Can E-Sports Save Disney's ESPN From Cord Cutters?
*BY ELAINE LOWINVESTOR'S BUSINESS DAILYJan 15, 2016 01:13 PM ET* http://news.investors.com/business/011516-790082-can-esports-save-disney-espn-cord-cutters.htm Walt Disney's (NYSE:DIS <http://research.investors.com/quotes/nyse-walt-disney-company-dis.htm>) ESPN doubled down on the emerging e-sports industry Thursday with a new ESPN.com section and a commitment to covering competitive video gaming with the same seriousness with which it covers pro football and pro basketball. But will that be enough to stem subscriber losses from Disney's money-making cable sports network as viewers flock to Netflix (NASDAQ:NFLX <http://research.investors.com/quotes/nasdaq-netflix-inc-nflx.htm>) and other over-the-top TV services? Back in November, Disney CEO Bob Iger said on the company's Q4 call that he felt "bullish about ESPN and ESPN's business <http://news.investors.com/business.aspx>." But the following month, the media conglomerate disclosed that ESPN had lost 7 million subscribers in just two years, dropping to 92 million from 99 million in 2013. <http://news.investors.com/photopopup.aspx?path=Biz07-DIS-011916-newscom.jpg&docId=790082&xmpSource=&width=1000&height=563&caption=&id=790071> View Enlarged Image <http://news.investors.com/photopopup.aspx?path=Biz07-DIS-011916-newscom.jpg&docId=790082&xmpSource=&width=1000&height=563&caption=&id=790071> ESPN.com's foray into e-sports has included the hiring of seasoned e-sports writers from Azubu and TheScore who, according to the Los Angeles Times <http://www.latimes.com/business/technology/la-fi-tn-espn-esports-20160113-story.html>, will also regularly appear on "SportsCenter" and other shows on the network. "Fans will find the same level of quality content and journalism that users of ESPN.com have come to expect, including in-depth looks at the competitive gaming world and on-site reporting from the major tournaments," said ESPN The Magazine and ESPN.com Editor-in-Chief Chad Millman in a statement Thursday. ESPN has aired gaming tournaments on TV before, mostly on ESPN3. But it is slowly but surely nudging e-sports to the forefront. Last year, it aired live coverage of a "Heroes of the Storm" collegiate tournament on ESPN2 and published its first e-sports edition of ESPN The Magazine. If ESPN's web outlet can cultivate a large enough e-sports audience online, that could translate to more viewers and subscribers to its cable TV channel. And there is a huge potential audience to mine: Amazon (NASDAQ:AMZN <http://research.investors.com/quotes/nasdaq-amazoncom-inc-amzn.htm>)-owned gaming streamer Twitch boasts over 100 million unique viewers a month, and Alphabet (NASDAQ:GOOGL <http://research.investors.com/quotes/nasdaq-alphabet-inc-cl-a-googl.htm>) unit Google last year debuted <http://news.investors.com/technology/061815-757892-youtube-gaming-takes-on-amazon-twitch.htm> its own live-streaming gaming hub, YouTube Gaming, with the hopes of tapping into that viewership. But Barclays analyst Kannan Venkateshwar downgraded Disney to underweight from equal weight on Friday, citing the weakness of ESPN, which accounts for a "disproportionate share of Disney's cash flow." He also cut his price target on Disney to 89 from 98. "(I)n a secularly fragmenting media environment, ESPN is the most exposed," he wrote. "This is because ESPN's business model depends on the cross-subsidy of the pay TV bundle. Consequently, given ESPN's fixed cost structure and variable revenue model, subscriber losses are likely to have a disproportionate impact on the business model." Read More At Investor's Business Daily: http://news.investors.com/business/011516-790082-can-esports-save-disney-espn-cord-cutters.htm#ixzz3xLXcK9bm <http://ec.tynt.com/b/rf?id=dW0sw4iSyr3P7iab7jrHtB&u=InvestorsBusinessDaily>
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