Failures

by Karl Bode


Filed Under:
cable, cord cutting, sports

Companies:
disney, espn



ESPN Has Lost 14 Million Viewers In 7 Years Thanks To Cord Cutting

from the swimming-against-the-tide dept

ESPN has long personified the cable and broadcast industry's tone deafness to cord cutting and TV market evolution. Executives not only spent years downplaying the trend as something only poor people do, it sued companies that attempted to offer consumers greater flexibility in how video content was consumed. ESPN execs clearly believed cord cutting was little more than a fad that would simply stop once Millennials started procreating, and ignored surveys showing how 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel.

The penalty for ESPN's failure to adapt has been severe. Disney's recent earnings revealed that ESPN lost another 2 million regular viewers this year. And while ESPN still has 86 million regular viewers, that's a 14 million regular viewer dip from the 100 million regular viewers it enjoyed in 2011. Those 14 million lost users generated around $1.44 billion per year for the "worldwide leader in sports," which is still saddled with the severe costs of set redesigns and sports licensing contracts the company struck while it was busy not seeing the massive locomotive of market change bearing down upon it.

While some of these wounds are inevitable due to shifting markets, many were self-inflicted. ESPN execs often tried to shoot the messengers instead of listening to the message. And once the damage was done, ESPN decided to fire hundreds of longstanding sports journalists and support personnel, but not the executives like John Skipper (since resigned for other reasons) whose myopia made ESPN's problems that much worse in the first place.

Ultimately, ESPN and Disney figured out that streaming was the future. In response, it launched a new direct-to consumer app dubbed ESPN+ that sort of provided users what they wanted, but not really. The $5 per month service basically took much of the fare available on ESPN's lesser-watched channels and offered it over the internet. But there were caveats; such as the service didn't really offer users what they really wanted (just a streaming version of ESPN's core channel) unless you subscribe to traditional cable, part of the "TV Everywhere" mindset cable execs can't seem to move past.

While ESPN's losses are the most notable, other Disney properties continue to see sharp viewership declines in the cord cutting era:

"Disney Channel has also seen its subscribers ebb to 89 million, down from 92 million in fiscal 2017. Freeform fell by 2 million to the 90 million mark. Disney Junior (69 million) and Disney XD (71 million) both lost 3 million subs. The numbers, attributed to Nielsen Media Research estimates, indicate that the growth of virtual MVPDs such as YouTube Live and Hulu’s package, are still not enough to offset a net decline in the subscribers from the traditional pay-TV world."

Again, many cable and broadcast industry executives are under the mistaken impression they get to choose when to adapt to the markets shifting around them. In reality they only have two choices. One, get out ahead of the shift toward streaming video by giving consumers what they actually want, even if that means losing some money in the short term. Or, refuse to adapt, double down on the belief that traditional cable TV is a cash cow that will never die, and watch as smaller, more flexible outfits continue to steal your massive subscriber base out from beneath your feet.


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  • icon
    Steve Swafford (profile), 29 Nov 2018 @ 5:08am

    Not sure it was all cord cutting. It also feels like they got too political and turned into more of a sports gossip channel than just being about the game. I'm no expert but I stopped watching because of these things. It just got old when it seemed to be every day.

    reply to this | link to this | view in chronology ]

    • identicon
      kallethen, 29 Nov 2018 @ 5:42am

      Re:

      Even if you aren't watching the channel, ESPN is still getting revenue from you. Part of your cable subscription payment goes to them. It adds up fast when multiplied across millions of people, especially since ESPN is baked into all but the most basic of cable packages.

      reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 29 Nov 2018 @ 7:17am

      Re:

      "I'm no expert but I stopped watching because of these things."

      The point is that under the traditional setup, you were still paying even if you never tuned into the service. Once people found ways to ditch the traditional cable packages, they also found ways to stop ESPN getting free money. This may be people like yourself who wanted to watch but dislike the direction they're going, but it likely includes many more who never really wanted to be subscribing in the first place.

      They may be able to regain the former, but the latter is a reality of cost cutting that will not be changing soon.

      reply to this | link to this | view in chronology ]

    • identicon
      AricTheRed, 29 Nov 2018 @ 10:53am

      Re:

      Unfortunately, due to my unending love of ESPN 8 aka "The Ocho" and my lifetime subscription to OSQ (Obscure Sports Quarterly), at $1,742 annually, which doubles my effective cable bill, I'm unable to cut the cord!

      To add insult to injury I have to add $10.99 a month for Netflix to watch the fantastic series "Medal of Honor" where my cousin Vito is a subject (S1E5 SO WATCH IT!), 'cause ESPN will not diversify and support other content!

      I might just switch over to that channel the kids were watchin' in that flashback scene in the original Terminator movie, you know, fire in an olde TV set.

      Good news, I don't think they have a subscription fee. Although I do live in an area where no wood fires are allowed. But, I do have all of those olde OSQ issues and cable bills, so I should be OK until Skynet comes online.

      "They" seem to get you coming and going.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Nov 2018 @ 5:25am

    but not the executives like John Skipper (since resigned for other reasons) whose myopia made ESPN's problems that much worse in the first place.

    I'll get to my point, so have a little patience here. Have you seen those commercials on TV for "DAZN" (apparently pronounced Da Zone, because we're suddenly back in 1996 when that was just starting to not be cool anymore)? They're the ones with boxer Canelo Álvarez and the Let's get ready to rumble guy.

    Anyways, they annoyed me just enough to see what the hell the actual product was, and essentially it's sports streaming. The deals they have in the US aren't very good right now, but if you see what you can get in Austria for the price they're charging... I'd probably sign up.

    Well, who is the DAZN Chairman? That would be non other than John "Only poor miserable pricks who live in their parents basement and refuse to have kids" Skipper. Talk about a 180.

    Moral of the story: ESPN can go away... I'd rather my $8 a month back.

    reply to this | link to this | view in chronology ]

  • identicon
    Fred, 29 Nov 2018 @ 5:36am

    What's the point of these articles. If someone cuts the cord EVERY company looses subscribers. Which cable companies allow you to just cancel ESPN?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 29 Nov 2018 @ 8:16am

      Re:

      One, ESPN is pretty much the most profitable company in this particular space and also one of the most widely and consistently viewed, so is a useful barometer for the space in general. Second, ESPN has spent a great deal of time and effort over the last 30 years cutting deals with cable companies to ensure that every (or nearly every) cable subscription plan includes ESPN. Because of the aforementioned profitability and popularity, they had the leverage to generally achieve this unlike pretty much every other company. This makes it an effective case study for this phenomena, as a significant part of many people's reasons for cord cutting has to do with lack of flexibility in cable subscriptions, including requirements to pay for networks that they had no interest in in order to access other content that they did have interest in. Third, ESPN has been one of the loudest in denying cord cutting was a problem over the last decade, so it's always nice when people have to eat their words.

      Or in other words, it is the very fact that cable companies do not allow you to just cancel ESPN that is the entire point.

      reply to this | link to this | view in chronology ]

    • identicon
      PRMan, 29 Nov 2018 @ 11:35am

      Re:

      Dish Network.

      reply to this | link to this | view in chronology ]

  • icon
    DannyB (profile), 29 Nov 2018 @ 6:07am

    Other cord cutting losses

    Not only has ESPN lost viewers . . . but cable tv companies have no doubt lost subscribers because of ESPN being forced upon them.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonmylous, 29 Nov 2018 @ 8:35am

      Re: Other cord cutting losses

      That's the reason I don't have YouTube TV. Over half the "channels" available are sports, with no option to drop them for another lineup or discount.

      reply to this | link to this | view in chronology ]

    • identicon
      Edwin L. McClannan, 30 Nov 2018 @ 3:39am

      Re: Other cord cutting losses

      That ESPN gets one cent from is too much and thus I cut cable completely. Now Spectrum promises this and that but I have blocked all known phone numbers and discard all their mailings to me.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Nov 2018 @ 6:31am

    Lost viewers or lost subscribers?

    Karl, the earnings link says they lost subscribers. You might want to update your article to be a little more accurate.

    reply to this | link to this | view in chronology ]

  • identicon
    Christenson, 29 Nov 2018 @ 6:49am

    Devil's advocate position

    As a cable-never, someone that generally sees sports as background when I am eating out, I think ESPN is doing quite well, all things considered.

    The survey says that have 56% are ready to cut the cord tomorrow, but they have lost only 14% of viewers from the peak.

    In very round numbers, that says that ESPN is still extracting rent from 50 million consumers that aren't interested in their product. I'm impressed, lol!

    reply to this | link to this | view in chronology ]

    • icon
      Zgaidin (profile), 29 Nov 2018 @ 8:12am

      Re: Devil's advocate position

      The point is that ESPN continued, for far to long, to be the most outspoken critics of cord-cutting. In the face of strong evidence that the cord-cutting trend was not going away and was, in fact, picking up speed, they made very expensive licensing deals with sports organizations and other business decisions that companies facing lean times would probably avoid (e.g. redoing all their sets) because they stalwartly refused to see the writing on the wall. They've now tried a semi-streaming service, but it's not what their viewers actually want (content) and it still relies on having an old-fashioned cable subscription (delivery method), so it's unlikely to do much except cost them start-up and maintenance. So, they'll continue to lose subscriptions (along with the rest of the cable industry) and that trend will likely only increase in speed over time.

      Which leads to a second point that seems to have gotten somewhat scrambled in the article which you and several people have mentioned. As you said, 56% of people are ready to cord-cut ESPN tomorrow, but haven't. The bulk of those are, probably, not sports watchers. They're forced to pay $8/month for ESPN as part of that fat channel bundles cable subscribers can't escape. They put up with it to get content they do want. That's different from viewers (people who actually tune into ESPN in any given time period), which apparently is also dropping. There's a relevant confluence of the two groups, though. As more and more content becomes available via streaming, more and more people can get what they want more cheaply by ditching cable, which hurts ESPN by $8/month/household but it also hurts ESPN another, less direct way. Sports is, more or less, the biggest hold-out from streaming. Sure, there's been some in-roads but not like what we've seen with traditional TV shows and movies. Due to the complicated licensing and demand for live broadcasts of sports, they don't really fit into the on-demand model provided by a service like Netflix, but Netflix and Amazon don't want to piss off that same 56% of subscribers who don't watch sports by jacking up rates to include sports, and they don't have the support systems in place to do it anyway (casters, camera crews, etc.) What we'll probably end up with, eventually, is something that looks like the so-called skinny-bundles where you pay a yearly or monthly fee for access to the sport(s) of your choice, produced by someone and distributed by Netflix or Amazon. Something like that. In the past, ESPN had a good bargaining leverage when negotiating license agreements with various sports entities (NFL, NBA, etc.) because they had a large subscriber base and a large viewer base. The NBA could get a lot of games to fans through ESPN. Eventually, they'll work out a more modern solution - it will probably look a lot like the way you can add HBO to your Hulu account for an additional fee. In the interim, though, with declining subscriber and viewer bases, ESPN is watching it's bargaining power dwindle (and costs rise) each time it renegotiates a license for content, and that's not just the live broadcasts, that's the licensing to use clips and highlights for commentary shows, etc. If they can't find a way to right the ship, which will involve adapting to the current market (the very thing they've been refusing to do), eventually they'll go out of business.

      reply to this | link to this | view in chronology ]

      • identicon
        Christenson, 29 Nov 2018 @ 9:31am

        Re: Re: Devil's advocate position

        I'm not discounting all the "this is long-term stupid" and "this is what will happen" above.

        However, vociferously denying reality here seems to me to be a smart short-term move on the part of everyone in control of ESPN. 50 million subscribers paying rent for something they don't want seems like a great deal for ESPN execs and stockholders!

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Nov 2018 @ 8:15am

    I would pay money to watch certain local sports teams instead of having a cable subscription. But with all the restrictions I cannot sign up to watch a season of the Warriors since I live in the Bay Area. You have to sign up a tv package to watch it, whether it is through comcast, direct tv now, sling... Well, three of my family, now use one account instead of having three separate accounts to watch tv. That might be more of the trend them people simply ditching tv. They are sharing the accounts.

    reply to this | link to this | view in chronology ]

  • icon
    rebrad (profile), 29 Nov 2018 @ 8:30am

    It's More Than Cord Cutting

    It's more than just cord cutting. ESPN's attempt to mix sports with politics has had more of an effect on ESPN and sports in general than cord cutting. People want to be entertained, not preached to, at least if you want to take their hard-earned money.

    reply to this | link to this | view in chronology ]

  • identicon
    DOlz, 29 Nov 2018 @ 8:33am

    If they just added a dedicated curling channel that would solve all their problems.

    reply to this | link to this | view in chronology ]

  • identicon
    jetty, 29 Nov 2018 @ 8:37am

    I cut the cord 6 years ago...

    and don't regret it one bit. The reason I cut the cord was to keep the Progressive Religion out of our house.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 29 Nov 2018 @ 8:55am

      Re: I cut the cord 6 years ago...

      I always wonder why "religion" is such a dirty word among those groups of people who most tend to be religious.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 29 Nov 2018 @ 9:55am

        Re: Re: I cut the cord 6 years ago...

        The problem is the believers of different religions all believe theirs is the one true religion, and they can't all be right.

        reply to this | link to this | view in chronology ]

  • identicon
    JEFF, 29 Nov 2018 @ 8:54am

    I use sling and get ESPN from Dec- March IF they televise a decent number of my hometown college basketball team. Then cancel when the NCAA starts.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Nov 2018 @ 9:00am

    Hey Disney stop nickle and dime-ing us .
    You really thing I'm going to pay for espn Hulu Hbo and what ever the fuck you call your new service for Star Trek ??? All under different separate internet subscriptions ?
    And you wonder why piracy is rising ?

    reply to this | link to this | view in chronology ]

  • icon
    Vic B (profile), 29 Nov 2018 @ 9:11am

    time and value

    There is another issue facing all these bundled channels forced on consumers for outrageous fees. With Neflix's $10 and HBO Go's $12 and whoever else's $10-$15 fee, eventually consumers are going to be more discriminating or else they will end up paying more for less than the bundles. The price to reach the Jones' living room will continue to increase for the ESPNs of the bundled world now that the paradigm has shifted power from content providers to content consumers. It will affect all providers, including today's leaders. Who says but them that a channel is worth $10, $12 or even $15? Supply and demand is ruthless...

    reply to this | link to this | view in chronology ]

    • icon
      NaBUru38 (profile), 29 Nov 2018 @ 2:34pm

      Re: time and value

      "the service didn't really offer users what they really wanted (just a streaming version of ESPN's core channel) unless you subscribe to traditional cable"

      Sling Orange costs US$ 25 per month.

      reply to this | link to this | view in chronology ]

  • identicon
    Ed, 29 Nov 2018 @ 9:32am

    I miss Boumante and Hill and the6. Anything that explores/ promotes racial grievances and leftwing philosophy within the context of sports is good. Also, 6 minutes of NHL vice 10 minutes of soccer...gots to love it too.
    BTW, the CEO was on coke during his reign. Let's not forget that salient fact.

    reply to this | link to this | view in chronology ]

  • icon
    markzip (profile), 29 Nov 2018 @ 10:02am

    Splitting the baby

    They finally saw the train of cord-cutters coming towards them and started an over the top service. But they still screwed it up by shifting the lesser-watched (in the US) sports over there.

    That particular equation ("they still screwed up") is correct, but only from the perspective of mainstream US sports consumers.

    From the perspective of fans of outlier sports, it's even worse. For the last few years the inclusion of ESPN3 (over the top) in the regular cable sub was a huge boon to fans of "foreign" sports. One could watch cricket, rugby and any soccer not on the cable channels on Roku and other platforms.

    Then they moved cricket and rugby over to the ESPN+ service but **kept** the majority of the soccer on the cable channels. Thus splitting the baby.

    So now, if you want to see the games the majority of the world watches, you have to have both the cable *and the ESPN+ sub.

    The acquisition of Formula 1 rights in the US merely strengthened the splitting of the baby. The venn diagram of these sports is almost a circle.

    Ugh.

    PS: ESPN is not alone in splitting the baby in this way. NBC Sports has done the same with their Premiere League, Cycling and Rugby coverage. They have moved many off to the NBC Sports Gold service. And from there you have to buy individual passes for individual sports. Where one used to be able to see all Premiere League games on cable, one must now pay for the Premiere League Pass. If one want to watch all the cycling they used to have, one must now pay for the Cycling Pass.

    reply to this | link to this | view in chronology ]

  • identicon
    The Deaf-Tones, 29 Nov 2018 @ 10:26am

    No, YOU "personify" "tone deafness"! Sheesh, what clumy phrase:

    "ESPN has long personified the cable and broadcast industry's tone deafness"

    Try not to mix and mangle your megaphors (sic), and to cut down on adjectives, especially pejoratives.

    Dark Helmet has taken my advice on writing. Why don't you?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 29 Nov 2018 @ 5:18pm

      Re:

      You're a long way from having anyone take your advice, blue boy.

      You suck so hard at advice, a man in a burning building would rather immolate than listen to you!

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Nov 2018 @ 8:38am

        Re: Re:

        If out_of_the_blue gave advice to a man trapped in a burning building, he'd sue the man for following instructions due to copyright infringement.

        reply to this | link to this | view in chronology ]

  • icon
    got_runs? (profile), 29 Nov 2018 @ 10:30am

    Greed over common sense.

    The cable Co's: They should of had "all-you-can-eat buffet" cable back in 2000.

    reply to this | link to this | view in chronology ]

  • identicon
    Slow Joe Crow, 29 Nov 2018 @ 12:40pm

    ESPN is a reason why I cut the cord

    When I cancelled cable I specifically told the company I was tired of paying for 7 ESPN channels and I disapproved of the NFL's political antics. I also saved $100 a month and get most of what I want on my Roku.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Dec 2018 @ 6:43am

    Out of fairness to ESPN, respect to the writers of the article and acknowledgment of all the comments here, I think the underlying message here and the point missing is “ it’s not just an ESPN problem but an industry problem across TV, media, advertising and the current model” There needs to be a rude awakening and reality check on the problems in order to adopt solutions and there are solutions to some of these, albeit it’s going to take tough love, self examination, pain and no gain in some cases to stay relevant in a rapidly changing and digitally transformative world. Content may still be king, data and technology queens, but the customer is lord of the universe.

    1. If we continue to stick our heads in the sand and say “ not me” let’s look at newspapers and magazines - subscription ad / model going down in flames. They need to start listening to the customers
    2. Changing demographic tastes and availability of technology and content choices across multiple platforms- oversupply and saturation of product
    3. High cost of programming and much of this falls toward the sports nets in terms of rights fees to leagues thus translated into surging salaries of athletes and talent. Thus sports cost more and thus espn cost being 6-8 times next tv cable channel.
    4. Over commercialization of product and lack of creativity and risk in altering the :30 second TV ad format that hasn’t changed much in 70 years. Viewer experience turnoff
    5. Targeted TV? Addressable TV - this has been coming for a long time and there are attempts yet still don’t see it -
    6. Cable has evolved from a non commercialized platform to one that is highly intrusive. See article below from 1981 https://www.nytimes.com/1981/07/26/arts/will-cable-tv-be-invaded-by-commercials.html
    7. Loss of consumer interest across generations, loss of traditional fans and casual fans.
    8. Couch potato effect - not healthy to sit all day and watch tv - many I know have adopted this mantra
    9. Cost of cable tv in General - on average - we watch 6 cable channels out of hundreds- think about newspapers - pay $6 to read Sunday Times and only read the business section
    10. Politics injected into the games- and don’t say no. It’s been a turnoff for many fans - and not just sports- news, entertainment as well
    11. Competition for time and interest - 20 years ago no social media, cell phones, multiple screens. 40 years ago - broadcast tv , cable in its infancy and let’s look at the broadcast tv numbers and radio for that matter.
    12. Consumers asking the question “ is there a need for all this content “ what do I eliminate
    13. The internet is fierce.Mobile is 24/7 . TV is still passive
    14. More people on the go. Not sitting at home
    15. Some Sports are not evolving as quickly as the technology- loss of interest from a consumer, lifestyle and viewer perspective
    16. Time - where does all the time go. What we do in an internet minute. See separate chart

    Most of not all of these activities were non existent 10 years ago or in their infancy.

    reply to this | link to this | view in chronology ]


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