What If There Was an ESPN OTT Offering?

Now that some content providers have launched over-the-top video offerings, there has been a lot of speculation about whether ESPN will make -- or ought to make -- such a move. As some customers are beginning to drop pay-TV subscriptions in favor of over-the-top (OTT), it’s a logical choice for all content owners to consider. Financial analysts at Bernstein weighed in on what an OTT offering would mean for ESPN in a research note. Their take? “[W]e believe ESPN is wise to keep OTT safely tucked away on its list of ‘things we could do, but choose not to,’” the researchers wrote.

According to the Bernstein researchers, about 100 million US households pay $7 a month for ESPN. Advocates of an ESPN OTT offering argue that if one third of those people would pay $20 a month for an ESPN OTT offering, ESPN would break even. The researchers argue, though, that many sports fans watch more than just sports and that a traditional cable bundle would remain the most attractive option for those people. A bigger concern, the researchers say, is that if ESPN launched an OTT offering, content providers such as Discovery, Viacom, AMC Networks and others would feel compelled to do the same. And Bernstein estimates that a group of those content networks could launch an OTT offering jointly that would retail for just $15. That means that “non-sports households would suddenly have a very attractive, much less expensive option,” the researchers note, which could cause a lot of subscribers to drop traditional pay-TV service -- including the sports programming that typically comes with it.