The two most aggressive media businesses chasing sports rights this year are barely six months old.
ESPN+ and B/R Live, two streaming services from ESPN and Turner Sports, both launched in April and have been amassing an impressive amount of live streaming rights (see chart, left).
Where some of the deep-pocketed technology companies — such as Amazon, Facebook and Twitter — largely have been using sports rights to experiment with new business models, ESPN and Turner have embraced the streaming platform and are signing deals to fill their services.
But that’s where the similarity between the two ends. Each company is using a radically different strategy to grow in the streaming marketplace.
ESPN+ provided in- market streaming of all non-national Chicago Fire games this season after reaching a three-year agreement with the MLS club. Allen Kee / ESPN Images
ESPN opted to follow a model used by services like Netflix and Amazon Prime. ESPN charges a smaller monthly price ($4.99 per month) as a way to entice more subscribers to sign up. ESPN+ recently eclipsed the 1 million subscriber mark, a number that benefited from ESPN’s early August decision to combine the 20-year-old ESPN Insider with ESPN+. Sources say the number of Insider subscribers that were converted to ESPN+ was around 300,000.
“The thing that we all felt has been a boon to folks like Netflix and Prime is that there’s a simple model and simple pricing to it,” said Kevin Mayer, chairman of direct-to-consumer and international at The Walt Disney Co. “We like the simplicity of the business model and also the ongoing nature of the relationship that you can get through subscriptions versus these one-off purchases. We can track our subscribers’ affinities and usage patterns in a way that will be difficult to do if you’re just selling a one-off access to a program. There are different models and different consumer insights you get from each. We wanted to maximize our service of consumers by understanding them better.”
Turner, on the other hand, has adopted more of a pay-per-view model for its B/R Live. Take its UEFA Champions League, the most popular programming it currently offers. B/R Live is selling subscriptions to watch the Champions League per game ($2.99), per month ($9.99) and per year ($79.99).
“There are many ways you can go at this,” said Turner Sports President Lenny Daniels. “You can go amass a lot of different subs and put them all together. That sounds like what ESPN is doing. Or you can take a more tactical approach, which is more of what we’re doing, to learn and grow from there. You can spend money. For us, it’s about learning first and making smart, strategic moves as we move into the space.”
Faced with a dropping subscriber base and rising rights fees for its linear cable channels, it seemed like a natural for ESPN and Turner to get involved in the direct-to-consumer market. More than a defensive strategy, both media companies consider their streaming services as big growth opportunities, ones where they can get a better idea of how people watch their shows.
“The companies that have that direct relationship with consumers are able to fully understand through data how those consumers behave and what they want and therefore serve them better,” Mayer said. “We can serve our consumers better. We can also enter into a part of the value chain, which will provide us with a lot of growth.”
Only a month into the UEFA Champions League season, B/R Live already has started to tweak its offering based on how its subscribers are watching the games.
“We’ve been testing and pivoting immediately depending on what we see, what we know, what we’re thinking,” Daniels said. “We’re going to understand what people are actually doing. Once we get to the point where we understand how to scale, we understand what we want the audience to do throughout the entire ecosystem of Bleacher and Turner broadly, then it will give us a much clearer direction of where we go and what we look at in the form of properties.”
Programming on these services runs the gamut from B/R Live’s upcoming Tiger Woods-Phil Mickelson pay-per-view golf match that broadcast networks wanted to the World Armwrestling League that it carried over the summer.
Carrying World Armwrestling League programming was about B/R Live reaching an engaged audience in different ways, says Turner’s Lenny Daniels.Courtesy of Twitter
“The arm wrestling was less about amassing an enormous audience or a young male demo,” Daniels said. “It was about learning how to take an engaged audience and seeing if we can reach them in different ways and talk to them in different ways.”
ESPN+ has a similar mix, with Top Rank boxing and Grand Slam tennis matches appearing on the service alongside college rugby and international cricket.
“Those are the two biggest differences in today’s world with ESPN+ — there are deals where we would have been partially interested before and now we’re interested in a comprehensive way; and there are deals where we may not have been interested in at all, we’re now interested in on a baseline level,” said Burke Magnus, ESPN’s executive vice president of programming and scheduling. “This is part of the key promise of ESPN+. There are pockets of super avid fans of a whole lot of sports that are underserved from a linear perspective. We believe there is a good business there if we can string a number of these sports back-to-back-to-back within the same product providing great depth and great value for ESPN+ subscribers.”
