Facebook (FB - Free Report) and ESPN recently inked a partnership, per which the latter will provide sports-related digital shows and content to Facebook Watch.
The deal is a win-win for both the social-media giant and Disney (DIS - Free Report) division ESPN. While the partnership will help ESPN reach a wider audience, exclusive shows from one of the top producers of sports-related content are likely to improve user engagement for Facebook Watch.
Competition Intensifying in Live Sports Streaming
Notably, the live sports broadcasting space is dominated by linear television providers like Fox (FOXA - Free Report) , Sony, ESPN and Sky Sports. Amid increasing cord-cutting, sports-related coverage has been a major source of revenues for these traditional players.
However, changing consumer preferences for streaming and the increasing adoption of smartphone have helped in the rapid proliferation of over-the-top (OTT) services.
Per eMarketer, revenues from sports digital media rights will grow 11.5%, in the next three to five years. On the flip side, revenues from traditional television rights will witness the slowest growth rate of 3.2%.
Moreover, according to the Center for the Digital Future at USC Annenberg and ThePostGame, 56% of sports fans would pay more for online streaming than for traditional TV channels. Further, 63% of sports fans are interested in paying for an all-sports over-the-top channel.
The solid growth prospects are attracting major tech and media players, including Facebook, Amazon (AMZN - Free Report) , Twitter (TWTR - Free Report) , YouTube and Disney.
ESPN Deal Diversifies Facebook’s Sports Content
Facebook’s rights to stream La Liga matches in India and Premier League soccer matches in Cambodia, Laos, Thailand and Vietnam between 2019 and 2022 are key catalysts. The company has also secured partial rights to stream Copa Libertadores, South America’s premier club soccer tournament. This year, Facebook partnered with FOX Sports to stream 46 games.
However, its partnership with Major League Baseball (MLB) has been a major disappointment. The renewed 2019 deal with MLB enabled Facebook to stream six games compared with 25 in 2018.
The addition of ESPN shows will diversify Facebook’s sport-related content portfolio, including the likes of college football and Mixed Martial Art. The slate of shows includes The People’s MMA Show, Countdown to GameDay, Fantasy Focus Live and additional content from Always Late with Katie Nolan.
Moreover, this is expected to help Facebook solidify its presence in the rapidly growing online sports streaming space.
Amazon, Disney & Others Join the Fray
Amazon now owns a stake in YES Network, the country’s most-watched regional sports network. It features live games and programming focusing on the New York teams — the Brooklyn Nets, the WNBA’s New York Liberty and most importantly, the New York Yankees.
Apart from deals with NFL to stream Thursday Night Football, the e-commerce giant also launched MLB.TV on Prime Video Channels for Prime members in the United States. Moreover, Amazon Prime Video live streams AVP league and the Laver Cup tennis tournament.
Additionally, in the U.K., the company has exclusive rights to the 2019 US Open tennis tournament as part of a five-year deal. Further, beginning this December, Amazon will offer 20 Premier League games.
Meanwhile, Disney’s sports-focused streaming service ESPN+ has gained solid traction, primarily owing to content strength. The service streams hundreds of MLB, NHL and MLS games, Grand Slam tennis, boxing, PGA Tour golf, college sports, international rugby, and cricket, among others.
Moreover, ESPN+ is the exclusive distributor of Ultimate Fighting Championship’s (UFC) pay-per-view (PPV) events in the United States through 2025.
Notably, Disney is set to launch a bundle pack of its three streaming services — Disney+, Hulu, and ESPN+ — for $12.99 a month beginning Nov 12.
Furthermore, Twitter has expanded its presence in the sports streaming space by partnering with ESPN, NFL, WarnerMedia, The Players’ Tribune and MLS.
Additionally, in July, YouTube announced a partnership with NBA Africa to offer live and video-on-demand streaming of basketball, rugby, cricket and football on its platform. The content slate includes 2019 NBA Finals, Women’s World Cup, Africa Cup of Nations (AFCON), UEFA Champions and Europa leagues, ABSA Premier League, La Liga, Ligue 1 and Serie A.
Facebook, Fox and Twitter currently have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, both Amazon and Disney carry a Zacks Rank #5 (Strong Sell).
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