Disney Has Religion on Digital, ESPN Is At the Core

Disney held its annual investor day yesterday, and as usual, technology, and the opportunities it creates for the company, was at center stage. Disney introduced a new initiative called "Disney Studio All Access" providing a central location for consumers to securely access the company's range of content. Though details were sketchy, key to the plan is more flexible consumer ownership and multi-device playback. For paid, downloadable video, that remains the holy grail.

Aside from the company's digital initiatives on the entertainment side of its house, the most important asset that Disney is trying to re-imagine digitally is ESPN. Just yesterday, the company announced a new distribution deal with Verizon, which emphasizes live online streaming of ESPN, ESPN2, ESPNU and ESPN Buzzer Beater. The deal is similar to one inked last September with Time Warner Cable, the country's 2nd-largest cable operator. No doubt others will follow.

Disney is wisely trying to create more online value out of the ESPN franchise, which helps its pay-TV distribution partners better justify its industry-leading monthly rates. In this sense, even though ESPN.com has been among the leaders in providing free online video clips and other multimedia, the company's bread-and-butter business model is and will remain monthly pay-TV carriage fees and advertising. CEO Bob Iger emphasized the point by highlighting the importance of TV Everywhere authentication yesterday. Of course, ESPN was one of the first to really get the value of digital, with its launch of ESPN3, the online-only network, available through broadband ISPs exclusively.

For sports fans, all of this is great news; more coverage, more engagement, more viewing flexibility, the list of benefits just keeps getting longer. The chink in the armor however, is that non-sports fans are continuing to help pay for all this, plus all the other sports networks they don't watch, through their monthly pay-TV subscriptions. This massive subsidization of sports programming is the elephant in the room in the pay-TV industry, and there is no question that as cheaper over-the-top entertainment-oriented alternatives proliferate, non-fans are going to better understand all of this.

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Categories: Cable Networks, Cable TV Operators, Sports, Telcos

Topics: Disney, ESPN, Time Warner Cable, Verizon