New streaming service will fill void at ESPN, but holes remain for cord cutters

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We’ve known that ESPN was developing a so-called “over-the-top” (OTT) streaming service since last August, when parent company Disney acquired a 33 percent interest in BAMTech, a streaming video company that was created by Major League Baseball in 2015. And on Tuesday, Disney announced it will be exercising its option to pay $1.58 billion for an additional 42 percent stake in BAMTech, giving it majority control of the company but more importantly giving ESPN the means to introduce its stand-alone OTT service early next year.

It’s an important step for ESPN, which has seen its lucrative cable-TV subscriber base wither via cord-cutting at the same time rights fees for the major U.S. sports have skyrocketed. This decline in revenue led to cost-cutting demands from Disney, and ESPN laid off around 100 TV personalities and online journalists earlier this year, its second round of major job cuts in less than two years. The new streaming service will give the network another revenue stream, something to offer cord-cutters who have stopped paying for cable and thus have stopped paying for ESPN.

ESPN has yet to announce the specifics, namely how much it’s going to cost. But based on a news release issued Tuesday and past statements from various TV executives, this is what to expect when the ESPN service goes live.

Here’s what you’ll get, should you choose to cut the cord:

– Out-of-market MLB games by virtue of Disney acquiring majority ownership of BAMTech, the streaming technology service that runs the MLB.TV subscription service.

– Out-of-market NHL games (BAMTech also runs the NHL.TV streaming service).

– Out-of-market MLS games (BAMTech also runs the MLS Live streaming service).

– NCAA games across multiple sports from conferences that have rights agreements with ESPN, but which aren’t broadcast on any of ESPN’s cable channels. This is comparable to what’s available on the WatchESPN app.

– Grand Slam tennis matches.

Subscribers also will be able to purchase stand-alone MLB, NHL and MLS packages, according to ESPN’s news release.

Here’s what you won’t be getting, unless you also continue to subscribe to ESPN’s pay-TV offerings:

– NFL games.

– NBA games.

– Anything that’s broadcast on the ESPN broadcast channels.

So if you want to continue receiving ESPN’s full array of content – including games from the two most popular spectator sports in America – you’ll have to continue to subscribe to ESPN’s pay-TV offerings.

ESPN’s OTT content will be comparatively incomplete, at least at the start, because the existing contracts it has with cable companies and sports leagues do not allow the network to sell certain content on its own as part of a separate streaming package. Plus, ESPN extracts more than $9 per month from every cable subscriber who gets the company’s four major channels (ESPN, ESPN2, ESPNU, SEC Network), by far the most expensive package on one’s cable lineup. The company cannot afford to see that revenue stream dry up – to have consumers ditch cable en masse for its OTT offering – especially at a time when more and more people are ditching cable altogether (ESPN has lost more than 10 million subscribers since 2010).

“The goal is not to take product off ESPN’s current channels but to use sports and product that ESPN has already licensed that’s not appearing on the channels,” Disney chief executive Bob Iger said in August 2016, when ESPN announced that it was purchasing a one-third stake in BAMTech. “And so we view this as a complementary service to what ESPN is already providing.”

The network’s newer rights agreements, however, reportedly allow the company to air games on multiple platforms, and ESPN will turn to those leagues to fill the time on its OTT offering.

“You have to be really careful. More is not always more, and you want to have a good amount of content, enough content, but not too much,” Bob Bowman, MLB’s president of business and media who helped broker the initial deal between BAMTech and ESPN, told Sports Business Journal in August 2016. “In some ways, we’re almost trying to replicate ESPN of 20 years ago, where they had a good amount of programming, but not everything.”

For some, this will be a welcome move. One of the complaints about ESPN in its current form is that too much network time is devoted to debate and not enough is spent on actual sporting events, a strange sort of nostalgia for a long-ago time when ESPN – by virtue of having little else to televise in its formative years – turned to oddities such as Australian Rules Football and lumberjack/strongman competitions to fill the hours. So looking at it that way, this new streaming service will fill a void, allowing ESPN to sell a product featuring live sporting events and little else. But any cord-cutter who expects a full-fledged ESPN replacement is bound to be left wanting, at least at the outset.