As consumers, we are in an odd time period where cable TV is in a state of flux. Cable bills seem to continuously rise, in large part due to major sports networks charging more for their services. This movement is forcing consumers to consider alternatives.
An increasing trend seems to show that customers are signing up for simple internet packages and nixing their cable. To save some money, they are then subscribing to platforms like Netflix and NBA League Pass to meet their entertainment needs. Yet, sporting events like this year’s Super Bowl are still grabbing the highest ratings ever seen.
Companies like Fox Sports and ESPN are doing what they can to hold onto those cable subscribers. At the same time, they are trying to cater to the needs of consumers-on-the-go by creating apps and new options that allow live streaming to mobile devices and laptops.
But why? What do these companies stand to gain from developing these technologies? To answer this question, it’s important to look at how these companies are walking a very fine line between consumer’s wants and their needs.
Fox Sports Go and WatchESPN
The basis of both Fox Sports Go and WatchESPN is to ensure fans can watch sports content no matter where they may be. Original programming, such as Pardon the Interruption and Crowd Goes Wild are available on each respective app.
It’s pretty simple really: Each app allows the sports consumer to enjoy “free” live content streaming to their laptop or mobile device through each app.
“Free” should be used with caution though, because a cable provider subscription is necessary for each app to work. Because of this required subscription, both Fox Sports and ESPN are able to persuade current customers to stick around.
Each app offers their own variety in sporting content as well. ESPN allows users to watch college and professional football, parallel levels of basketball, major golf and tennis tournaments, and more. WatchESPN really steps into its own for going back to the company’s roots, also allowing users to watch niche sports like cricket.
It doesn’t stop there either, because ESPN3, ESPN’s online streaming service incorporated into WatchESPN, can be accessed with a simple internet subscription, no cable necessary. Even more rewarding is the fact that current college students and military personnel are able to utilize on-campus and on-base networks to access ESPN3 for free.
ESPN3 is also available to those that have a Gold subscription to Xbox Live. Greatness awaits too, because programming is on-demand, whether you want to watch SportsCenter or some non-televised college sports.
Fox Sports Go has its own unique lineup. With UEFA Champions League matches, UFC bouts, NASCAR races, and their own college sports, this app comes in its own unique “flavor.”
But the general idea behind both apps is to give users a new way to consume the sports they want, when they want, and where they want.
A Fine Line
Both Fox Sports and ESPN have been rather careful in their mobile streaming endeavors though, and rightly so. On one side of the line, the consumers have a desire for sports entertainment. The other side of the line involves sports entertainment providers that produce content and allow access to the final product.
By providing sports content on the go, they are allowing the consumer an “extended freedom.” Companies like Fox Sports and ESPN must tread lightly though. The last thing the Worldwide Leader in Sports wants is to chase away their loyal paying customers.
Because a cable or internet subscription is required for access to this extra content, both Fox Sports and ESPN are careful to maintain current subscribers. The apps, Fox Sports Go and WatchESPN, are both meant to be extensions of their cable networks, not replacements.
However, consumers are finding reasons to ditch their cable subscriptions. One reason can be attributed to the rising cost. ESPN alone costs cable providers $5.54 per month just to carry the network. Much of this cost is then being sent straight to the consumer.
Apps such as watchESPN are helping to entice cable loyalists to stay on-board. Little does the consumer know that the app is actually costing cable providers more. For instance, Verizon FiOS offers the app to their consumers, but pays 19 cents more to ESPN.
When carefully considering these costs, it’s easy to make an argument for ditching cable and subscribing to Netflix coupled with NBA League Pass, for example. But the idea for ESPN and Fox Sports is to offer the applications as an extension to their services, all while nabbing an extra revenue stream or two.
Revenue Streams Meet at a Confluence
Much like the beloved rivers in Pittsburgh meeting at a confluence, ESPN and Fox Sports are extending their services to create an extra revenue stream that leads straight to others.
Aside from the extra 19 cents that cable providers are paying the media companies, how are these two media companies gaining a revenue stream? That question is easily explained by considering ad sales.
Just like their cable counterparts, programs streamed through mobile devices allow room for advertising. Simply stated, this digital ad space is additional revenue. While the apps enable display ads, the system isn’t complete yet. Some ad spots are short and have difficulty allowing ads to properly fit. But this will change with time.
Streaming content apps are evolving along with the sports industry. They will only gain importance to companies like ESPN and Fox Sports because of their value. Extra ad space is one thing. But the effects are multiplied when more viewers are tuning into their mobile devices to catch games; big games.
Although streaming apps are costing sports media companies more when at the negotiating table with the likes of the NFL and MLB, ESPN has a positive outlook on the situation. For instance, 200 brands bought ad spots on watchESPN last year, yet there is room for expansion.
Additionally, 773,000 viewers tuned into WatchESPN to catch last year’s BCS National Championship game. This number is not staggering by any means. But it certainly shows some promise. It shows a need for streaming content and nothing would delight ESPN more than to fulfill that need.
As the sports industry continues to expand and grow with consumers, gaps will become evident. These gaps, such as the desire to stream content on the go, will be eaten up by the likes of ESPN and Fox Sports.
Throughout its history, ESPN has found tremendous ways to innovate and push the industry to the next level. Streaming apps are just another opportunity for the Worldwide Leader in Sports to capitalize on. The potential is there, which will cause ESPN’s eyes to light up like a kid on Christmas. And nothing will delight Fox Sports more than trying to steal that thunder.