B (2:45)

Well, I think it does give consumers more choice. Right. Because up until recently they've had espn, which is lim, and didn't always overlap with espn. And then you've had ESPN through the Legacy channel. So. You know, the other thing that is interesting is that some of the big cable providers like Spectrum, Charter, Spectrum, have already made deals with Disney to facilitate access to people on those legacy platforms. So it seems like to the best of its ability, Disney is trying to have it both ways, where they're still hanging on to what's left of that traditional pay TV ecosystem, but obviously transitioning to a future time when everybody's going to access everything through an Internet connection.

A (3:35)

Yeah, still a very important piece for them. They had in 2020, ESPN was available in 100 million homes via cable. Now that's at 61 million. So down significantly, but still a lot of people. You mentioned espn, which had some ESPN content, but not really kind of like the live stuff that most people want to watch. They're hoping that this is going to reinvigorate the brand because that ESPN offering peaked two years ago. In terms of viewers, according to our forecasting team, 37 million viewers this year. The last two years, it's been kind of a staircase downwards to get to that 37 million. And I'm Jeremy Goleman noting that there's a pool of 114 million American digital live sports viewers viewers that ESPN could attract.

B (4:25)

Right.

A (4:26)

So quite the market. And that app, ESPN losing money as well. So time for a change. Paul, I also thought something else that could be one of the initial impacts is this could take personalization to a new level because fans, they can enter their favorite teams and sports and get personalized versions of SportsCenter, the news recap show, using AI generated narration based on the voices of ESPN anchors. What do you make of this piece?

B (4:54)

Personally, I think it's a little creepy to create these AI versions with these new voices because it creates more opportunity for confusion as to is this a bot or is it a real person? If you're using the regular. Now, if you look at almost any YouTube how to video, there's an AI narrated version and you can definitely tell. So it makes me a little bit uneasy, especially for the older customers who may not have as much familiarity with great point AI. And they are the ones who are in the crux of this transition from the old model to the new model. But I think overall it's the way things are going and if it allows people to customize that content, that could be an important distinguishing characteristic, especially at a time when these sports rights are fragmenting across so many different entities. If you're a fan of a league or a sport, chances are you have to triangulate to figure out like, where's my, you know, on which channel do I get to watch my team tonight? Some exceptions to that, but for the most Part I think that the order of the day is fragmentation. So being able to personalize the experience helps a little bit because then you know that, like, when you fire up that ESPN app, it's going to. The starting point is going to be like, you know, giving you what you want based on your preferences.

A (6:22)

Yeah, it's a tough balance, though, because I like that YouTube knows that I'm interested in Lakers content and it's going to give me a lot of that. But I also do want a healthy dose of regular league news. And this reminds me of something called the Daily Me. So this was a term coined by MIT Media Lab founder Nicholas Negroponte in his 995 book, Being Digital, describing personalized digital daily newspapers customized for a person's tastes and interests, not the general public. Sounds nice, but the problem is that the concept was linked to concerns about, as you said, fragmentation and a fragmented public and a loss of a shared understanding. Folks becoming increasingly isolated. Who do you talk to about your personal sports center? For you, sports is a very social experience. So I don't know how this is going to land.

B (7:14)

Yeah, I mean, like, it used to be around about the water cooler, but now everybody has their own water bottle, so there is no water cooler anymore. So. Yeah, I mean, I think it's a slippery slope. Right. Like, personalization cuts both ways. On the one hand, it saves a few steps, it saves some clutter, but it does lead to these silos and these echo chambers where you kind of end up just with, you know, the. A very narrow scope and not necessarily looking across a wider spectrum. So, like, yeah, if you're, I think if you're a sports fan, you obviously want to track your team. That's your biggest interest. But if you don't have more visibility into, like, what other teams are doing, then you don't have that perspective, you know, when it comes to, like, you know, the trade deadlines, like, you know, like just so many things about that experience where it really is all about the league. It's not just about, like, okay, what are my team scores from from today?

A (8:18)

Because if your team's not doing well, then maybe you're more likely to check out. But if you're picking up on some of those other storylines from the league, then maybe you're more likely to tune in. So a lot of initial impacts here. Potentially the biggest takeaway I think for me was it's about time, because I think a lot of people felt that way when ESPN plus came along. They thought it was going to be more of that content that they used to watching on cable, it wasn't. I was looking at this. The number of live sports viewers. Digital overTook traditional pay TV live sports viewers back in 2023. There are now 30 million more of them. And so digital has been ahead in terms of sports for a while now. This is ESPN finally catching up. Paul R. Jeremy Goldman writing that the economics of $30 a month subscriptions like the ESPN one only work if consumers perceive ESPN as a default home for sports. Can ESPN pull this off, in your opinion?

B (9:16)

Yes and no. I mean, you know, ESPN is the most recognizable brand in sports and I think everything that Disney has been doing around ESPN is only going to cement that. So I don't, I don't have any fear for Disney that their brand is going to get diluted or that people will stop associating ESPN with sports. But back to the point of fragmentation. If you look at some of the major US sports leagues and who has the licenses, it is a hodgepodge of different parties, some digital, some traditional. So in that sense, I think ESPN has to continue to work hard at keeping its association with certain leagues and not losing on opportunities. So like for example, Paramount just signed an exclusive deal with ufc. Right. So that cuts this. Not that maybe Disney didn't even want to be there, or maybe they just didn't see the economics of it. But if you want to be synonymous with sports, you have to cut a pretty wide swath. And I think it gets a little bit harder to do that when the rights themselves are fragmented or when you have companies swooping in, like Apple did with mls, for example, where Apple has the exclusive rights to mls, not just in the US but worldwide. So like, if Disney wanted in on that, like they, you know, they're not going to have that. So, so I think they have to play a little bit of defense, you know, to use a sports analogy, to make sure that as rights come up for renewal, that they're always in those conversations. Yeah, ultimately they're going to make whatever business decision makes sense for them at the time. And there are going to be times, there have been times when clearly the bar was a little too high, even for a company with as deep pockets as Disney. But at least they need to be in that conversation if they want to be associated with sports writ large.

A (11:17)

Yeah, not everything is here. A lot is here, but not everything. And as you're saying, and as Jeremy also points out, marquee events, he says, like the NBA playoffs and the World cup remain on rival platforms like Peacock and Prime Video deadline noting that even die hard ESPN subscribers might juggle multiple services to catch all the biggest games. I like the way he puts this. Yes, the convenience of cable era channel surf surfing is simply given way to app surfing. And speaking of this, there was a Wall Street Journal article by Isabella Simonetti and Nate Ratner and they had this, this really good graphic from, from ampere analysis showing the share of national US sports rights TV deals. Basically the NFL, where is it spread out across the NBA, NHL, Etc. So the NBA for example, Disney has about 38, Comcast 36 and then Amazon has rights to the remaining 26. And so he's done this for, or they have done this for the NFL, NBA, NHL, etc. Etc. Looking at this share of national U S sports rights TV deals is is this the world for the foreseeable future or will start right, start to consolidate? Because we're basically looking at there's seven pie charts here. Each one is a league and pretty much all of them, apart from one or two are cut up amongst three, four, five, six, seven different people. It's different networks or channels, streaming services.

B (12:49)

I think when it comes to the, what we perceive as like the major US sports, so football, basketball, baseball, hockey, I don't see a scenario where those start to consolidate. I think they will continue to be fragmented when it comes to things like UFC or the Olympics. Right. Like you know, back to the conversation around ESPN and its reputation as like you know, the venue for sports, like they will never have the Olympics at least in the foreseeable future. So there's that giant carve out, you know, that belongs to nbcu. So you have these pockets where a certain media company has managed to license the entirety of something as NBC has done, as Paramount has done with ufc, as Apple has done with mls. But I think those are special cases and those aren't like the day to day kind of like sports leagues that Americans associate as the major sports. So if anything I see opportunities for maybe even more, more fragmentation because like oh wow, Apple for example has just started licensing mlb but if they decide to go a little bit deeper there, then that pie chart which is now basically Fox has the biggest share and then you've got Disney and Warner Brothers Discovery having roughly equal shares. So Apple right now is a small share, but theoretically that could start increasing. We know what happened with the NBA in the most recent renewal, so that's not going to change anytime soon. But over time, as rights come up or as certain things might get carved out like playoffs, it's easy to foresee a company other than Disney, Comcast or Amazon wanting to get in on that action. I mean, one thing that's interesting about this whole ecosystem is that sports rights are one of the only things in the media landscape that doesn't move at lightning speed. Right. Some of these contracts are locked in for 10 years. So we're going to. We're going to see more glacial pace movement than sudden jolts.

A (15:08)

Yeah.

B (15:09)

So, you know, none of the potential reshaping of how those rights are apportioned is going to happen.

A (15:16)

Yeah.

B (15:16)

In, you know, it's going to happen more like in a time that a shark can remember.

A (15:19)

Yeah. So I zoomed us out for a second to look at sports rights across the board. I'm going to zoom us back in for a second because I think going back to this question of being the default home and how difficult that might be given that rights are all over the place. It is, I will say, to ESPN's credit, it is a hub of sorts already because it is bringing a lot of sports consumption into one place. Steven Zaichik of Holly the Hollywood Reporter was pointing out there is tailored vertical video highlights. You can shop on the platform. You can get betting information through SPM Bet, and you can scour fantasy updates because they have a fantasy portion as well right next to a broadcast. So it is, it is a hub already, to a certain extent.

B (16:06)

Yes, very much so, yeah.

A (16:08)

Final question, Paul. Any unexpected consequences that you foresee regarding the new ESPN Apps release?

B (16:17)

$30 a month or whatever it ends up being with promotions or bundle deals. That doesn't seem like too far a reach. But consumers look at these subscriptions as a group. They don't look at them in isolation. And the more of them that they have to have, the more it becomes like, okay, what do I cut? Right. And realistically, ESPN is going to be one of the last things to get cut. So is Netflix. Right. So I think ESPN is in a very solid place in that regard. But all of these prices, we've seen them go up like right across the board. I think price points are a delicate subject, but I think Disney, they're a smart company and I think they dialed it in where they needed to, just like they did when they launched ESPN back when.

A (17:13)

Yeah, yeah. Well, interesting to see what this does to bundling because you imagine this price to what you're saying is going to go up quite fast, quite quickly once they get people in the door and get it established. I'm wondering how much of a boost this gives for a second Window gives Disney properties like Disney and Hulu because they have, I think, a very compelling bundle. Actually, they're marketing this as here's your sports, ESPN, your movies, Disney, your shows, Hulu for 30 bucks a month as a limited time offer. I think that's very compelling for households. Also wondering what kind of a boost this gives to Fox because they are launching their standalone app in conjunction or the same time as ESPN. It's called Fox One. And there's gonna be a $40 a month bundle in October for two of those. So maybe we see more bundling as a result.

B (18:00)

Yeah, there's a strong possibility of that.

A (18:03)

Yeah. A few other takes in terms of unexpected consequences. One is I wonder if this pulls folks away from watching ESPN on cable even faster because subscribers to pay TV will get access to the new ESPN app. And so maybe this does transfer some people over a little quicker. So going from watching it in on a linear platform to digital ones. The other one, Paul, was about whether this will break the sports news model. And so Stephen Zaick again of the Hollywood Reporter was writing that ESPN for 45 years has, no matter the window dressing basically employed the same model, buy rights to games, run clips from games, and have highly paid and sharply dressed personalities talk about games. Can something so one directional, so expensively legacy media be combined with something this grassroots, this user generated, this 2025? I was wondering, is this kind of going to break up that model of, you know, have watching people behind a desk talk about the games that just happened?

B (19:09)

That part of it is more likely to be disrupted than just simply the broadcast itself, where you need high production values, you know, you need the high quality talent on air. And some of that talent obviously are the people who do end up doing like the, you know, post game analysis. So there's some crossover. But I would say yeah, you know, like, I think the way people consume media in general and sports in particular is changing to where there's more, there are more influencers, there's more, you know, back to the earlier part of our conversation, more personalization and customization of the experience so that you don't necessarily need to tune in to a half hour show that's going to dissect like, you know, the Weeks games because like, you've already basically gotten so much information ahead of that. And there might even be some cannibalization with some of the ancillary content that ESPN produces that could negate some of the talk shows. Yeah, I don't see the model breaking tomorrow, but over time, I think the Nature. Just like, you know, I know we did a podcast on late night TV not long ago like that. In the same way that that model is changing and has to change, I do see the possibility of like the sports shows morphing into something a little different.

A (20:34)

Yeah, it's interesting because my favorite sports show, first things first, they, they just added an extra hour to their broadcast. It went from two to three hours. So they're getting longer. So maybe there is store place for them especially for, as you said, some of the older folks who remember and still like that model of consuming sports and, and a lot of that content is still very sn can cut it into videos that you can put on YouTube or wherever. So it's not three hours straight. You're watching, you know, 10, 15 minute segments about your most most interesting topics for you. Final thing here real quick is I thought it's interesting to see how much this can boost merch sales. ESPN marketing lead Tina Thornton saying, you'll be able to shop for merch after your team wins. She said, quote, you watch Ty Simpson, Alabama's quarterback, break a passing record and then one tap, you can buy his jersey. Close quote. I thought that was quite interesting. The England men can't seem to win anything when it comes to football. But the England women just won the Euro again.

B (21:36)

Congratulations tomorrow.

A (21:38)

Thank you very much. And Chloe Kelly, the most clutch player in the history of sports, scored the winning penalty. She scored the winning goal last time as well. As soon as it finished the game, I wanted to buy her jersey and I'm going to buy her jersey. And her prompt had come up saying, you can now buy her jersey. I would have got it already. So I thought this is quite compelling actually.

B (21:58)

Yeah. And it also goes to like the fantasy aspect and the betting aspect. So all three of those things, merch, fantasy betting. Disney is very good at leveraging those opportunities. So yeah, I think that becomes a much bigger part of the experience and obviously a lot more direct revenue for Disney. They're not the only company that's connecting those dots, but I think they do it particularly well.

A (22:24)

Well, that is all we have time for, unfortunately. A brilliant conversation. Thank you so much to Paul for joining us.

B (22:30)

Hey, it's always a pleasure.

A (22:32)

Yes, indeed. And thank you of course, to the whole editing crew and to everyone for listening in to behind the Numbers in the marketing video podcast. Please subscribe, follow rate and review. If you feel like that's a lot, just pick one and do that. We'll be back on Monday. Happiest of weekends.

B (22:46)

Can I go back to swimming with the sharks now, Cat.