Joe Drape and Brooks Barnes from the New York Times:
The “Worldwide Leader in Sports,” as ESPN brands itself, laid off scores of journalists and on-air talent on Wednesday, showing that even the most formidable media kingdom was vulnerable to the transformation upending the sports broadcasting industry as more and more people turn away from cable television.
In October 2015, ESPN laid off about 300 people, most of whom were not on camera. The network has been periodically culling its staff as it searches for ways to cut costs and adapts to changing consumer habits, with fans increasingly watching video clips on their smartphones at the expense of traditional highlight shows like “SportsCenter.” With ESPN locked into long-term contracts for programming rights with various sports leagues, savings must primarily come from a reduced staff.
They buried the real lede:
The ESPN layoffs come as Disney accelerates efforts to introduce an ESPN-branded subscription streaming service. The offering, expected this year and made possible by Disney’s $1 billion purchase in 2016 of part of BamTech, Major League Baseball’s streaming division, will include coverage of sports like hockey, tennis, cricket and college sports — mostly rights that are owned by ESPN, but not televised.
Disney bought BamTech (the best streaming infrastructure in the business, powering services like HBO Now and WWE Network; I should know, I used to work there) and is using it to build an OTT streaming platform for live sports!
Correction: Disney acquired a minority stake in BamTech, 33% of the company, for its $1 billion. Makes sense; when I was there, before BamTech was officially spun out of MLBAM, the expected valuation for BamTech was about $2.5 billion.
The profusion of ESPN channels was originally supposed to support multiple simultaneous games, but then they needed to fill all the programming hours and invested in legions of talking heads. A corrosive "fandom" culture took hold in which viewers embraced the shouting matches and venom (seriously, take a look at the comments of any YouTube video featuring the Golden State Warriors or the Cleveland Cavaliers), but it started to turn some off.
Nevertheless, what seemed like intense viewer loyalty and spectacular ad rates helped inflate the cost of broadcast rights, even as improving online streaming and increasingly questionable cable bundle pricing led to "cord cutting" on the fringes.
You know how this movie ends.
A hypothetical "ESPN Now" doesn't need "channels," which means there's less dead air time to fill. It can offer a primary "live" stream of games interleaved with short highlights and analysis segments, while potentially offering on-demand access to full-length streams of all the sports ESPN holds broadcast rights to. It just doesn't need as much conventional on-air talent.
There will be new opportunities around scripted content like 30 for 30 or Outside the Lines across the entire range of sports, because a streaming platform doesn't inherently prioritize any one over the others. Got a compelling deep dive into the world of Russian women's pro curling? There's now potentially room for that, on equal footing with the annual hagiography of the Super Bowl-winning team.
By the way, Disney's
acquisition of investment in BamTech makes me wonder about the prospects for Netflix's "exclusive streaming partner" relationship. With BamTech in-house, Disney could spin up a Netflix competitor of its own, and it has the depth of catalog in film, tv, animation and (via ESPN) sports to make it a compelling alternative.
Live sports has been viewed as the final frontier in cord cutting, and between Twitter's NFL streaming last season, Amazon's $50 million deal for those same rights in the upcoming one and this Disney/ESPN/BamTech development, we may be approaching the tipping point in VODs usurpation of broadcast television.
As someone who's been cable-free since 2009, but who loves sports, I can't wait for ESPN Now in 2018!