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ESPN (NYSE:DIS) is reportedly setting up for a future where it streams its channel straight to consumers — a move that might bring about a sea change in the fundamental cable TV business model.
The self-proclaimed “Worldwide Leader in Sports” is actively preparing for a shift to direct streaming under an internal project codenamed “Flagship,” The Wall Street Journal reported.
The plan includes continuing to offer ESPN’s channels as pay-TV options — but those would have to compete with the direct option, according to the report.
ESPN has been maneuvering in this direction through its recent deals with cable providers and similar talks with sports leagues, the WSJ noted.
ESPN has long been one of the foundations of the pay TV business model, with its channels securing the highest rates per subscriber of the entire pay TV landscape — a sort of “anchor store” for providers including Comcast (CMCSA), Charter (CHTR), DirecTV (T), Verizon (VZ), Dish Network (DISH) and many more.
Pay TV’s bundling setup means many viewers who don’t watch ESPN pay for it anyway, and ESPN takes a $9.42 chunk of each average pay TV bill, vs. an average of $0.49 per subscriber for other cable nets.
Walt Disney (DIS) stock was up 0.7% premarket Thursday.
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