Disney (DIS - Free Report) officially announced the new over-the-top streaming version of its flagship sports network, called “ESPN+,” on its earnings call yesterday. However, based on CEO Bob Iger’s initial breakdown of the new ESPN streaming service, it seems unlikely to help the struggling network.
Shares of Disney climbed after-hours on Tuesday and are up over 0.50% through mid-morning trading. The company beat both earnings and revenues estimates, but its top-line was bolstered by Parks and Resorts growth, while ESPN continued to struggle (also read: Disney (DIS - Free Report) Beats Earnings Estimates on Robust Parks & Resorts Growth).
Disney’s Media Networks revenues came in at $6.243 billion, basically flat from the year-ago period. This also fell short of our estimates for the category, which called for sales of $6.35 billion. The company’s Cable Networks unit, which ESPN accounts for a large portion of, did climb 1% year-over-year, but operating income fell 1%, thanks in part to declines at ESPN.
ESPN has struggled over the last year as it loses subscribers at a rapid pace, based mostly on the continuation of the cord-cutting revolution. The network is attached to a large number of basic cable packages, and when people drop cable its numbers dip.
Iger’s announcement of the new ESPN Plus service, which has been talked about for some time, seems like it will do little to bring the brand into the streaming age. On Disney’s earnings call, the CEO said the new $4.99 per month service “will launch sometime this spring.” But unless you are still a cable subscriber, users won’t really get too much with the new service, and it appeals mostly to the hardcore fan of non-major sports.
According to Iger, the new redesigned ESPN app will feature “countless scores and highlights, as well as podcasts and other sports information.” The updated app will also allow users to live stream all of ESPN’s networks, “provided consumers are subscribers to multi-channel packages.”
The chief executive also touted the new ESPN app’s more personalized experience that “blends explicit choices with implicit behavior to curate a unique mix of specific, relevant content tailored to the tastes of each individual user.”
BAMTech, which Disney has invested billions of dollars in, and runs streaming for HBO, MLB, WWE (WWE - Free Report) , will power this new service. But many sports fans might be left wondering what exactly they are paying an extra five dollars a month for.
The new ESPN streaming service will include access to thousands of hours of MLB, MLS, and NHL—which ESPN does not air on TV—as well as some college sports, tennis, boxing, golf, rugby, and cricket. All of this extra live action will be events that won’t appear on ESPN’s linear networks.
The new service will also include access to all of ESPN’s critically acclaimed 30 for 30 documentary series—which are currently available on Hulu. On top of that, Iger noted that the company will begin to create “a robust slate of high-quality original content exclusively for this platform.”
But for now, this long-awaited ESPN+ streaming service, which many investors hoped would be a stand-alone streaming version of ESPN, is currently just a $4.99 a month add on for rugby and cricket fans that seems like a quick, low-budget fix to a big-money, long-term problem.
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