ESPN launches streaming service with new app

In the early 2010s, a group of ESPN executives gathered for an off-site retreat near the network’s campus in Bristol, Connecticut. ESPN faced no headwinds at the time: It was airing many of the biggest events in sports, churning out must-see documentaries and publishing a thriving magazine. It was all possible because its flagship cable network was in 100 million homes, making it the most successful channel in the history of television.

Still, these meetings were important to chart a course for the company, and executives took turns highlighting potential threats, such as losing sports rights to competing networks. But when “cord-cutting” — consumers leaving the cable bundle in favor of emerging streaming options such as Netflix — came up, ESPN’s research suggested it would not be a major threat.

A decade and a half later, ESPN launched a new “experience,” as chairman Jimmy Pitaro put it, making the entirety of ESPN available without a cable subscription. For the first time in network history, sports fans can watch “SportsCenter,” the College Football Playoff, all the Stephen A. Smith they want and next season’s Super Bowl for $30 a month.

The new direct-to-consumer product is available through a redesigned ESPN app. It also represents the latest evidence of the chaos that cord-cutting has wrought on the media industry. Since 2013, ESPN has lost some 40 million cable subscribers, NBC has shuttered its cable sports network, and regional sports networks have collapsed.

The new app offers sports fans a new live-game experience, integrating many of the current second-screen experiences into one. Fans watching a game can find immediate highlights with one tap and then return to live action or track their fantasy teams in real time. A new social video feature called Verts will look a lot like TikTok, mimicking popular social media platforms with personalized highlights, clips from ESPN talking heads and social content.

“TikTok can do a fine job of giving you some grainy screen grab from a fan at a game,” said Kaitee Daley, an ESPN senior VP of digital and social media. “Here you’re going to have a broadcast-quality highlight from your favorite teams. Then you can get a reaction from Stephen A. should you care to hear it. Or you could swipe if you don’t.”

Meanwhile, the app will give ESPN new ways to cash in. Fans can track wagers or find suggestions for new bets on ESPN Bet, the network’s online sportsbook, or shop via a QR code in a special ESPN-branded section of Fanatics’ website.

Pitaro said his favorite part is the personalization that will deliver highlights to fans based on their favorite teams. (Cable subscribers can authenticate in the app and have access to all of the new features.)

For a decade, ESPN has been balancing the old model with the new. Two years ago, Pitaro said, came the tipping point. The cable bundle was shedding between 8 and 9 percent of its subscribers per year. He knew the new app would need to be launched quickly.

It took so many years to get here because the cable ecosystem was too valuable to cannibalize. Even diminished, it continues to be lucrative. In the most recent quarter, ESPN delivered $4.3 billion in revenue; ESPN+, the first iteration of ESPN’s streaming service, which only shows some live events, made $150 million.

How many customers will pay $30 per month for ESPN alone remains to be seen, but the service, executives said, also will fit into current and future bundles, including with Disney’s other streaming platforms, Hulu and Disney+, at a higher price point. A separate product that includes all of ESPN and Fox Sports will be available this fall for $40 per month.

Industry insiders were mixed on what this version of ESPN might mean for the next iteration.

“Whatever the media business looks like, whatever it becomes, you have to feel that Disney is a company that will get across this somehow and that ESPN will be part of that,” said Patrick Crakes, a former Fox Sports executive turned industry consultant.

Rich Greenfield, co-founder of research firm LightShed Partners, suggested Disney would one day sell its sports and news divisions, separating them from its entertainment portfolio. “I think it’s just prepping ESPN and ABC to ultimately live on their own,” he said.

This is an excerpt from a Washington Post story.