You're Not Helping: ESPN Delays 'Apex Legends' Broadcast After 2 Mass Shootings

from the not-helping dept

Of all the battles we wage here, my personal frustration probably peaks on the topic of video games and real world violence. The amount of calories spent even having this discussion should go down as some kind of complete human failure. Study after study, never mind the input from actual law enforcement professionals, has demonstrated that the political talking points on violent games are complete bunk. I used to be fond of saying that the science on this topic was unsettled. At this point, the science is quite clear.

Which means what we really need for that science to take hold with the public and end this stupid debate is to stop signaling that the debate isn't over. But when ESPN, with all of its popularity, decides to suspend a broadcast for an Apex Legends tournament because of the recent mass shootings, it's doing the opposite.

This weekend’s planned airing of the EXP Apex Legends Invitational at X Games tournament on ESPN2 has been postponed by the network, “out of respect for the victims and all those impacted in the immediate aftermath of the shootings.”

The broadcast is meant to show highlights from the Apex Legends tournament that was held at X Games in Minneapolis, Minnesota, on August 2. Originally scheduled to air on ESPN2 this weekend, the show has been postponed for two months.

On the one hand, look, sure this sounds fine. And it's almost certain that somebody somewhere would have raised hell at ESPN about putting on a video game tournament that includes violent gaming shortly after a tragedy. But the job of society is to tell those people that they're crazy, not bend the knee to them. One single movie announced it was pulling its release following the shootings and this too is absolutely not helping. Plenty other upcoming releases that feature violent imagery are going off as planned. No word of TV networks delaying the release of any episodes over concerns that they contain violence. Not a single book release has been rescheduled, music video delayed, nor comic book axed over any of this. So why is this different?

Because video games. The scapegoating has gone on for so long that it's become etched into our psyches and only a conscious uncoupling is going to change that.

Filed Under: apex legends, delays, shootings, video games
Companies: espn

ESPN Has Lost 14 Million Viewers In 7 Years Thanks To Cord Cutting

from the swimming-against-the-tide dept

ESPN has long personified the cable and broadcast industry's tone deafness to cord cutting and TV market evolution. Executives not only spent years downplaying the trend as something only poor people do, it sued companies that attempted to offer consumers greater flexibility in how video content was consumed. ESPN execs clearly believed cord cutting was little more than a fad that would simply stop once Millennials started procreating, and ignored surveys showing how 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel.

The penalty for ESPN's failure to adapt has been severe. Disney's recent earnings revealed that ESPN lost another 2 million regular viewers this year. And while ESPN still has 86 million regular viewers, that's a 14 million regular viewer dip from the 100 million regular viewers it enjoyed in 2011. Those 14 million lost users generated around $1.44 billion per year for the "worldwide leader in sports," which is still saddled with the severe costs of set redesigns and sports licensing contracts the company struck while it was busy not seeing the massive locomotive of market change bearing down upon it.

While some of these wounds are inevitable due to shifting markets, many were self-inflicted. ESPN execs often tried to shoot the messengers instead of listening to the message. And once the damage was done, ESPN decided to fire hundreds of longstanding sports journalists and support personnel, but not the executives like John Skipper (since resigned for other reasons) whose myopia made ESPN's problems that much worse in the first place.

Ultimately, ESPN and Disney figured out that streaming was the future. In response, it launched a new direct-to consumer app dubbed ESPN+ that sort of provided users what they wanted, but not really. The $5 per month service basically took much of the fare available on ESPN's lesser-watched channels and offered it over the internet. But there were caveats; such as the service didn't really offer users what they really wanted (just a streaming version of ESPN's core channel) unless you subscribe to traditional cable, part of the "TV Everywhere" mindset cable execs can't seem to move past.

While ESPN's losses are the most notable, other Disney properties continue to see sharp viewership declines in the cord cutting era:

"Disney Channel has also seen its subscribers ebb to 89 million, down from 92 million in fiscal 2017. Freeform fell by 2 million to the 90 million mark. Disney Junior (69 million) and Disney XD (71 million) both lost 3 million subs. The numbers, attributed to Nielsen Media Research estimates, indicate that the growth of virtual MVPDs such as YouTube Live and Hulu’s package, are still not enough to offset a net decline in the subscribers from the traditional pay-TV world."

Again, many cable and broadcast industry executives are under the mistaken impression they get to choose when to adapt to the markets shifting around them. In reality they only have two choices. One, get out ahead of the shift toward streaming video by giving consumers what they actually want, even if that means losing some money in the short term. Or, refuse to adapt, double down on the belief that traditional cable TV is a cash cow that will never die, and watch as smaller, more flexible outfits continue to steal your massive subscriber base out from beneath your feet.

Filed Under: cable, cord cutting, sports
Companies: disney, espn

ESPN Has Finally Realized This Whole Streaming Thing Has Legs

from the go-figure dept

ESPN has personified the cable and broadcast industry's tone deafness to cord cutting and TV market evolution. Executives not only spent years downplaying the trend as something only poor people do, it sued companies that attempted to offer consumers greater flexibility in how video content was consumed. ESPN execs clearly believed cord cutting was little more than a fad that would simply stop once Millennials started procreating, and ignored surveys showing how 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel.

As the data began to indicate the cord cutting trend was very real, ESPN's first impulse was often to try and shoot the messenger. Meanwhile, execs doubled down on bloated sports licensing deals and SportsCenter set redesigns, pretty clearly unaware that the entire TV landscape was shifting beneath their feet.

By the time ESPN had lost 10 million viewers in just a few years, the company was busy pretending they saw cord cutting coming all the while. ESPN subsequently decided the only solution was to fire hundreds of longstanding sports journalists and support personnel, but not the executives like John Skipper (since resigned for other reasons) whose myopia made ESPN's problems that much worse.

Ultimately, ESPN and Disney figured out that streaming was the future. In response, it launched a new direct-to consumer app dubbed ESPN+ that sort of gave users what they wanted, but not really. The $5 per month service basically took much of the fare available on ESPN's lesser-watched channels and offered it over the internet. But there were caveats; such as the service didn't really offer users what they really wanted (just a streaming version of ESPN's core channel) unless you subscribe to traditional cable, part of the "TV Everywhere" mindset cable execs can't seem to move past.

Even then, the service still managed to gobble up more than a million subscribers in just over five months, a fact ESPN was quick to highlight in a press statement about the milestone:

"Reaching one million paid subscribers is an important milestone for any video subscription service, but reaching this benchmark in such a short amount of time is an incredible testament to the teams from DTCI and ESPN who have worked tirelessly to bring this product to market and continually improve it since our April launch,” said Kevin Mayer, chairman, Direct-to-Consumer and International, The Walt Disney Company. “We’re thrilled so many sports fans have quickly come to love the service. The future is bright and we believe growth will continue as we add features, distribution partners and more exclusive content in the coming months."

While better late than never, you have to think ESPN would have far more than a million subscribers by now if execs had actually paid attention to the market they inhabit. And while ESPN+ is making progress, ESPN still finds itself between a rock and a hard place in terms of providing users what they actually want (again, just a streaming version of ESPN). In short, if ESPN offers a standalone version of ESPN, it only encourages customers to cut the cord and move to less expensive (and less profitable) alternatives. If ESPN doesn't give customers what they want, they'll cut the cord out of frustration.

That said, you'd rather be out ahead of a major paradigm shift than trailing behind, a lesson ESPN execs seem to be slowly but steadily learning.

Filed Under: cord cutting, internet, sports, streaming
Companies: espn

ESPN Latest To Nix User Comments, Abdicate Its Responsibility For Fostering A Good Community

from the comment-nowhere dept

Readers of this site will be aware of the trend over the past several years for news and media sites across the internet deciding to nix their respective comments sections. This wave of muzzles on the communities that previously participated in these sites has come with a variety of reasons or excuses, depending on your perspective. Some sites have noted that comments sections devolve into the worst humanity has to offer, with vile speech and spam-bots sucking up all of the digital oxygen. Other sites have suggested that some sort of liability comes along with any proper moderation of their comments sections. Still others have pointed towards social media platforms that can better take over the duties as some sort of 3rd party community gathering place, be it on Facebook or Twitter. All of these reasons are silly and false, or they simply abdicate the site's responsibility for fostering a well-functioning community of commenters. Here at Techdirt, we love our own community and value the ever-living hell out of our comments, be they supporters of our positions or well-meaning dissenters. Trolls come along for the ride, of course, but we trust our own community to act as a moderating force against them.

And, yet, the trend continues. The latest site to shutter its comment section is ESPN, to much unfortunate fanfare at Deadspin.

No longer will you be able to read an ESPN.com article and then underneath receive the dumbest possible reactions to it. The Worldwide Leader has phased out its Facebook-hybrid comment sections, as confirmed by a company spokesperson this week. None of the keyboard mashing will be archived—they will be lost in time, like tears in rain.

Here's the official statement:

"Fans currently have more touchpoints than ever to voice their comments. We value their opinions, and feel that we are better able to serve them through our customer care team and our social platforms. In fact, we have and are continuing to create content for social that embraces these conversations and interacts with fans."

This is an abomination. Chintzy Instagram memes are no substitute for jokes that were plagiarized from somewhere else, or completely indecipherable opinions on Colin Kaepernick.

Readers at Deadspin will recognize this as classic Deadspin snark. The site's writers, despite having its own vibrant commenting community, have always taken a dim view of user contributions to the discussion. Somewhat amazingly, Deadspin in particular has a fairly good commenting community of its own, only deepening the mystery for the stance it takes here.

Well, perhaps not so mysterious. Simplistic might be the better word. Deadspin's objections, and likely ESPN's reasoning as well, is that ESPN comment sections tend to be the very kind of vile, idiotic contributions that we discussed in the intro. Deadspin, and likely ESPN, seem to stop the thought process right after making that determination and use it as its reason to muzzle the ESPN community entirely. What's lost in that kind of thinking is that the onus for fostering a good commenting community at ESPN is on... ESPN.

It's always been this way. There is so much benefit to be derived from a vibrant comments section, from increased reader engagement, to diverse thoughts that can shape discussion and the future work of the writers of posts, to a treasure trove of useful information and tips that journalists and commentators ought to be salivating over. The real story here is that ESPN has decided to toss all of those benefits out the window because it doesn't want to do any heavy-lifting to create a comments section that produces that kind of benefit.

It's the easy way out and no amount of snark or accurate portrayal of the current comments section as a cesspool will change that. Sites, if your comment section sucks, it's your fault. Taking your ball and going home, even if you're ESPN, is not the best option. It's not even a good option.

Filed Under: comments, social media
Companies: espn

ESPN Analysts Routinely Told Execs Not To Worry About Cord Cutting

from the nothing-to-see-here dept

ESPN has long personified the cable and broadcast industry's tone deafness to cord cutting and TV market evolution. The company not only spent years downplaying the trend as something only poor people do, it sued companies that attempted to offer consumers greater flexibility in how video content was consumed. ESPN execs clearly believed cord cutting was little more than a fad that would simply stop once Millennials started procreating, and ignored surveys showing how 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel.

As the data began to indicate the cord cutting trend was very real, insiders say ESPN was caught flat footed by the trend. Instead of adapting for the streaming era, the company spent years doubling down on bloated sports licensing deals and SportsCenter set redesigns.

These decisions ultimately came back to haunt the "worldwide leader in sports," resulting in ESPN losing 16 million subscribers over seven years (and an estimated 17,000 defecting viewers per day). As the accountability hammer began to fall, ESPN execs tried to pretend they saw this coming all along. ESPN subsequently decided the only solution was to fire hundreds of longstanding sports journalists and support personnel, but not the executives like John Skipper (since resigned) whose myopia made ESPN's problems that much worse.

This week, the Wall Street Journal offered up a report on the arguably stupid debate over whether ESPN's programming is partisan. In it was buried this little nugget indicating that the analysts ESPN paid to help prepare it for the future routinely told company leadership that cord cutting was a nothingburger that would never become a widespread issue. Even as late as 2014, when the stats were becoming very clear, analysts were telling execs they had nothing to worry about

"ESPN’s research department presented data arguing cord-cutting was unlikely to become widespread, according to attendees.

"They were flat-earthers," said one former ESPN executive.

At the same time, ESPN was spending aggressively. The company agreed to triple the fees it would pay the NBA, which it believes is growing in popularity. On the talent side, Mr. Skipper closely managed negotiations, desiring to beat back rivals like Fox Sports 1 and NBC Sports. Agents, former ESPN executives and hosts said that led him to overpay for several on-air personalities.

You'd hope that ESPN kept its receipts. Amusingly, executives could have simply read Techdirt for free and been better informed.

The irony is that ESPN hasn't fully gotten the message the cord cutting revolution is sending: give your customers what they want. While many don't watch sports at all, those that do and cut the cord simply want a standalone version of ESPN streamed for a monthly fee. And while ESPN recently unveiled a new streaming service it claims finally delivers this, we've noted how that's not actually true. ESPN's still so worried about cannibalizing the traditional cozy cable TV cash cow you still can't get a standalone ESPN streaming service without subscribing to traditional cable.

The thing many cable execs don't want to admit is this: rising programming costs and surging competition and choice means TV isn't going to be as profitable as it used to be. Companies can either cling tightly to outdated models in a misguided attempt to prevent inevitable evolution until it's too late, or they can get out ahead of the phenomenon now. There's still a large number of cable and broadcast executives under the false impression that there's a choice in the matter.

Filed Under: cord cutting, espn, internet, tv
Companies: disney, espn

ESPN To Combat Cord-Cutting By Putting Once Kinda Free Content Behind A New Paywall

from the that'll-show-'em dept

In reaction to cord-cutting, a very real "thing" no matter what some cable executives will tell you, ESPN has mostly employed two strategies to combat it. The first strategy has been to stick its head as far and deep into the sand as possible, virtually ignoring reality. Once that was no longer possible, the ESPN ostrich lifted its head out of the sand and squawked out a new streaming service, for which it would bill customers $5/month. In that last link, our own Karl Bode wrote:

There's every indication that ESPN's still only paying lip service to innovation. What consumers say they want is the ability to either avoid ESPN entirely, or buy ESPN the channel on a standalone basis. But it's important to point out that's not what ESPN is actually offering here. The new streaming service won't provide access to ESPN's existing channel lineup unless you have a traditional cable subscription. Without a traditional cable TV subscription, users of the app will be directed to other content they may or may not actually want.

While all of that is still mostly true, recent revelations about the new streaming service indicate that it's actually worse than Bode described. There will indeed be more content on ESPN+ that users probably do want -- such as MLB and NHL games --, much of the rest of the content offered through the service will be cannibalized from another ESPN property that has previously been kinda sorta "free" if you're a cable subscriber.

ESPN+ is also a way to get some extra money out of current subscribers, ones who might already be used to thousands of live sports over streaming. If this new service sounds a lot like ESPN3, the current online home—provided by many ISPs*—for thousands of sports that aren’t televised on ESPN’s TV channels, you’d be right.

While certain aspects, like the MLB and NHL games, are brand new, one of ESPN3's main draws is a wealth of college games in lesser-watched sports or conferences, as well as expanded coverage of Grand Slam tennis and global competitions like cricket. The network has so far been vague about which leagues and games will get cannibalized from ESPN3, or how many, but ESPN did confirm that some of ESPN3's programming will change.

ESPN3 comes along with many cable television packages that include ESPN's TV channels. The content for ESPN3 has always been the sort that isn't popular enough to air on the channels, but which might interest some customers. College games and niche sports make up the bulk of the lineup. But now ESPN will remove some of that content and put it behind a $5/month paywall, asking customers used to getting this content free, bundled with their cable subscription, to instead pay another $60 per year for it. Same content, more money, all while further reducing the value of an ESPN cable subscription, where ESPN still makes most of its money.

How is this a recipe for increased revenue?

You'll still get ESPN3 forced on you by your cable subscription (if you have one), it will just suck a little bit harder. Most of the sports content you want will still only be available through a cable TV subscription, which more and more people do not want. And ESPN+ will cost more money, while only being moderately better in content compared with the bundled in ESPN3.

This is what we call a swing and a miss.

Filed Under: cord cutting, paywall, sports, streaming
Companies: disney, espn

ESPN Still Isn't Quite Getting The Message Cord Cutters Are Sending

from the more-of-the-same dept

We've noted repeatedly how ESPN has personified the cable and broadcast industry's tone deafness to cord cutting and TV market evolution. The company not only spent years downplaying the trend as something only poor people do, it sued companies that attempted to offer consumers greater flexibility in how video content was consumed. ESPN execs clearly believed cord cutting was little more than a fad that would simply stop once Millennials started procreating, and ignored surveys showing how 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel.

As the data began to indicate the cord cutting trend was very real, insiders say ESPN was busy doubling down on bloated sports licensing deals and SportsCenter set redesigns. By the time ESPN had lost 10 million viewers in just a few years, the company was busy pretending they saw cord cutting coming all the while. ESPN subsequently decided the only solution was to fire hundreds of longstanding sports journalists and support personnel, but not the executives like John Skipper (since resigned) whose myopia made ESPN's problems that much worse.

Fast forward to this week, when Disney CEO Bob Iger suggested that Disney and ESPN had finally seen the error of their ways, and would be launching a $5 per month streaming service sometime this year. Apparently, Iger and other ESPN/Disney brass have finally realized that paying some of the least-liked companies in America $130 per month for endless channels of crap has somehow lost its luster in the streaming video era:

"There are signs that young people are coming into multi-channel television. People that were once called or thought to be cord-nevers are starting to adopt less expensive over-the-top packages," Iger said.

Who knew? Did you know? I certainly didn't know. Bloomberg, meanwhile, informs us that the company's new service is "Iger's bet on the future":

"If anything it points to what the future of ESPN looks like,” Iger said on a conference with investors. “It will be this app and the experience that it provides."

But will it? There's every indication that ESPN's still only paying lip service to innovation. What consumers say they want is the ability to either avoid ESPN entirely, or buy ESPN the channel on a standalone basis. But it's important to point out that's not what ESPN is actually offering here. The new streaming service won't provide access to ESPN's existing channel lineup unless you have a traditional cable subscription. Without a traditional cable TV subscription, users of the app will be directed to other content they may or may not actually want:

"The over-the-top service will roll out sometime in the spring, in tandem with a redesign of Disney's ESPN app. The over-the-top feature will be one part of that app, allowing users to watch live programming that will not otherwise be available on any of its channels. "The third feature is a plus service, we're calling it ESPN Plus, that will include an array of live programming that is not available — live sports, live sports events — not available on current channels," Iger said in an exclusive interview on CNBC's "Closing Bell."

This is something ESPN already tried once with the launch of ESPN 360 (ultimately renamed just ESPN 3) years ago. That channel offered access to streaming sports content, but not any of the content anybody was actually interested in (unless you're really crazy for men's professional hopscotch). What users want is either the option to buy ESPN as a standalone channel, or to avoid ESPN entirely. What ESPN's offering is a streaming channel retread filled with content viewers probably didn't ask for. All, again, because ESPN is afraid of cannibalizing its traditional viewership numbers by trying something new.

Admittedly ESPN is stuck between a rock and a hard place with no real easy options. ESPN currently makes $7.21 for each cable TV subscriber, many of whom pay for ESPN begrudgingly. Many industry insiders also have told me over the years that ESPN's contracts with many cable providers state that should ESPN offer its own streaming services, cable providers will no longer be bound by restrictions forcing them to include ESPN in their core lineups, which will only accelerate the number of skinny bundle options being offered without ESPN.

In short, if ESPN offers a standalone version of ESPN, it only encourages customers to cut the cord and move to less expensive (and less profitable) alternatives. If ESPN doesn't give customers what they want, they'll cut the cord out of frustration. But if ESPN actually wants to be ready for the future, getting out ahead of the inevitable shift to streaming is the only real solution. Nobody said evolution would be painless or the traditional cable TV cash cow would live forever. ESPN has the option of getting out ahead of the trend, or playing from behind later on when the cord cutting trend shifts from a trickle to a torrent.

Filed Under: cord cutting, espn, sports, standalone, streaming
Companies: disney, espn

ESPN Joins List Of Companies Enforcing Stringent Social Media Policies, Which Is Both Bad And Stupid

from the everything-is-politics dept

In these times in which I have spent many words and more calories lamenting the hyper-partisan uber-politicization of, well, pretty much everything, I have tended to focus on the primary effects of that silliness. It makes for bad elections, and therefore bad democracy. It grinds any kind of progress in government to a halt. It results in too many people making too little time to actualy listen to those that might not think as they do, instead devolving entirely too many conversations into soundbite name-calling, as though we were all participating on some national cable news roundtable.  

But the secondary effects of all of this are both important and terrible as well. An example of this can be found in major media companies responding to this partisanship, and particularly the silly amount of noise being made about how media itself is partisan, by instituting social media policies that are both draconian and stupid on the business side. And, if this sort of thing makes you feel any better, it happens on both sides of the political aisle. In recent weeks, for instance, both the New York Times and Wall Street Journal have rolled out social media policies disallowing their respective journalists from publishing anything partisan.

The New York Times waded back into this particular swamp when it introduced an update to its social-media guidelines earlier this month, and reinforced the fact that its journalists are not to express any “partisan opinion” on social. The Times also noted that while reporters might be using these accounts on their personal time, anything said on them is the purview of the paper because of their association with it.

Not to be outdone, The Wall Street Journal this week released an update to its social-media policy. It reiterated the existing prohibition against “posting partisan comments on social networking sites,” and added that the paper’s management believes some reporters and editors “are spending too much time tweeting.”

This is silly for a number of reasons, chief among them that it will not have the desired effect. The New York Times will still be the dirty liberal communist left for those of a certain lean, while the Wall Street Journal won't be suddenly seen as the bastion of the middle ground for those of another. Stifling the social media presence of your media personalities to cultivate some non-partisan moniker is laughable. But it's also bad for business. People follow those media personalities, many of them that do opinion-based work, because they want to know what those personalities think. Slapping duct tape over the mouths of those that are the magnet for a media company's audience is the exact opposite of what they should be doing. For those more on the journalistic side than opinion side of things, it's slightly more understandable for a media property to want to appear politically even, except that we already said that wasn't going to happen.

And if you thought this was only going on in the arena of traditional news media, you're wrong. ESPN too, in the wake of the Jemele Hill vs. the White House episode, has gone further and required that their personalities not do things that draw any attention to ESPN that it doesn't want. And if you think that sounds vague, that's how the actual policy is written.

ESPN distributed new social media guidelines to its employees Thursday, which reinforced some existing rules about not breaking news exclusively on social media, respecting colleagues, and—oh wait, here’s a new thing: “Do nothing that would undercut your colleagues’ work or embroil the company in unwanted controversy.”

How is the average sports commentator or journalist supposed to know which types of controversy the company might want and which it doesn't? It's worth remembering that ESPN is essentially a marketing company more than it is in the journalism business. It wants attention, generally speaking. More attention, more eyeballs, more money. At least the New York Times and Wall Street Journal had the common decency to list an actual offense to avoid: partisanship. ESPN's guidelines instead puts its employees' employment at the pleasure of whether or not enough of the public will be upset at what they say on social media to warrant "controversy." That's crazy.

And even more so than with straight news media outlets, sports journalism and ESPN are almost entirely opinion-based. So ESPN wants to take people that follow its personalities for their opinions...and tell them not to be opinionated on social media? That doesn't make any sense. And, again, it won't achieve its goal. ESPN is the land of the socialists. We know so because Rush Limbaugh told us as much. No social media policy is going to change that.

The ultimate cure for this is, of course, the normalization of our political discourse, moving it back to the more reasoned discussions we at least think we remember having. These social media policies are a symptom of the problem, not a cure to it.

Filed Under: bias, journalism, opinions, social media
Companies: espn

As A Streaming Future Looms, ESPN Is Damned If It Does, Damned If It Doesn't

from the rock-and-a-hard-place dept

So for years we've examined how executives at ESPN completely whiffed at seeing the cord cutting revolution coming, and personified the industry's denial that a massive market (r)evolution was taking place. As viewers were beginning to drift away from traditional cable and erode revenues, ESPN executives were busy doubling down on bloated sports contracts and expensive Sportscenter set redesigns. Only once ESPN lost 10 million viewers in just a few years did executives finally acknowledge that cord cutting was a problem, though they subsequently have tried to downplay the threat at every opportunity.

The question now is how to fix that problem. ESPN's first step was to try and save costs by firing oodles of on-air talent, but not the executives that failed to navigate this sea change. That has since been followed by ESPN-owner Disney recently proclaiming it would be offering two direct to consumer streaming platforms -- one stocked with Disney and Pixar fare, and the other being a direct to consumer ESPN product. During a recent earnings call, Disney CEO Bob Iger verbalized the company's slow epiphany in the face of cord cutting:

"We’ve got this unbelievably passionate base of Disney consumers worldwide that we’ve never had the opportunity to connect with directly other than through the parks,” Iger said. “It’s high time we got into the business to accomplish that.”

Iger acknowledged that the decision to act was spurred by the disruption in the traditional TV eco-system that has been rocking ESPN for the past few years. But Disney’s blue-chip brands give them a leg up in taking a radical new approach to reaching consumers.

“It’s not just a defensive movie, it’s an offensive move,” Iger said.

Granted it's not really playing offense when you only react after worries about cord cutting and ratings slides causes a $22 billion valuation hit in just a few days, something Disney experienced last year. Still, it's good to see Disney pull its head out of the sand and embrace the idea of giving consumers what they want, even if the move is painfully belated and under-cooked. The problem for ESPN specifically, as many have been quick to point out, is that the company is still stuck between a rock and a hard place in terms of navigating the transition to streaming -- even if it does everything right (which it won't).

There's plenty of reasons for that, the biggest being that streaming simply can't be as profitable as the long-standing practice of forcing cable TV customers on to bloated bundles filled with channels (like ESPN) that they may not want. ESPN currently makes $7.21 for each cable TV subscriber, many of which pay for ESPN begrudgingly. One survey found that 56% of ESPN viewers would ditch the channel if it meant saving that money off of their monthly bill. Fear of losing those customers was one of the reason ESPN sued Verizon when the company tried to take ESPN out of its core TV bundle.

And while ESPN may now be technically doing the right thing in finally offering a direct-to-consumer streaming product, such an offering will only aid to expedite viewer defections, while ESPN's sports licensing costs remain the same:

"A streaming service, while it might attract sports fans who have cut the cord, won’t solve ESPN’s profit problems. Instead it will exacerbate them. Why? Because ESPN will continue to lose the millions upon millions of cable subscribers who pay for it but never watch it. Losing $7.21 from each non-watcher is going to be a revenue killer. There is no possible way the universe of sports fans who want ESPN can make up that revenue, even if they’re charged more for a streaming service."

Traditionally, many cable and broadcast companies have tried to give the impression of adaptation by launching a streaming service, then saddling it with all manner of caveats to prevent existing, traditional cable TV customers from downgrading to the cheaper, more flexible streaming option. This really never works, but it looks like the path Iger and Disney are going to follow when it comes to ESPN's latest streaming venture:

"To make matters worse, Disney appears to be planning a streaming service that even the most rabid sports fan will be reluctant to pay for. All the good stuff — big-time college football, professional basketball, the Monday night National Football League game — will remain exclusively on ESPN’s cable channels. The streaming service will get, well, other things. It’s pretty clear that Iger is still trying to protect Disney’s legacy cable business, and that his move to the internet is not exactly a wholehearted embrace."

In other words, ESPN's epiphany and transition isn't quite as profound as many are suggesting, and ESPN still somehow believes it can control the rate of evolution; a fool's errand. Many industry insiders also have told me over the years that ESPN's contracts with many cable providers state that should ESPN offer its own streaming services, cable providers will no longer be bound by restrictions forcing them to include ESPN in their core lineups, which will only accelerate the number of skinny bundle options without ESPN.

It's a damned if you do and damned if you don't scenario for ESPN, and even if ESPN does all the right things here and offers a truly compelling streaming platform customers really enjoy -- there's simply no getting around the fact that this transition is still going to really hurt.

Filed Under: cord cutting, streaming, television
Companies: disney, espn

ESPN Axes Long-Standing Reporters, But Not The Execs That Failed To See Cord Cutting Coming

from the forest-for-the-trees dept

For years ESPN has been the perfect personification of the cable and broadcast industry's almost-comic denial regarding cord cutting and market evolution. Long propped up by a system that forces consumers to buy massive bundles of largely-unwatched channels, ESPN has struggled with the rise of streaming alternatives and sleeker, "skinny" channel bundles. The sports network, which has lost 10 million viewers in just the last few years, has been trying to argue that these losses (which caused Disney stock to lose $22 billion in value in just two days at one point) are simply part of some kind of overblown, mass hallucination.

Surveys have shown that 56% of consumers would drop ESPN in a heartbeat if it meant a reduction in the $8 per subscriber the channel is believed to cost. But last year, ESPN exec John Skipper suggested that these departing customers weren't worth keeping anyway:

"People trading down to lighter cable packages. That impact hasn't leaked into ad revenue, nor has it leaked into ratings. The people who’ve traded down have tended to not be sports fans, and have tended to be older and less affluent. We still see people coming into pay TV. It remains the widest spread household service in the country after heat and electricity."

All is well! Nothing to see here! This narrative that cord cutters are somehow uneducated, too old, or otherwise not worth keeping (which isn't true) sits at the heart of cable and broadcast executive denial. And while execs like Skipper consistently insisted that everything was under control, former ESPN talent like Bill Simmons have noted that the cord cutting revolution came out of left field and surprised the hell out of the self-proclaimed worldwide leader in sports, which had spent years spending millions on SportsCenter set updates and licensing deals with nary a care in the world.

Instead of identifying market evolution and quickly adapting, ESPN did, instead, what any other legacy company would do. One, it began suing companies that tried to offer more innovative, disruptive cable TV packages that didn't include ESPN by default. Two, it began yelling at companies like Nielsen simply for showing company executives the truth: ESPN was losing subscribers at an alarming rate. In short, executives doubled down on bad behavior and denial, something fans had noticed for several years:

This week, some ESPN employees began paying the price. Including long-standing workhorse beat reporters like Ed Werder, who was among 100 on-air personalities and writers given pink slips this week.

In a memo posted to the ESPN website, Skipper proclaimed the staff reductions were necessary to "manage change" (something Skipper has shown himself incapable of doing while somehow remaining employed):

"A necessary component of managing change involves constantly evaluating how we best utilize all of our resources, and that sometimes involves difficult decisions...Dynamic change demands an increased focus on versatility and value, and as a result, we have been engaged in the challenging process of determining the talent—anchors, analysts, reporters, writers and those who handle play-by-play—necessary to meet those demands. We will implement changes in our talent lineup this week. A limited number of other positions will also be affected and a handful of new jobs will be posted to fill various needs."

That's great and all, but purging your on-air talent won't magically make executives like Skipper less myopic and more flexible. After losing an estimated 10,000 viewers per day, ESPN recently stated it will finally offer a standalone streaming service. But that won't solve ESPN's woes either. I'm told many of Disney/ESPN's contracts with cable providers contain provisions that prohibit cable providers from offering channel bundles without ESPN -- unless ESPN offers a standalone streaming service. In other words, even if ESPN adapts, it opens the door to new skinny, sport-free bundles without ESPN -- accelerating subscriber declines.

None of this is pretty, and were I a betting man I'd wonder if Disney/ESPN doesn't get swallowed up completely by a company like Verizon sometime in the next year. At that point you'd have to wonder if ESPN execs, like John Skipper (you know, the ones actually responsible for the channel's monumental implosion) might actually face something vaguely-resembling accountability.

Filed Under: business, cord cutting, predictions, sports
Companies: espn