As Disney (DIS) continues its impressive start to growing out its steaming platform Disney+, it’s easy to see why the growth at its more sports-focused streaming subscription, ESPN+, might be overlooked.
But after the company reported it more than quadrupled its ESPN+ subscribers from just over 1.4 million a year ago to 7.6 million as of the first week of February, it’s clear that the new offering is connecting.
Through a mix of live sport streams that aren’t available on cable, evergreen features like ESPN’s award-winning “30 for 30” documentaries and all-access interview series like Jay Williams’ “The Boardroom,” ESPN+ has been able to attract a growing audience of sports fans to its platform. As Williams tells Yahoo Finance, it’s been a delicate science.
“The way they’re building behind the paywall is fascinating,” he said on Yahoo Finance’s YFi PM, highlighting ESPN+’s mix of live programming like exclusive Ultimate Fighting Championship pay-per-view bouts.
“I think giving an array of content while still being able to capitalize on linear [has been key] because people still do want to watch live sporting events,” he said.
Of course, the question will remain how much of ESPN+’s rise is coming at the expense of its traditional cable revenues as cord-cutters continue to shift away from cable. In its last earnings report, Disney noted that ESPN’s domestic linear advertising revenue was down 4.5% in the first quarter due to lower average viewership. However, at least offering a streaming platform alternative for anyone cutting the cord seems to be doing enough to shake the storyline of declining revenue at ESPN from being the main focus for investors. Disney’s stock has been able to sustain its break above the $100 to $120 per-share range of trading back when ESPN’s cable decline was the common concern just a few years ago.
As has been noted in the past, revenue per streaming subscriber pales in comparison to the traditional cable subscriber at ESPN, and as Disney noted in its last earnings update, average monthly revenue per paid subscriber for ESPN+ dwindled further as a result of being promoted in a bundle with Disney+ and Hulu. Building up exclusive content that’s not available on cable could help support Disney’s hope that offering ESPN+ to customers could be seen more as an additional subscription to cable rather than a replacement.
As Williams points out, Disney’s ESPN+ and even Hulu for that matter has had a head start when it comes to sports programming. That will change in July when Comcast’s (CMCSA) streaming service, Peacock, goes live with the momentum of NBC’s Olympics programming behind it.
For now, Disney has pointed to a lower-than-expected churn rate as a benefit to bundling its streaming offerings ESPN+, Hulu, and Disney+. Whether or not that can be sustained, or if ESPN+ itself can continue its impressive growth, remains to be seen as another streaming competitor prepares to enter the fray.