Disney finally has a plan to offer live streaming video service online for ESPN, but critics already see it as half-baked

Disney is betting that people will pay big bucks to see live streaming ESPN online services to view niche sporting programs
such as 2015's Cricket World Cup, but not so much the NFL, NBA, MLB, NHL, or any other marquee professional sports leagues
In an effort to stem the tide of cord cutters jumping off the cable bundle band wagon, it appears Disney and ESPN finally have an experimental plan in place to test the waters of selling live, streaming, online sports programming to sports fans everywhere to try to recapture some of the lost revenue from cord-cutters and cord-shavers jumping off their cable subscriptions over the past four years.

Cable subscription losses have hit Disney stock prices really hard over
the past year because even live sporting events are not immune to the 
cord-cutting phenomenon
Since August of last year, Wall Street has been clamoring for Disney to try to find some sort of solution to save the 24-hour all-sports cable network from an imminent demise, which has been progressively losing more paying subscribers by the millions for the past four years, but Disney has been very slow to react which has greatly worried its investors.

Because Disney has not moved an inch on adapting to the fast changing media landscape to quell further fears from investors, their stock has taken a beating on Wall Street because many security analysts perceive that the goose that laid the golden eggs for Disney, namely ESPN, has all but dried up.

According to media sources, ESPN leaked plans last Thursday, in a meeting of media and technology titans at Sun Valley, Idaho, on unveiling a live streaming package of limited sports programming that it will offer directly to consumers online, said a spokesman with knowledge of the plans.


It's about time; however, there’s a catch, and it's a big one which has many Disney investors groaning nonetheless. 

How important is ESPN to Disney? It alone makes up more than half of
Disney's operating income and outperforms all other divisions, combined
ESPN's new offerings online won't include highly-coveted live sporting events from the NFL, the NBA, MLB, or other marquee professional sporting leagues that cable bundle subscribers have come to expect from the ESPN networks.

After all, that's what differentiates ESPN from every other cable sports network out there (e.g., Fox Sports, NBC Sports Network, CBS Sports Network, etc.)

Instead, Disney is only taking half-hearted baby steps to offer only minor colleges games and other insignificant niche sports that nobody is interested in watching, much less paying for, in a standalone video on-demand service over the internet. 

The problem with ESPN’s half-baked plans is that they don't seem to understand what the term “over the top” means to paying customers who expect full-services from the network online and on-demand when they put up lots of cash for the privilege of subscribing to ESPN as a standalone service. 


Give the public what it wants, which is the access to all their live professional sporting programs, including NFL, NBA, MLB, or NHL. However, Disney's failure to deliver what their customers want seems to show they still don't have any good solution to their cable bundle subscription problems, and that's got a lot of Wall Street investors very worried.

Problems at ESPN abound as their profits are shrinking in line with
its declining subscription base
Nobody in their right mind is going to pay $100 for the privilege of watching the Cricket World Cup on the web with spotty live-streaming video that cuts in and out every five minutes, as ESPN offered last year. 

For that amount of money, one can get numerous other live streaming entertainment subscriptions or a skinny cable bundle.

Thus, it appears the Disney's woes in watching its golden goose drying up and failing to lay any golden eggs anytime in the near future is bad news for the financial health of the international media giant.

Since acquiring the all-sports network in 1996, through its acquisition of Capital Cities Communications, which included ABC TV networks, ESPN has generated 30% of Disney sales and over half its operating income. 


One cannot ignore the importance of ESPN to the financial health of the Walt Disney Company. It is the crown jewel of media networks division, and the House of Mouse’s primary bread winner in terms of generating cash.


However, Disney’s cable business has lost a great deal of its luster in recent years due to cord cutters leaving their expensive cable subscription bundles for cheaper online options, such as streaming online services (e.g., NetFlix, Amazon TV, Apple TV, etc.), and other more competitive skinny cable bundles, such as Dish Networks' Sling. 


Between 2011 and 2015, Disney's ESPN subscribers fell from 99 million to 92 million. Last year alone, the cable industry lost more than 3 million subscribers, showing that the trend is not stopping anytime soon, but in fact accelerating over time.


Unless Disney comes up with a better solution to bridge the gap from declining cable subscriber numbers in the near future, they can expect more declines in their stock prices on Wall Street.


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