Can ESPN Score by Subsidizing Data Plans?
As streaming video becomes more popular every day for wireless subscribers, the most-watched services are considering paying to have their content remain available in unlimited form. The Wall Street Journal reports that ESPN has explored the subject with different wireless carriers in hopes of coming to an agreement that would keep their viewers online all month long. Verizon (NYSE:VZ), Sprint (NYSE:S), and AT&T (NYSE:T) have been forced into a position to rethink how to make money in the face of an insatiable thirst for media via mobile.
The potential for ESPN, the “Worldwide Leader in Sports” owned by Disney (NYSE:DIS), is too great to ignore. As the days tick off the monthly calendar and data subscribers reach their limits, they’ll stop using wireless plans and search for alternative ways to stream content. That leaves ESPN and their significant ad revenues from mobile broadcasts and apps out in the cold until the next billing cycle. What if that limit disappeared when it came to ESPN programs?
Naturally, there would be a huge advantage for the company, whose sports programming is already wildly popular. ESPN offers many free broadcasts online that attract wide audiences while eating up bandwidth for for users and wireless carriers alike. Amol Sharma of WSJ reports that ESPN has raised the possibility of wireless carriers working with the company to share some of the burden. On one hand, ESPN is bringing in countless viewers, while on the other hand, the wireless provider is delivering the bandwidth…
No agreements have been reached because there is no solution yet that’s made sense for ESPN. If it were to pay a significant chunk to subsidize wireless content for its viewers, could it recoup the money and earn a profit through the nonstop ad revenue? Those calculations have yet to make financial sense for the sports broadcasting giant.
On the other hand, regulatory issues exist that could prevent ESPN from paying wireless carriers to consider its content “void” when counting up the usage of subscribers. Network neutrality laws prevent carriers from offering preferential treatment to one service or or website in favor of another. Since Netflix (NASDAQ:NFLX) has so many customers streaming videos, ESPN could take a bite out of their viewership. If customers can stream the big game without worrying about overage, would reruns and rom-coms ever compete for sports fans’ attention?