ESPN is The Worldwide Leader in Sports and has been for decades. It is the #1 destination on cable TV for live sports and sports entertainment.
The launch of their ESPN+ streaming service has been incredible. Just this morning I was able to get in several hours of additional PGA Championship coverage that wasn’t on TV.
Amazing as they are, the ESPN+ streaming options are limited as it isn’t anything close to a reflection of what’s available to stream on cable.
Now, a report from Jessica Toonkel and Sarah Krouse in the Wall Street Journal outlines a secret project code named ‘Flagship.’ This project will reportedly see ESPN go around cable and offer cord cutters a direct-to-consumer option for their flagship channel, crippling cable networks’ negotiating as ESPN is often their biggest bargaining chip these days.
While there is no reported timetable for the standalone streaming service to launch, there are some details of interest. Toonkel and Krouse report:
“ESPN would continue to offer the TV channel after launching a streaming option, the people familiar with the matter said. Still, the change could have a major impact on cable-TV providers, since ESPN is one of the main attractions of the cable bundle. The providers pay to carry the ESPN channel and would have to compete with the new streaming service.”
They write that ESPN has been proactively ‘securing flexibility’ in its deals with cable providers nationwide. Thus laying the foundation to be able to launch the standalone streaming service for cord cutters.
On the surface, it would appear that nothing would immediately change for cable subscribers and those that also pay for ESPN+ (like myself). However, offering ESPN’s flagship channel has been the biggest bargaining chip for cable companies in recent years.
The live games (NBA, NFL, NCAAF, NHL, etc) available to stream on ESPN+ have always been secondary to the ‘primetime’ games featured on ESPN. Cable companies use that exclusivity to keep subscribers.
The report in the Wall Street Journal points out that “ESPN gets a $9.42 slice of the average cable TV bill” regardless of whether a household watches sports or not. It goes on to state that ESPN only earns about 49 cents from each streaming subscriber.
There are a LOT of factors that could impact the eventual pricing of ‘Flagship’ including which deals with major sports networks ESPN/Disney maintains. They state that roughly 74 million households in America have access to ESPN through cable but anywhere from 4-5 million households are cutting the cord each year.
Interestingly, ESPN’s bargaining power with cable networks has shrunk significantly in the past year. The report states that “income from Disney’s traditional television networks, including ESPN, fell significantly to $1.8 billion, from $2.8 billion in the year-earlier quarter.”
It is certainly worth keeping an eye on ‘Flagship’ as this could be a game-changer in the coming years.