional TV businesses to really succeed once they have made the jump. On the former point, if the future really is streaming-first, it’s probably best for the broadcasters to get ahead of the curve. On the latter, it remains to be seen how their commitment to their traditional linear sports channels might affect this new service’s chances of success.
