Bob Iger is all in on streaming live sports — here’s why that’s risky for Disney | yahoo!finance
Disney CEO Bob Iger recently unveiled plans for a significant shift in the company’s strategy, emphasizing the importance of live sports streaming in its future endeavors. The move entails launching ESPN as a fully over-the-top (OTT) streaming service by fall 2025 and collaborating with Warner Bros. Discovery (WBD) and Fox (FOXA) to introduce a new sports streaming platform later this year. This shift responds to the changing landscape of consumer preferences as traditional pay-TV models give way to streaming platforms.
However, this strategic pivot comes with inherent risks. Like other media conglomerates, Disney faces the challenge of balancing the allure of streaming with the potential loss of revenue from traditional pay-TV bundles and advertising. Analysts warn that if streaming services are priced too low, they could accelerate the decline of pay-TV subscriptions while pricing them too high might limit consumer demand.
Moreover, the transition to streaming poses financial challenges for Disney. Despite narrowing losses in the latest quarter, the streaming segment remains unprofitable. The joint venture with WBD and Fox aims to address subscriber churn and improve profitability, but uncertainties persist regarding pricing strategies and consumer willingness to pay.
Analysts caution that the success of Disney’s streaming ventures, particularly in the sports domain, hinges on finding the right pricing model. While estimates suggest ESPN’s OTT service would need to charge around $30 a month to break even, consumer surveys indicate a reluctance to pay such high prices for dedicated sports streaming. This underscores the complexity of transitioning from traditional broadcast models to streaming platforms in a financially sustainable manner.
As Disney navigates this transition, it must carefully consider the delicate balance between attracting subscribers, generating revenue, and maintaining profitability in an increasingly competitive streaming landscape………..
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Rising Dough
How do shifting consumer preferences towards streaming platforms impact the strategies of businesses like Disney, particularly in pricing their services to balance consumer demand and profitability?
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Considering high inflation and wage stagnation at the moment consumers want to save as much money as possible. So, if a streaming service just for sports launches at 30$ consumers will likely not buy it. Furthermore, if they lower the price Disney will lose money, and by setting price low consumers may believe the unprofitable price is the standard, so they won’t pay for price increases. Disney has to lower its price to a certain level to get enough consumers to purchase this app to hopefully breakeven which I doubt will happen. This situation seems like a lose lose for Disney.