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The Future of Cable TV: ESPN's Move Towards Streaming

The Future of Cable TV: ESPN's Move Towards Streaming

  Many still prefer cable TV and are likely to continue paying for it, though streaming services could become increasingly attractive alternatives. It is therefore crucial for the industry to develop effective strategies to retain people and keep them engaged with its offerings. One way is to provide better customer service on streaming platforms, where people may become frustrated while trying to reach an actual human being. ESPN’s Place in a Streaming-Dominated Sports World ESPN is an integral part of many sports fans' viewing experiences, providing highly produced shows about top leagues, players, and teams as well as exclusive rights for major events that can only be seen on its channels - like its coverage of the National Basketball Association March Madness tournament since 1980; one of television's most well-known and widely enjoyed events. But ESPN isn't alone in the streaming market. A number of media giants are betting that direct-to-consumer streaming services will become the norm for digital sports content delivery in the near future, such as Apple and Amazon, who already boast significant presence through standalone sports services with exclusive content available only through them. Companies like these have spent billions purchasing sports rights while using their platforms to sell additional streaming offerings that include movies and shows. ESPN must find its place in this new environment, and one approach could be making its over-the-top service, ESPN+, the primary destination for its sports content in the future. According to research notes issued by Barclays analysts, ESPN+ may become "self-sustaining force" by becoming the hub of live sports content delivery. As more people abandon traditional cable packages and opt for streaming-only services instead, ESPN+ streaming service will become even more necessary than before. How subscribers choose to pay either $10 per month or $100 annually could have an enormous effect on its future success and could change how its future unfolds. As more consumers transition away from traditional pay-TV providers and toward streaming subscriptions, live sports rights prices are expected to keep increasing. Therefore, traditional broadcasters are seeking ways to diversify their streaming offerings by acquiring or creating regional sports networks with more specialized programming offerings. ESPN stands out from competitors with its brand recognition, strong corporate backing and early adoption rates of streaming. That is why The Bowdoin Orient editorial team decided to support ESPN+ through our annual subscription. ESPN’s Streaming Strategy ESPN's future on cable TV remains in doubt, and more cord-cutters are opting for streaming than ever before, making the time right to offer an independent version of ESPN. Problematically, ESPN won't be able to survive solely on subscriber fees alone. An average cable subscriber pays about $120 monthly while its most popular channels bring in billions in annual revenues; by contrast, niche channels typically make only pennies each month. Current bundles make it challenging to drop ESPN without also cutting out popular channels, leading to a vicious cycle whereby the more popular networks push cable companies to add additional channels that increase cost and make it difficult for consumers to justify paying such an exorbitant sum for such numerous services. ESPN is taking steps to protect itself against losing a significant source of revenue by making major adjustments. They have begun simulcasting some live events on ESPN+ platform as well as negotiating exclusive rights for domestic sports - this allows fans to watch NFL and NHL games that air on ESPN in addition to its existing lineup of content. But that won't be enough to forestall its inevitable decline; more viewers are gradually making the switch from broadcast TV to streaming services, forcing sports networks like Fox to move closer towards direct-to-consumer if they want to remain afloat in this evolving marketplace. Disney's ownership of most of the media empire gives it the power to ensure ESPN's transition is as seamless as possible. They could package it with other services and offer comprehensive sports offerings comparable to Hulu, Paramount's new Peacock service and Fox streaming offerings. ESPN must find ways to monetize its expensive sports-broadcasting rights by selling access directly to consumers or it risks facing an uncertain future. ESPN’s Move Towards Streaming ESPN is well positioned to capitalize on the streaming revolution. Its app, ESPN+, has garnered an increasing following while live game broadcasts can also be found on Hulu and other services. But to increase revenue further still, ESPN could package its sports content together and sell directly to consumers - something it reportedly talks with other networks about doing as reported by CNBC. Such an initiative would represent a bold step as its current model relies on cable companies bundling it with bundles for subscribers' subscription. ESPN, like other media networks, generates billions annually through pay-TV subscription fees. While niche channels with limited viewing often charge just a few dollars monthly from subscribers, ESPN demands several times that amount from distributors - which explains why its loss of millions of viewers due to cord cutting poses such a serious threat for the industry as whole. The decline of traditional TV viewing and the proliferation of streaming platforms have forced sports leagues to revisit their longstanding business models. For instance, the NFL recently switched its Thursday Night Football games from Fox Sports and NFL Network to Amazon Prime and NBCUniversal's Peacock streaming service; such an action may lead to cable providers closing shop or offering direct-to-consumer services akin to Comcast's NBC Sports app. Disney is following suit by developing its upcoming streaming service Disney+ to compete directly with ESPN+, but switching to direct consumer access would present another unique challenge to ESPN: churn. As with other streaming providers, ESPN would face similar issues such as people cancelling before going back into a subscription once watching games is no longer desired - something other direct-to-consumer services do not need to contend with. ESPN is adapting to this changing reality by expanding their streaming service and including links on their website and app that direct people to other live game streaming services, according to CNBC. ESPN executives' confidence that they will continue dominating sports world despite more people opting out of cable TV is evident through these measures. ESPN’s Streaming Plans Streaming has given ESPN new ways to reach viewers, but it won't replace its traditional television audience. Bidding from tech companies with deep pockets has driven up sports rights prices significantly and made it harder for ESPN to justify how much it spends broadcasting events. ESPN has responded to this by expanding their streaming offerings with live games via ESPN+ and archived sports such as baseball, basketball, golf, hockey, tennis, soccer and UFC (excluding its pay-per-view events). ESPN+ can be found across most devices and platforms from Apple TV, Roku and Xbox One all the way through to Android smartphones. Future developments of ESPN+ may include expanding to cover all sports coverage, including live games. This would enable it to compete with Fox Sports, CBS Sports, and NBC Sports who all offer live sports streaming services and apps of their own. Such an action could prompt additional streaming services to follow suit further fragmenting pay-TV bundles while raising questions as to the sustainability of current models. Jimmy Pitaro, chairman of ESPN, recently stated that it's inevitable for them to move all live events from broadcast TV onto their streaming app, though such a decision would require the approval of Walt Disney CEO Bob Iger who owns both ESPN and its parent company Walt Disney. At present, the network is focused on increasing awareness of its live streaming services and building its user base. One strategy being considered by management involves including links on their website or app to direct viewers towards live sports broadcasts on other platforms - in exchange for providing these links, the network would earn a percentage of subscription revenue when someone signs up through its link - but wouldn't receive any cut if someone already subscribes through a competitor streaming service. This approach may present its own set of difficulties, particularly given streaming glitches that have plagued fans this season, from DirecTV's two outages of NFL Sunday Ticket to Amazon Prime Video's less-than-seamless debut of Thursday Night Football. But as pay TV subscribers continue to decrease and ad-supported streaming become more widely adopted, ESPN must find new methods of reaching its viewers.

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