56% Would Drop ESPN In A Heartbeat If It Meant Saving $8 A Month On Cable

from the goodnight,-sweet-dinosaurs dept

Over the last year, ESPN’s decision to laugh off cord cutting has truly come home to roost. The company has had to engage in numerous “belt tightening measures” after losing around 7 million subscribers in just two years. Where are these subscribers going? Many are cutting the TV cord entirely. Others are opting for so-called “skinny bundles” that pull pricier channels like ESPN out of the core cable lineup, moving them to additional, premium channel packs. Companies like Verizon that have experimented with skinny bundles have been rewarded for their efforts with with lawsuits from ESPN.

But there’s every indication things will be getting worse for our friends at Disney and ESPN.

A new study commissioned by BTIG Research and analyst Rich Greenfield (registration required) found that 56% of those surveyed would happily ditch ESPN if it meant saving them $8 a month. 60% of females say they would ditch the channel for the $8 discount, while 49% of males would do the same. And while ESPN could pursue a standalone streaming service, 85% of those polled say they wouldn’t subscribe at $20 a month, even if it bundled in all of the additional ESPN channels such as ESPN 2 and ESPN 3.

And there are some additional problems with ESPN pursuing a standalone streaming platform. ESPN’s recent lawsuit against Verizon revealed that many of the channel’s contracts with cable operators restrict them from breaking ESPN out of the core cable bundle; a provision that is nullified if ESPN offers a streaming version of its own. So ESPN could accelerate its own evolution in the face of cord cutting and go straight to consumers, but (at least initially) it would greatly accelerate the company’s losses as more cable operators pull ESPN out of the core channel lineup.

The problem is effectively that ESPN has enjoyed more than a decade in an artificial bubble, where, thanks to the inflexibility of cable offerings, users were stuck paying for a channel they never watched. In that bubble, ESPN had no real motivation to adapt, and now the check is coming due thanks to internet video. But with the playing field changes, Greenfield’s quick to note that even as a standalone option, there’s simply no way that the financials work out (at least nowhere near the level ESPN’s used to):

“The reality is that ESPN would likely have to charge dramatically more than $20/month/sub in a direct-to-consumer model, given the dramatic reduction in penetration rates…”The math for a direct-to-consumer offering for a basic cable network does not work, especially for channel(s) with very high monthly fees embedded within the current MVPD bundle. Disney cannot take ESPN direct-to-consumer and they know it, whether they admit that publicly or not. Furthermore, if the multichannel video bundle frays faster than expected and the TV ad market continues to weaken, ESPN’s future growth prospects are dim, at best.”

As The Weather Channel can attest, there’s obviously going to be some casualties in the cord cutting revolution. As some companies like The Discovery Channel have been realizing, one way to ensure customers don’t flee under the new paradigm of consumer is to focus on quality, a mysterious new frontier for broadcasters used to getting paid an arm and a leg for delivering the bare minimum.

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Companies: disney, espn

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Comments on “56% Would Drop ESPN In A Heartbeat If It Meant Saving $8 A Month On Cable”

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51 Comments
Anonymous Coward says:

Re: Re: Re:

I think you’d end up paying almost as much per show as per channel. Back-episodes on Amazon for most shows are $1.99 – 2.99. At 16 annual episodes of TWD, you’d pay $32-48, which is more than I’m willing to pay for the season’s DVD.

Maybe you’d get a break because there’s commercials in the aired episode, but probably not, since they anticipate some larger percentage of the audience is going to skip all the commercials anyway.

Pepe says:

Re: Re: Re: Re:

You only have to pay for episodes that are not on Prime.
I have a long list of shows (including some exclusive ones) that I can watch as part of Prime ($99/year) which also includes free 2 day shipping on most things I buy in Amazon.
You can also get Netflix for $7.99/month and get another large set of shows to stream. If you are really so anxious to see the new ones, you can pay a premium for them.

I’d much rather find older shows I can watch at my own schedule, with no commercials.

Phoenix84 (profile) says:

Re: $8.00?

I’m with you.
Personally, I’m ok with locals, SyFy, Science/Discovery (assuming they air science and educational shows), and Cartoon Network. I’d be ok with a few more I watch even more rarely (like TNT, USA), as long as I can remove ones I don’t ever want.
My wife watches more channels than I do, but still not much more than a dozen we could get away with combined.
I have like 100+ channels I don’t use.
Like you I also removed all sports channels from my guide.

TasMot (profile) says:

Generally speaking, Disney has been smart about following the money. With ESPN, the money WILL be down soon.

We should see Disney spinning off ESPN soon as it’s own company (and probably overvalued and burdened with debt) or selling it outright for whatever it can get. Wall street is still somewhat blind to cord cutting so they could get away with it and they still do have some long term cable contracts. But, with cord cutters and cord nevers growing, ESPN’s demise in its current form is going to be a short story.

Anonymous Coward says:

How about...

…instead of ESPN suing cable operators to keep it in the lineup, cable subscribers sue cable operators for forcing it on them all of these years.

I am not one for suing, but it might be an interesting catalyst if one giant class action lawsuit from 10s of millions of present and former cable subscribers who wanted their money back for ESPN that they did not want came their way.

Might speed up a la cart offerings or push Disney to make some painful choices. Removing ESPN could even be the settlement.

nasch (profile) says:

Re: Re: Re: How about...

RICO and Conspiracy.

Isn’t there some weird provision where any person can initiate a RICO charge, or something? I doubt it would apply though.

“A racket is a service that is fraudulently offered to solve a problem, such as for a problem that does not actually exist, that will not be put into effect, or that would not otherwise exist if the racket did not exist. Conducting a racket is racketeering.”

While colloquially what cable operators are doing could be called “a racket” I don’t think it fits the legal definition of racketeering. And “conspiracy” is not something one can sue about, as far as I know.

radix (profile) says:

Bigger picture

ESPN is just a middle-man. Most of their revenue ends up in the hands of the NBA and NCAA, with smaller contracts for other leagues (17 NFL and ~18-20 MLB games/year). I’m sure they license clips of plays/games from nearly every sport, so there will be some impact around the sports world, but it won’t be evenly distributed.
The college football racket, in particular, may be the bloodiest casualty, as they deal with lawsuits of their own on the other end already.

JBDragon (profile) says:

Re: Re:

Throw up a Antenna like I did and get ABC, CBS, NBC, FOX, CW, PBS in HD and 5.1 surround sound for FREE legally!!! It looks BETTER then cable as it’s not as compressed! That doesn’t include other channels I get like MeTV and Antenna TV, etc.

I cut the cord around 4 years ago. I still have Comcast, so not truly CUT. But it’s Internet only where I currently pay $50 a month for 105Mbps service. I have my own Cable modem, so no rental fee’s on that.

I did luck out and was able to get a Tivo Roamio OTA Box which has 4 tuners with Lifetime service for $299. That was a great deal. So I can record all my programs from the Antenna with full DVR control. I can watch from the family room and continue in the bedroom on a Tivo Mini. ZERO fee’s for doing that. Sure there’s some upfront costs, but the savings I have pay it all off in no time flat.

I assume NBC programs are on HULU+ (CBS has their own $6 a month all access thing!) So for $13 a month Commercial FREE. You don’t want to pay the cheaper $9.99 and have commercials because then it just SUCKS. Do that with a ROKU or AppleTV or a Amazon Fire. They all support HULU+ Even the TIVO does.

You can get one of their new Tivo Bolts for $199 which includes a year of service and then it’s like $15 a month. You can stream HULU+ and Netflix and there’s even PLEX support. There’s Global searching for content. It has Auto commercial skip for certain channels during prime time hours. Hit a button and will skip them all. So it’s kind of a All in one solution that way. No ROKU or anything else needed unless you get into some of the other content providers they don’t support.

With a Antenna, there’s a number of options. I went with TIVO. But there’s also Tablo and SimpleTV. They have 2 or 4 tuner options. They need a external HDD to record to, and you need a ROKU or Chromecast or something to be able to watch on your HDTV as they don’t directly connect to a TV. Their service fee’s are much cheaper then TIVO also. $4.95 a month, $49.99 a year, or $149.99 Lifetime. Lifetime on TIVO is $599!!! That’s just crazy high.

Then there’s ChannelMaster. They have a DRV with NO service fee’s. Just buy it and it works. As I haven’t used any of these others, I have no idea how good they are. These are ways to watch on your own time, skip commercials, and doesn’t waste your Internet CAP. If a Antenna is not possible, check out HULU+ and see if that would work for you! $13 a month instead of $30 a month, may be a deal for you.

markzip (profile) says:

Re: Re: NBC

Likely Anonymous Coward, Jan 20th, 2016 @ 3:31pm was talking about watching soccer on NBC Sports channel.
For a soccer fan in the US, you’ll want:
NBC Sports (English Premier League)
Fox Sports (FA Cup, UEFA) (with more games on associated channels)
ESPN (UEFA)
Fox Deportes (Bundesliga)
ESPN Deportes
Univision
And the really hardcore go for Fox Soccer Channel and GolTV.
No cord-cutting possible for any of those channels. Unfortunately.

JBDragon (profile) says:

I heard in the past that only 4% of Cable subscribers actually watch the Sport channels on a regular bases. That means 96% are Subsidizing that 4% group!!!

If you had to sign up for ESPN as it’s own service like HBO. it might actually cost you $15 or more a month. It’s those HUGE costs to cover sports games and the Million that players get. Costs have just shot up. Why do I want ESPN, ESPN2, ESPNEWS, FOX Sports and on and on and on. Paying for all that crap I NEVER wanted or watched!!! It’s one of the reasons I had enough with Cable TV service.

I cut the cord not long before I went House shopping. When I got my House, the first thing I did was mount a large antenna. Signed up for Internet only service. At the time U-Verse. Not fast, but at $35 a month, fast enough for my needs. Well after a couple years with U-Verse, they almost doubled my cost and wouldn’t make a deal again and I warned them I’d cancel. Because Comcast was a TON faster for not much more money. Well In about a Week, I got a new Cable Modem, ran a new Cable line outside to the hookup to my Closet where I planned to put the new cable modem. Called Comcast, was going to get the 50Mbps for $45 a month, they said for $5 more I could get 105Mbps, so I did that. Got it working, ripped out my U-Verse modem, called them up to cancel, they tried to work out another deal and I said NO, already warned them a week ago and I have Comcast now and working, bye, bye!!!

Back at my old place, it was just me and I was paying for much slower Internet from Comcast, plus their TV service, and a Duel HD DVR Motorola Box and paying $170 a month. No thanks. Could no longer justify the cost. I had enough. I dropped Showtime a few years before that because costs were shooting up every year. I had enough.

A Girl at work right now pays over $200 a month to Comcast. She and her brother live in the house that was her MOM’s who just died from cancer. They don’t make a lot of money. She wants me to help them out and get them setup with a Antenna and get rid of that $200+ cable bill every month. I’d NEVER pay that. it’s just crazy. No TV is worth that much.

Kids these days don’t even seem to watch CableTV. It seems to be all about Youtube!!! My brothers young kids pretty much only watch Netflix. Didn’t know what a commercial was for the longest time. They cut the cord about a year ago I guess. I have to much TV to watch as it is. Why would I pay a bunch more? I’d rather keep it in my pocket then give it to Comcast. Think about how much you pay and add it up.
If I stuck to what I was paying 4 years ago, to what I’m paying NOW and prices didn’t keep going up. I’m saving $120 a year right now. That’s $1,440 per year, or $14,400 after 10 years!!! How long have you’ve been paying, and how long do you think you’ll continue. 10 years, 20 year, longer? It add’s up fast.
$1,440 a year, means that easily paid off all my TIVO hardware, plus all the costs of my Antenna, cables and wiring my house for Gigabit Ethernet and a few other things. The year after and beyond is nothing but savings. Hell buy a couple season passes for shows you may miss. I buy season passes for “The Walking Dead” from Amazon. The cheaper SD version which looks just fine. I can watch on Monday after the new episode airs on AMC on Sunday night. It’s commercial free and I own it!

Think about it. If you’re a huge Sports person, you can always get SlingTV at $20 a month to get ESPN and ESPN2.$5 more for the sport bundle, get another 9 sport channels including ESPNEWS.

Maybe cutting the cord will work for you, maybe it won’t.

Yasmin Greene says:

Re: Re:

My parents live in a senior citizen apartment complex and nobody they know has cable TV or even a landline telephone. Half of their neighbors don’t even own a TV set, and these aren’t Luddite Neanderthals. Most are college educated or retired military people who had cable TV when they were younger and raising kids but now have no interest in any of it.

Simon says:

Re: Re:

On a recent business trip, I realized as I was checking out of my hotel room I hadn’t turned the TV on once. It never crossed my mind. I had my laptop and phone that provided more entertainment that I could possibly consume. Why would I watch lowest common denominator shows with 12 minutes of content spread out over half an hour?

I truly don’t understand how people watch regular TV anymore. It’s like having your own personal chef ready to cook anything you want but opting to go to MacDonalds.

Whatever (profile) says:

I find the whole story interesting because I would consider ESPN to be one of the channels most likely to retain viewers, as sports tends to be all about the live events and that doesn’t translate well in piracy or other sharing.

Then again, the stats show that the majority of those who would lose it are women, who perhaps have somewhat less interest or desire for live sports, which is mostly a male oriented broadcast form.

Also, I tend to be slightly suspect of this sort of “price point” survey in part because the real choice would have to be made when it’s “save $8 dollars but you can no longer watch your favorite sport team live”. For many, the price point may be more important in abstract then in reality. So ask them about money, they say “sure, lose it”, but when they are going to lose live sports, they may change their tune.

I also think that cord cutting may lead to something much worse for viewers, which is expensive streaming options that are available only to people with credit cards (and are willing to use them online). It could create a “digital gap” for people who don’t have credit or credit cards, and who are unable to pay for online streaming.

I am also thinking that cord cutters may find themselves in the weird place of paying MORE for the content they want, because they are having to source it individually without any package benefits. Potentially this could narrow the field of successful channels, and in the end hurt the levels of diversity in programming, creating a sort of winner take all situation that is not beneficial to the consumer.

Ninja (profile) says:

Re: Re:

as sports tends to be all about the live events and that doesn’t translate well in piracy or other sharing.

Artificially. You can offer live streaming.

the stats show that the majority of those who would lose it are women

Because we live in a patriarchal society that still has ingrained that enjoying sports (or at least some more popular ones) is something males do. Give the girls a chance and they can be better fans than any man out there. As you noted, it’s made for males. I see an opportunity here, not a problem.

Also, I tend to be slightly suspect of this sort of “price point” survey in part because the real choice would have to be made when it’s “save $8 dollars but you can no longer watch your favorite sport team live”.

U dumb? The ones that would drop couldn’t care less about watching live sports. I’d be one of those. Sure I can watch my team but to hell with it if I can save money. Contrary to my father who really likes sports, he would probably retain a channel even with streaming options. Besides going to the stadium is way more awesome.

I also think that cord cutting may lead to something much worse for viewers, which is expensive streaming options that are available only to people with credit cards (and are willing to use them online). It could create a “digital gap” for people who don’t have credit or credit cards, and who are unable to pay for online streaming.

You can buy offline credits in the form of codes for Google Play for instance. This is a non issue. As for the pricing, it all depends on how much of a monopoly a single source will retain over one game for instance. And even then people will vote with their wallets for sure.

I am also thinking that cord cutters may find themselves in the weird place of paying MORE for the content they want, because they are having to source it individually without any package benefits.

No problem. You won’t be paying 100+ streaming options, you can select a few that fulfill most of your needs and I’m quite sure it will be cheaper than cable nowadays.

Potentially this could narrow the field of successful channels, and in the end hurt the levels of diversity in programming, creating a sort of winner take all situation that is not beneficial to the consumer.

I doubt it. There’s plenty of free content being produced and made available via Youtube for instance. And the people behind it still make money. So it’s a matter of adapting. If someone abuses their monopoly there will be thousands wanting to chew on that dominant position by offering reasonable alternatives.

Mike says:

I'd drop ESPN for 1 cent

Provided the remaining money doesn’t get sent to ESPN/Disney.

I (50ish male) do not, and never have, watched professional sports. Why on earth would I want to watch someone do their *job*. Ditto for college sports where the pay comes in other forms.

The only sports I am tempted to watch is the Olympics, but… since we decided that the athletes can be professionals, the Olympics go the way of all other paid sports.

Kal Zekdor (profile) says:

Re: Re:

False dichotomy.

It could be agreed upon by the parties involved to offer the choice of having ESPN or not to the consumer.

Comcast is bleeding from a thousand cord cuts. They need to retain customers. They can do this by lowering the price point of their service (basic economics). A good way to lower price is to more efficiently meet customer needs, i.e., lowering costs. Comcast could save money by splitting off ESPN to an optional package. However, ESPN currently has a contract which forbids this…

ESPN is also feeling the crush of innovation. The good news is that demand for Sports hasn’t gone down (at least significantly). As was touched on in the article, they were riding high on the cable bubble, but reality has come rushing in, and it’s time for them to tighten their belts. They can’t offer a streaming service because it would invalidate their existing contract, turning a relatively stable glide to the ground into a nose dive. They need that lifeline in order to buy time to adapt. However, if they keep strangling Comcast with it, neither company will survive. So, ESPN could strike a deal with Comcast, allowing unbundling of the channel in exchange for either an upfront capital infusion to allow them to move forward, or for striking the provision regarding streaming services from their contract.

Isn’t business fun?

Anonymous Coward says:

The quality at espn just isn’t what it used to be. They cycle through employee’s faster than I can even know their name. The company looks greedy and smug and that arrogant ceo seems like he could care less. Too late now anyway — espn has buried itself too deep in debt (like paying 12 billion for the NBA, only to see the lowest ratings in 2 decades, and that’s 3 seasons in a row!) They will get spun off by disney and become their own company and slowly sink into oblivion. Kinda like spike tv

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