Disney Executive Gives Update On The Launch Of ESPN On Disney+
Last week, ESPN On Disney+ launched in the United States, which introduced a new ESPN tile and hub into the streaming service that serves as a destination for ESPN+ streaming sports content and giving subscribers access to sports, general entertainment, and kids and family programming, all within a single app.
ESPN+ offers access to more than 30,000 live sports events each year, which also includes games and events from MLB, WNBA, college sports, tennis, golf, and more, plus a library of on-demand replays and acclaimed original content and studio programming that will now be available through Disney+ to eligible bundle subscribers.
While standalone Disney+ subscribers now have access to a curated selection of live sports events, studio shows, and ESPN Films from ESPN+
During a recent question-and-answer session at the UBS Global Media and Communications Conference, Disney’s Senior Executive Vice President & Chief Financial Officer, Hugh Johnston, was asked about the launch of ESPN On Disney+ and revealed that churn is one of the major reasons for the inclusion of the new hub on Disney+.
Yes, it’s only been a handful of days. So it is a bit early on that front. In many ways, it’s a little bit of what I was just talking about, but then to sort of zero it into what it is that ESPN+ can do for the — for the Disney+ asset. It creates in many ways an objector to churn, right? And when you think about what drives churn, somebody said, well, you know what, there’s not that much I need right now and it’s easy for me to get out of it. So let me churn out and then I’ll come back in later.
What you really need in the household is one objector, somebody to say, no, no, no, we can’t turn it off because of, right? And it may be someone who likes general entertainment. It may be the Disney+, the kids movies and things like that, this is the all-family types of things. It may be sports. Oh no, we can’t turn it up because we’ve got ESPN right now. I’m in season for my team. It may be news, somebody who’s just a news junkie and says, what, no, there’s no way I’m going to give up that asset. And by virtue of putting in all of these assets, you really — you see the churn go down.
One of the biggest changes for Disney+ subscribers is how the streaming service has evolved over time, originally launching as a family-friendly platform with a focus on five core brands, the introduction of Hulu, ABC News Live and ESPN are pushing the boundaries of what Disney+ is. Hugh continued to explain how the introduction of this content has made a big impact.
I mean, we’ve already proven that. So in terms of what it does for ESPN, you think right now what we’re essentially doing is getting people used to the idea of finding ESPN on Disney+ as opposed to finding it elsewhere. Now when we finally launch ESPN flagship, which is going to be a much more sophisticated product sometime in early fall of next year, that product is going to be about much more interaction. It’s really not going to be just an analog product delivered digitally, but it will be a true digital native type of product. So, if you want to do ESPN — betting through ESPN Bet, you’ll be able to do it on the app.
If you want to do fantasy tracking, you’ll be able to do it through ESPN+. If you want to do e-commerce connected to sports, the opportunities will be there to do that. And there’s a whole variety of other product features that we’re working on right now that you’ll see in a few months. I don’t want to give the whole thing away at this point, Jimmy Pitaro will kill me. But the reality of it is, this is really going to be an extremely interactive sports product and sports fans love to be interacting with sports, right? It’s part of what motivates them to be sports fans. So, I think by virtue of putting it on Disney+, there’s huge benefit to the service of having ESPN and there’s huge benefit to ESPN of being on the service. It really works both ways.
In late 2025, Disney is planning on launching a new full direct-to-consumer version of ESPN, which is currently going by the codename of “Flagship” and it will offer all of ESPN’s content online. This new premium streaming service will also be available within Disney+, though Hugh was asked for more details on the platform, such as its name:
We haven’t declared all specifically what the naming conventions are going to be, but I would think of ESPN+ premium being what flagship is going to be. Flagship is just an internal name. I don’t — we’re not going to go with that as a public name.
With the launch of the new version of ESPN, Hugh was asked if they are ramping up their production of sports content, to which he replied:
We feel good about the portfolio of rights deals and assets that we have. I mean, if you look at how we try to run ESPN and ESPN has somewhere in the 30s to maybe low 40s in terms of market share of sports viewership. We don’t need to have everything. What we need to have is the critical mass of the right things. And if you look at what we have right now between the NFL and college football and the NBA, all of the things that we have are really sort of tentpole types of sports and then we fill around them with other sports.
With the tentpoles, we’ve pretty well got our deals in place well into the next decade. So, we’ve got phenomenal predictability. I mean, in terms of predicting, sort of, outcomes on the cost side, ESPN is pretty straightforward in that regard. So we have some escalators built into these deals and these are things that are easy to model and easy to build in. But we don’t feel like we need to go out and do something dramatically different in terms of the portfolio of assets we have and we feel like we’ve got really strong visibility into the future on that front. In terms of what happens beyond those tentpoles, we’ll sort of see and play it out as it goes. In a lot of ways, one of the things that’s beneficial to ESPN is we actually to some degree have the ability through the storytelling and through our reach to sort of build a sport, an emerging sport or a nascent sport into something bigger.
If you look at how women’s basketball went over the last couple of years, obviously, Caitlin Clark was a big story and sort of all the things that were happening inside of women’s college basketball. But ESPN also took it and really blew out those stories and made them much more visible and much more notable. In fact, the women’s college basketball championships were some of the highest-rated programs we had across any sport this year was truly amazing.
And I think ESPN was a contributor to it. Obviously, the players of the story, but our ability to do the storytelling, kind of, basically amplifies it, which makes us attractive from a rights deal perspective, if you’re the owner of the right, you want somebody who can make your sport look really, really good.
Roger’s Take: ESPN is one of Disney’s most important brands, especially for its linear television business, since it brings it much more money than its other channels. However, the shift to streaming has left Disney with some major problems, and it’s why Disney hasn’t made any rash decisions to change its lucrative sports business. But that major shift to streaming is happening within the next year, and Disney+ is a key aspect of this since it’s become the company’s gateway into your living room.
Other streaming services are offering sports programming, and incorporating ESPN into Disney+ is vital for the long-term success of the platform. The days of Disney+ only being about family-friendly content, with Marvel and Star Wars taking the top billing, are no longer the case. Over time, Hulu and ESPN are going to become a bigger part of Disney+ as a more varied offering helps reduce churn, along with increasing engagement and viewing time, all of which is vital to keeping subscribers and thus, keeping the money rolling in.
What do you think of the launch of ESPN On Disney+? Let me know on social media!
Roger Palmer
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