At long last, ESPN has officially announced its highly anticipated direct-to-consumer streaming service.
The platform, aptly named ESPN, will include everything the network has to offer from its linear channels to digital exclusives and top-flight personalization.
But at a steep price of $30 per month, many are asking who exactly the service is for. After all, the service only includes ESPN content. Sports fans will have to find other ways to access games airing on Fox or CBS or NBC or their regional sports network, likely at additional cost. And when services like YouTube TV exist for $83 per month and include everything from sports to entertainment to news, the market for a standalone ESPN streaming service looks pretty limited at the current price point.
ESPN knows this. In fact, its own executives are already tempering expectations on how many people will signup for the service initially. So why pour two years of effort into developing a streaming app that not many people will subscribe to?
According to the analysts at LightShed Partners, it’s a Trojan Horse.
“We believe the goal of launching the ESPN app direct-to-consumer is to get existing MVPD/vMVPD subscribers who have access to ESPN (over 65 million subscribers, which implies well over 130 million potential users/viewers) to watch via the ESPN app instead of watching via their MVPD/vMVPD.
“If ESPN can drive MVPD and vMVPD subscribers to use the ESPN app instead of watching on Comcast, DirecTV, or YouTube TV, they will finally have a direct relationship with their viewers. This would allow them to understand what viewers watch, target advertising in a far more compelling way and try to engage viewers beyond live games (whether that be highlights, merchandise, sports betting, fantasy, etc).”
That logic adds up. In the lead up to this week’s announcement, ESPN’s executives have been keen to highlight the personalization features that accompany the new platform. Fans will have access to an AI-generated SportsCenter filled with highlights from their favorite (and least favorite) teams. The service will connect to fans’ fantasy teams and sports betting interests. Everything will be catered to the individual user’s experience.
The goal in developing these features is not only to entice some people to pay $30 per month for a direct-to-consumer platform, but to entice the vast majority of ESPN viewers who still consume the network through traditional pay TV platforms to instead watch directly on ESPN’s app.
For obvious reasons, a viewer that watches ESPN directly through its platform is much more valuable than a viewer that watches on DirecTV, for instance. The user on the platform will be served targeted ads. The user on the platform is more likely to engage with other ESPN content. The user on the platform will watch more of a game than they would on a linear platform where channel surfing is an option.
ESPN’s direct-to-consumer platform isn’t about the people that will pay $30 per month for access. At least, not yet. It’s about the more than 65 million pay TV subscribers who will be able to authenticate themselves into ESPN’s new platform and enjoy all the bells and whistles it has to offer.
Eventually would ESPN like to have tens of millions of subscribers paying $30 per month for its content? Sure. But that’s not the goal right now. The goal is to develop an experience that sports fans cannot pass up. Success in the early stages won’t be measured in subscribers. It’ll be measured by how engaging ESPN’s new features really are.