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Disney's ESPN to Expand Coverage of eSports on Website

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Good news for electronic sports lovers, The Walt Disney Company’s (DIS - Free Report) sports enterprise ESPN has announced its decision to cover eSports as well as a range of competitive games on its website and apps.

Over the past few years, eSports competitions have risen to form a global industry worth $500 million. As per research firm SuperData, over 130 million people follow eSports tournaments across the globe. In 2014, ESPN covered the League of Legends championships which has been a grand success, recording 27 million viewers.

Launched by ESPN on its website, the eSports segment will have links to cover games like League of Legends, Hearthstone and Dota 2. Recently, Activision entered eSports through the purchase of Major League Gaming for $46 million.

The company’s decision to expand eSports on its website might not boost profits immediately as income generated through advertising, sponsorship and subscription sales are not very high.  

For some time now, Disney’s primary cash cow ESPN has been under considerable pressure as the Pay TV landscape continues to change owing to migration of subscribers to online TV. Falling subscriptions will have a telling effect on the network’s ad revenues.

Per the company’s November SEC filing, ESPN has been losing subscribers on a regular basis. ESPN lost nearly 7 million subscribers over the last two years as the number of cord cutters continues to increase. At the end of the fourth quarter of fiscal 2015, ESPN had a subscriber base of 92 million in comparison to 95 million at the end of the prior-year quarter and regressing to the level it had a decade ago.

Zacks Rank & Stocks to Consider

Disney currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the media sector include Liberty Media Corporation , Grupo Televisa, S.A.B. (TV - Free Report) and The E. W. Scripps Company (SSP - Free Report) . All these stocks hold a Zacks Rank #2 (Buy).

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