ESPN Wants You to Say Goodbye to Your TV
Google (NASDAQ:GOOG), Sony Corp. (NYSE:SNE), and Intel (NASDAQ:INTC) have long been itching to steal a piece of the TV service pie ever since they learned that major satellite and cable providers like Comcast (NASDAQ:CMCSA) and DirecTV (NASDAQ:DTV) make a combined $100 million per year in U.S. pay-TV fees.
It’s a tough industry to break into, but thanks to Netflix (NASDAQ:NFLX) and other streaming services, more consumers are turning their attention away from the TV and more toward their computer and tablet devices. A Web-based TV service therefore seemed like the perfect idea for Google, Sony, and Intel, and it’s something they consistently propose.
But though it initially seemed like a shot in the dark, those plans might finally be coming to fruition. A recent report shows that Walt Disney Co.’s (NYSE:DIS) ESPN sports network is now willing to begin negotiating a Web-based TV service plan.
Bloomberg reports that the president of ESPN, John Skipper, told sources on ESPN’s campus Wednesday that the sports network is now in talks to offer its programming on a Web-based TV service as long as the Internet provider is willing to buy “the whole suite of products” — which includes ESPN, ESPN2, ESPN News — and not just pick and choose.
This is major news for future online TV providers because ESPN has 98 million subscribers and the highest subscriber fees on basic cable, making it the most lucrative channel for pay-TV providers. Gaining access to ESPN’s network would help online TV providers establish credibility and draw subscribers from Comcast and DirecTV who specifically pay high cable fees in order to watch their favorite sports teams.
But unfortunately for consumers, this new Web-based TV service won’t necessarily mean lower prices. According to Bloomberg, Skipper maintained Wednesday that Internet TV providers would likely be paying as much or even more than cable and satellite services for the network, making it difficult for the sports broadcasting giant to offer the lowest prices to new users.
These providers will also have to prove that they have a stable subscriber base with the understanding that if not enough viewers sign up, the Internet TV providers still have to pay the deficit, Bloomberg reports.
Talks are still very much in their initial stages, but they reflect a step forward in terms of future Internet TV providers getting their foot in the door. It’s little wonder that ESPN is one of the first to jump at this new, Internet-based TV opportunity: The TV network is Disney’s most lucrative business, continually coming in with a revenue that the Burbank, California-based company would likely be interested in sustaining.
If Google, Sony, and Intel have it their way, they’d offer Web-based TV on PCs, tablets, and smartphones — and they might just be one step closer.