By The TV Answer Man team
TV Answer Man, I keep hearing that ESPN will offer its channel as a streaming service that won’t require a cable or satellite subscription. But my question is how much will they charge? I can’t imagine it will be cheap. Any guesses? — Jake, town withheld.
Jake, Disney, which owns ESPN, has said a standalone streaming version of the sports network is coming, perhaps as early as 2025. This won’t be like ESPN+, the $9.99 a month streamer that offers some of ESPN’s live events and in-studio shows. This will be the whole ESPN lineup, 24/7. But what will ESPN charge for a streaming service that would not require you to subscribe to a cable, satellite or live streaming service such as YouTube TV or Sling TV? Let’s take a look at the numbers.
Understanding the Current Model
ESPN now operates as part of a bundle in most cable and satellite TV packages. This bundle includes a wide range of channels, and the cost is shared among all subscribers, regardless of whether they watch ESPN or not. This business model has allowed ESPN to charge high fees to cable and satellite providers for carrying its channel, making it one of the most expensive channels in these packages.
The Current Costs
According to various analyst estimates and news reports, ESPN charges cable and satellite providers an average of approximately $10 per subscriber per month. This fee is often passed on to consumers as part of their monthly cable or satellite bill. To determine how much ESPN would have to charge if it sold the channel to consumers separately, we need to consider its current subscriber count.
ESPN now has approximately 74 million subscribers in the United States. However, these numbers have been steadily declining due to cord-cutting and the rise of streaming services. If ESPN were to sell its channel directly to consumers, it would start to lose some of the guaranteed revenue from cable and satellite providers. We don’t know how many people would cut the cord if ESPN was available as a standalone service. But to make up for a likely significant loss of pay TV subscribers, ESPN would need to charge a higher monthly fee per customer.
Calculating the Standalone Cost
Let’s do some rough calculations to estimate how much ESPN would have to charge per month if it sold the channel directly to consumers. Suppose we assume that ESPN needs the same revenue it currently generates from cable and satellite providers, which is approximately $10 per subscriber per month. Given that there are 74 million subscribers now:
Revenue Needed = $10 x 74,000,000 = $740,000,000 per month
To make this amount of revenue, ESPN would need to charge each of its 74 million former subscribers the same $10 per month. However, in a standalone model, it’s likely that not all previous subscribers would be willing to pay that much. Some might opt for cheaper streaming services or forego ESPN altogether. If we conservatively estimate that ESPN takes away 50 percent of its previous subscriber base, it would have around 37 million subscribers. To cover the same $740 million in monthly revenue:
Monthly Fee = $740,000,000/37,000,000 = $20 per subscriber per month.
Therefore, ESPN would need to charge approximately $20 per month to each of its estimated 37 million standalone subscribers to maintain its current revenue level if it sold the channel separately.
However, there’s another factor to consider. Disney wants to begin tapping the cord-cutting audience with the full ESPN lineup, but it doesn’t want to do it too quickly. It will still generate revenue from the cable and satellite audience so it’s motivated to keep that revenue stream flowing as long as possible. If it sets the price of a standalone ESPN high enough, it will encourage more consumers to stay with cable and satellite a bit longer while attracting those who will never subscribe to a multi-channel pay TV service again, the cord-cutting audience. Consequently, the company might be inclined to offer the standalone ESPN for something like $24.99 a month, which would be competitive with other national streaming services such as NBA League Pass and MLB TV. Disney might even want to go higher than that to create the perception that ESPN is something special, but we suspect that it will stay in the $20-25 range at launch to give the service an early boost. (It could also do an ads-free version for $29.99 a month.)
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