{"id":19530,"date":"2016-11-18T16:48:39","date_gmt":"2016-11-18T21:48:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/espn-the-world-worldwide-leader-in-the-digitization-of-sports-media\/"},"modified":"2016-11-18T16:52:21","modified_gmt":"2016-11-18T21:52:21","slug":"espn-the-world-worldwide-leader-in-the-digitization-of-sports-media","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/espn-the-world-worldwide-leader-in-the-digitization-of-sports-media\/","title":{"rendered":"ESPN: The World Worldwide Leader in (the Digitization of) Sports (Media)?"},"content":{"rendered":"

ESPN Overview<\/strong><\/p>\n

ESPN, a subsidiary of The Walt Disney Company (NYSE: DIS), is a media company that includes television channels (such as their flagship ESPN channel), ESPN.com, a radio network, and other assets.\u00a0 The ESPN television network broadcasts live sports and other sports-related broadcasts in over 200 countries.\u00a0 ESPN\u2019s pervasiveness, importance, and influence in the sporting world are undeniable \u2013 in 2014, it was ranked as the world\u2019s most valuable media asset and second most valuable sports brand behind Nike1<\/sup>.\u00a0 The company\u2019s first foray into digitization came in 2006 with Mobile ESPN, which provided sports content on demand for mobile phone users who downloaded the app.\u00a0 Below is a sample of the current ESPN app.<\/p>\n

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Trends in Cable<\/strong><\/p>\n

While ESPN gets the vast majority of their revenues from affiliate fees related to TV (approximately $6 billion3<\/sup>), there have been disturbing trends with the viewership.\u00a0 As shown in the chart below, the number of households with ESPN peaked in 2011 and has dropped precipitously in the past couple of years.<\/p>\n

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As revenues from the big cable bundles have dwindled, ESPN knew they had to re-position themselves to compete in this digital, cord-cutting age.<\/p>\n

ESPN\u2019s Initial Digital Media Strategy<\/strong><\/p>\n

ESPN adopted a strategy of \u201cbuilding digital verticals around stars and subjects\u201d4<\/sup>; however, to date, there has been much uncertainty about their ability to implement the plan profitably and effectively.\u00a0 Grantland <\/em>was a pop culture and sports blog started in 2011 by well-known (and occasionally controversial) sports writer Bill Simmons.\u00a0 While it reached decent levels of popularity, it was rumored to have never reached profitability and was shut down in 2015 after Simmons\u2019 departure.\u00a0 Below is a sample of the Grantland <\/em>website.<\/p>\n

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ESPN\u2019s The Undefeated<\/em>, a website exploring the intersections of culture, race, and sports, got off to a rough start with a long delay and the resignation of the founder4\u2011<\/sup>.\u00a0 The digital vertical at ESPN was also the source of many layoffs in 20155<\/sup>, perhaps signaling the firm\u2019s lack of commitment to the strategy.<\/p>\n

Rise of Mobile<\/strong><\/p>\n

ESPN\u2019s app is one of the most popular: \u201cin an average week, across all of its apps, ESPN delivers approximately 600 million alerts to tens of millions of phones\u201d3<\/sup>. Moreover, the company has added a daily feature on Snapchat to appeal to a younger generation.\u00a0 Between all of its digital offerings, ESPN\u2019s mobile audience is much bigger than its current TV audience; yet, the difficulty of monetization in mobile has plagued the company as it looks for ways to replace its fading revenue from cable subscriptions.<\/p>\n

New Partnerships<\/strong><\/p>\n

In 2016, ESPN\/Disney has forayed into new partnerships to strengthen their digital position.\u00a0 First, the company purchased one-third of Major League Baseball\u2019s digital business (with an option to take a majority stake in the future).\u00a0 This business, called MLB Advanced Media, manages digital ticketing, live streams, and sponsorships. MLB Advanced Media \u201cdistributes 25,000 live events annually and 10 million streams daily\u201d and, perhaps more importantly, \u201chas the resources to support “millions of multi-platform subscribers and processes\u201d6<\/sup>.\u00a0 Below is a sample of MLB Advanced Media\u2019s live streaming.<\/p>\n

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ESPN also reached an agreement with Tencent to leverage potential synergies between ESPN\u2019s sports content and Tencent\u2019s user base.\u00a0 According to terms of the deal, \u201cESPN’s content will be localized and exclusively distributed and promoted by Tencent’s digital platforms in China\u201d7<\/sup>.\u00a0 Tencent\u2019s live sports and digital offerings in the Chinese market will now be exclusively Mandarin ESPN content.\u00a0 Through this arrangement, ESPN can quickly begin reaching millions of Chinese fans with their extensive coverage of basketball, soccer, and other sports.<\/p>\n

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