Kevin Mayer Explains His Vision For ESPN’s Future
With the Walt Disney Company’s Q1 earning report set to be released tomorrow, all eyes will be on CEO Bob Iger.
One of the biggest questions that Iger has to answer, is what the future of ESPN looks like.
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For decades, the Worldwide Leader in Sports has been the backbone of cable packages, and the clear face of sports media.
With tastes changing, and cable television quickly giving way to streaming, however, Iger and his team need to decide what the future of ESPN looks like.
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To help him lay out a future for ESPN, Iger has hired former Disney streaming chief Kevin Mayer as a consultant.
Mayer Says Fans Will Pay For ESPN
Mayer, who was a longtime proponent of bringing ESPN to streaming, spoke at the Yahoo Fiance Invest Conference on Tuesday and warned that sports fans will soon have to pay a higher price tag for ESPN.
“People have always paid a lot for sports,” Kevin Mayer, who now runs Blackstone-backed entertainment startup Candle Media, said. “They didn’t always know it because back in the day when 95% of this country had paid TV bundles, probably 40% to 50% of the cost of that bundle was sports programming. … [But] now they can do so explicitly.”
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Bob Iger currently has a litany of issues on his plate, from declining linear television revenue, to activist investor Nelson Peltz’s push for a board seat, even the company’s India business is now under the microscope.
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Still, according to Mayer, the issue most pressing for Iger to solve is ESPN. In his remarks, he stated that the Disney CEO is “definitely most focused on making sure that ESPN, a company that he really believes in strongly, is well positioned for the future.”
What Would the Price Point Be?
A full-streaming version of ESPN would likely need to cost consumers at least $30 a month for Disney to break even.
Mayer, however, insists that a $30 price point would be an “entirely reasonable price to get the full suite of sports that ESPN would offer.”
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Mayer then went on to reference his time serving as the chairman of the global sports streaming platform Dazn. At the time, the company was expanding into new markets and trying to capture new subscribers.
“My idea having launched Disney+ was let’s go into the low price. Maybe we can get some of these people that are pirating signals to buy it legitimately, and maybe we can expand the marketplace at a lower price,” he explained. “People were used to paying from Sky, which was the previous broadcaster, about 30 to 35 euros a month. We went in at 19 euros a month.”
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Despite the lower price point, Mayer says, Danzn failed to gain more subscribers than it would have in the 30 to 25 euro price range.
“It was imperceptible,” he said.
The Ball is Iger’s Court
The lesson for ESPN then, is that the network’s audience will pay a higher price point, or they won’t subscribe at all.
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If Iger can successfully create an ESPN streaming platform at a price point that proves profitable, it will go a long way in solving the company’s overall financial woes.
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Until then, Disney will have to prove that it can make money in streaming before investors will have faith in the company’s long-term viability again.
