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State of the Screens

Is ESPN+ A Winner For Disney?

By February 25, 2021One Comment

Mickey + ESPN

Big news: ESPN+ passed 12M subscribers. They had previously projected reaching that number by the end of 2024.

ESPN Paid Subscriber Outlook

ESPN+ subscribers (YoY growth):
1) 2019 – 6.6M
2) 2020 – 12.1M (↑ 83%)

Why this matters: Traditional pay-TV subscribers for ESPN have fallen from a peak of 100M in 2010 to 89M today. ESPN+ is not ready to replace traditional ESPN as the breadwinner, but direct-to-consumer is the future for the worldwide leader in sports.

ESPN subscribers through traditional pay-TV (YoY growth):
1) 2010 – 100M
2) 2011 – 99M (↓ 1%)
3) 2012 – 98M (↓ 1%)
4) 2013 – 99M (↑ 1%)
5) 2014 – 95M (↓ 4%)
6) 2015 – 92M (↓ 3%)
7) 2016 – 90M (↓ 2%)
8) 2017 – 87M (↓ 3%)
9) 2018 – 86M (↓ 1%)
10) 2019 – 85M (↓ 1%)
11) 2020 – 82M (↓ 4%)

Big question #1: How does ESPN make money?

Quick answer: Through a combination of affiliate/subscriber fees, direct-to-consumer subscriptions, and advertising.

Source of revenue for ESPN (% of total) according to Kagan:
1) Subscriber fees – $9.5B (79%)
2) Advertising – $2.6B (21%)
3) Total – $12.1B

Big question #2: How important is ESPN to Disney?

Quick answer: Extremely important.

2019 financial model for ESPN according to the Motley Fool:
1) Revenue – $12.1B
2) Content expenses – $8.8B
3) Operating expenses – $1.3B
4) Operating income – $2.0B

Big question #3: How does ESPN increase total subscription revenue with ≈ 18M fewer subscribers?

Quick answer: Price increases.

Quick math #1 on ESPN subscriber revenue:
1) 2000 – 100M subscribers X $1.14 X 12 = $1.4B
2) 2011 – 99M subscribers X $4.27 X 12 = $5.0B
3) 2019 – 85M subscribers X $9.06 X 12 = $9.2B

Quick math #2 on ESPN subscriber revenue:
1) Subscribers – ↓ 15%
2) Average monthly fee -↑ 695%
3) Subscription revenue -↑ 557%

Monthly fee for various sports networks according to Business Insider:
1) ESPN (ESPN, ESPN2, ESPNU, SEC Network) – $9.06
2) Fox Sports (FS1, FS2, Big Ten Network) – $1.86
3) NFL Network – $1.39
4) NBC Sports (NBCSN, Golf Channel) – $0.68
5) NBA TV – $0.30
6) MLB Network – $0.28
7) CBS Sports – $0.26
8) Tennis Channel – $0.15
9) Univision Deportes – $0.14

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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