ESPN Chairman Jimmy Pitaro Talks New Innovation Center, the Growth of ESPN+, and the Future of Sports-Media Rights
He was featured at this week’s ESPN Edge Virtual Conference
Last month, ESPN formally announced the launch of the ESPN Edge Innovation Center — an initiative that aims to explore how emerging technologies like 5G, AR/VR, and edge computing can enhance storytelling and the sports-fan experience. To promote the virtual center, the company hosted the first-ever ESPN Edge Virtual Conference with an opening session featuring Chairman of ESPN and Sports Content Jimmy Pitaro.
Besides discussing the Innovation Center, Pitaro touched on the growth of ESPN+ since its launch in 2018, how ESPN’s recent rights deals factor into its direct-to-consumer (DTC) strategy, ESPN+’s increased fan engagement (especially among younger fans), how the heft of Walt Disney Co. gives ESPN a unique value proposition for leagues (for example, the recent NHL rights deal), and how he expects technology to evolve in the years to come.
ESPN+’s Growth as It Nears Its Fourth Birthday
Pitaro, who was interviewed by ESPN SVP, Content Business Development and Innovation, Mark Walker, kicked things off by noting that, while he is pleased with ESPN’s digital-centric evolution since the launch of ESPN+, the company is looking to innovate further through collaborative efforts like the ESPN Edge Innovation Center. He sees such efforts as a way to further ESPN’s already significant efforts on the digital and DTC fronts.“None of this was easy or obvious for Disney and ESPN, especially when you consider how successful the traditional television business model has been for us,” he said. “But it starts with vision, and it starts with leadership, and that was started years ago with [former Disney CEO] Bob Iger and continues today under [Disney CEO] Bob Chapek. That vision is centered around digital and direct-to-consumer and the opportunity that the Walt Disney Co. has in those spaces.”
Since launching 3½ years ago, ESPN+ has continued to grow and recently hit 14.9 million subscribers. Perhaps most notably, ESPN+ has resonated with younger fans: nearly half the ESPN+ audience is under 35.
Besides volume, Pitaro cited growing engagement and brand affinity for ESPN+. According to the company, 85% of sports fans are aware of ESPN+, and 65% like or love the DTC streaming service. That affinity metric has grown 11% over the past two years, the largest increase among ESPN offerings during that time.
He also explained how ESPN+ users tend to be more connected to ESPN’s platforms overall, with roughly half of ESPN+ subscribers using other ESPN media platforms every day. In addition, 35% spend more time on the ESPN app than fans overall spend.
“[ESPN+] is also a great value proposition for fans when you look at the experience and … the depth of content that we’re providing,” he said. “And when you look at the price point, it really is a ton of value.”
Cross-Platform Rights Serve Both Traditional TV and DTC Streaming
In the months leading up to and years since the ESPN+ launch, Disney and ESPN have increasingly emphasized digital- and streaming-media rights — both in standalone rights deals and as part of larger multiplatform agreements with leagues.
“We’ve secured a string of new rights agreements — including championship-caliber programming — that provide us with a ton of flexibility by including this ability to go direct to consumer,” Pitaro said. “We now have these must-have positions in key sports like NHL, UFC, soccer, golf, and college. At the same time, we’ve established important complementary positions in other major sports, [such as] the NFL, MLB, and a long list [of others].”
According to Pitaro, cross-platform rights deals provide ESPN the necessary scale and flexibility to evolve from the aging cable/broadcast-television market to the growing DTC-streaming sector.
“[With these] programming deals, we’ve secured cross-platform rights,” he explained. “These rights give us the optionality that we need in a very competitive sports marketplace, where we’re all competing for sports fans’ time. On one side, we have the ability to maximize the current ecosystem: cable and broadcast television, which has been very good to ESPN and the Walt Disney Co. And, at the same time, through these rights, we’ve been able to position ourselves for changing consumer behavior … [and] direct-to-consumer.”
While these multiplatform rights agreements are helping ESPN stay agile, Pitaro noted, the company’s league partners are also beginning to see the benefits of their games’ being carried on ESPN+.
“We’ve also been able to demonstrate to our very important league partners the vision for ESPN+ and its importance in the future,” he said. “Leagues are constantly looking for new ways to generate scalability and broaden their audience, and ESPN+ is now a platform that they are very much proud to be a part of. It’s not just about ESPN linear; it’s about ESPN digital, including ESPN+.”
ESPN’s NHL Rights Deal and the Unrivaled Scale of Disney
Of the many rights deals ESPN has inked under Pitaro’s stewardship, the recent seven-year agreement with NHL is perhaps the most interesting from a digital standpoint. The deal marks the first time that a top national package from a Big Four U.S. sports league is available exclusively on a DTC streaming platform. This season, 75 national games will stream exclusively on ESPN+ and Hulu SVOD, and the league’s out-of-market package (formerly NHL.TV) offering more than 1,100 games is digitally exclusive to ESPN+.
“Our partnership with the NHL is a great example of what Disney and ESPN can bring to the table and what we can offer to fans and what we can offer to rightsholders and league partners,” said Pitaro. “This one was a first-of-its-kind deal in the industry. To be quite honest, we would not have been able to get this deal done without the significant streaming component that exists. If you were to ask me what the heart of this deal is, I will tell you streaming, without any hesitation. This deal does reflect streaming’s role as a critical part of the future of ESPN and Disney.”
In the case of the NHL, the league saw early on in negotiations that the combination of ESPN+ and Hulu SVOD offered far wider reach than is typical of a DTC streaming platform.
“They saw that, with ESPN+ and Hulu SVOD, we are already there in terms of being able to deliver the reach that they’re looking for,” he said. “Typically, when you’re looking for reach, you’re thinking about traditional television, whether it’s broadcast or cable. But now fast forward to where we are, and we feel really good about that scalability.”
Pitaro added that this type of multiplatform scale makes ESPN and Disney more desirable than ever as a rights partner. With sizable reach via broadcast, cable, streaming, TV Everywhere, ESPN.com and the ESPN app, ESPN social-media platforms, other Disney platforms like Hulu, and international partners, he believes ESPN holds a “distinct advantage” when it comes to acquiring sports-media rights.
“It creates value for the consumers,” he said. “It creates value for our partners, and it creates value for our business.”