The Company Man youtuber made a video called "The Decline of ESPN...What Happened?" back in 2018. (linked below).
The gist of it being, one-third of ESPN's revenue is generated by advertising. Two-thirds of their revenue is generated by subscriptions.
As the internet has grown over the years, getting sports news has been easier and faster than ever and ESPN no longer has a stranglehold over sports content.
Combine this with the fact that cable tv subscriptions have been declining for well over a decade now, and ESPN has a major problem. When you pay for your cable tv package, most channels cost around $1 or less. ESPN is the most expensive channel to carry for any cable lineup. Over the years people have either chosen tv packages without ESPN (if they don't care to watch it) or cut cable tv entirely.
This reduced ESPN's revenue by hundreds of millions of dollars or more.
Rather than lowering the cost of their subscription to keep subscribers or attract new ones (as the youtuber suggests), ESPN has chosen to increase the price of their subscriptions to make up the difference in the lost of subscribers -- potentially alienating even more viewers.
Adding to the fact that ESPN has locked themselves into expensive, multi-billion dollar contracts to broadcast the NFL, NBA, etc... it continues to put them in a bind.
This helps to explain the mass layoffs of talent over the past few years. They have to cut costs somewhere.
Unfortunately for them, the cord-cutting trend does not appear to be reversing any time soon.
I suppose getting into the sports betting business with Penn Entertainment is their way to tap into a new revenue stream. We'll see if it works out for them.
What do you think of the future of ESPN?
The gist of it being, one-third of ESPN's revenue is generated by advertising. Two-thirds of their revenue is generated by subscriptions.
As the internet has grown over the years, getting sports news has been easier and faster than ever and ESPN no longer has a stranglehold over sports content.
Combine this with the fact that cable tv subscriptions have been declining for well over a decade now, and ESPN has a major problem. When you pay for your cable tv package, most channels cost around $1 or less. ESPN is the most expensive channel to carry for any cable lineup. Over the years people have either chosen tv packages without ESPN (if they don't care to watch it) or cut cable tv entirely.
This reduced ESPN's revenue by hundreds of millions of dollars or more.
Rather than lowering the cost of their subscription to keep subscribers or attract new ones (as the youtuber suggests), ESPN has chosen to increase the price of their subscriptions to make up the difference in the lost of subscribers -- potentially alienating even more viewers.
Adding to the fact that ESPN has locked themselves into expensive, multi-billion dollar contracts to broadcast the NFL, NBA, etc... it continues to put them in a bind.
This helps to explain the mass layoffs of talent over the past few years. They have to cut costs somewhere.
Unfortunately for them, the cord-cutting trend does not appear to be reversing any time soon.
I suppose getting into the sports betting business with Penn Entertainment is their way to tap into a new revenue stream. We'll see if it works out for them.
What do you think of the future of ESPN?
