ESPN is doing all it can to save itself.
Recently we got word that ESPN was trying to find a company to partner with. There are reports it approached both the NBA and NFL in an effort to find a suitor.
Whether those were accurate or not is no longer an issue. ESPN now found a partner in the form of PENN Entertainment, This will result in the rebrand “Barstool Sportsbook” as “ESPN Bet".
It is the company's first endeavor into having its own sports betting book. In the past, it had partnered with DraftKings and Caesar Sportsbook although neither gave the network its own book.
This is a big step for the struggling company.
Cord Cutting And The Death Of Broadcast Television
ESPN is finding itself in a world of hurt due to the changing nature of television. ESPN is in a similar situation as the cable news channels. They are all struggling to get viewers as people are bombarded with many other options.
It was not long ago that ESPN had 100 million subscribers. Due to cord cutting, that number is closer to 75 million. This still generates an enormous sum of money each month for the network. However, the belief of analysts is that it will drop to around 50 million by the end of the decade.
The problem is that we are likely looking at a generational situation. Cable television is the epitome of Baby Boomers. They were the ones who came upon 24 hour news and sports channels . For the past 3 decades, they consumed the content these organizations provided.
We are facing a demographic shift. The Boomers are starting to die off. At the core of this issue for these networks is the fact the younger generations are not tuning. We know they live on their phones and other devices of that nature. This opens up a host of other entertainment possibilities.
Big Money In Betting
This is probably a smart move by ESPN.
It is hard to argue with the revenue potential. This deal provides the network with $1.5 billion over 10 years, a term that can be extended. It also includes $500 million in warrants to purchase 31.8 million PENN common shares.
ESPN had to find ways to generate more revenue. If their subscriber base dwindles due to cord cutting, this has a direct impact on advertising monies. Streaming was something that many had hoped would take off but that is not losing a ton of money.
Perhaps better is the big money move.
The question is whether the ESPN brand is enough to carry it successfully into the betting world. Do most people really care about ESPN when it comes to placing a bet?
It is something that will be answered over the next 10 years.
From a financial perspective, this is small potatoes for Disney, the parent company of ESPN. So far this year, it has lost almost $1 billion on the movies it put out. Hence, $1.5 billion is a drop in the bucket when factored over 10 years.
Of course, the profits from the betting could alter things greatly.
The Impact of Web 3.0?
We are about to embark upon the era of Web 3.0. This is likely to be a game changer when it comes to entertainment.
Expertise is being delivered by non-media entities. In the past, they had a monopoly on the creation and distribution of content. The Internet changed that completely.
Now we have a different monetization situation arising. This could is going to pull many more into the content creation game.
How will this affect a mainstream network like ESPN? It is something worth considering as we move forward.
The attention economy is upon us. When it comes to broadcasting, that was always the case. The difference is no longer do these mega corporations have a monopoly on the ability to generate content.
This could change everything.
