Disney to launch flagship ESPN streaming app in 2025

Disney plans to launch a flagship ESPN standalone app in 2025, CEO Bob Iger affirmed on the company’s quarterly earnings call Wednesday.

Disney already disclosed a flagship ESPN product was coming, but hadn’t shared plans for timing, which the CEO on Wednesday said will probably be August of next year. It also reconfirms that a planned sports streaming service that’s expected to launch this fall, developed and operated under a joint venture between ESPN, Fox and Warner Bros. Discovery announced Tuesday, isn’t impacting the plan for a standalone ESPN service. The yet-to-be-named JV direct-to-consumer streaming service will include the full suite of ESPN channels as well as existing ESPN+ service (which will also continue to be offered as a standalone) along with sports assets from the other companies on a non-exclusive basis.

Speaking on the earnings call, Iger said Disney will “be offering ESPN as a standalone streaming option with innovative digital features, creating a one-stop sports destination unlike anything available in the marketplace today.” 

Iger noted the company’s mission is to build ESPN into “the preeminent digital sports brand,” reaching as many sports fans as possible and serving access to programming no matter where they are. One avenue for that is through the JV offering. And moving direct-to-consumer is in part about preserving or creating relationships with those that have left or are leaving the full cable and satellite TV bundle.

On the standalone ESPN app, he emphasized it would be available to Disney+ bundled subscribers (with Hulu and Disney+ themselves becoming more integrated in a single app experience), with a more unified streaming experience he said that one would expect to deliver higher engagement, lower churn and increased advertising potential. The flagship ESPN service will have live games and studio programming, but also certain features not found in the JV sports streaming app, according to Iger - namely integrated betting and fantasy sports, e-commerce and merchandising features, deeper dives on sports stats, and a high degree of customization and personalization. He indicated these moves mark a progression for the sports asset, which started with the first step of ESPN+. Disney has also been in active discussions with potential content and marketing partners for ESPN, where Iger said the company has “made progress towards securing deals” and expects to share more in the near future.

Responding to an analyst question on what success in sports is for Disney, Iger said “I think success will be for us in this, basically migration, would be to maintain ESPN’s position in sports in general, and the affinity that its fans have with ESPN and attractiveness of ESPN to advertisers and sports leagues. That simple.”

The chief executive noted that sports “is still an advertiser’s delight,” adding that the brand has been successful in its primary goal.

“They’re reaching sports fans effectively, which is why advertisers and distributors and sports leagues and organizations feel they have to kind of be part of or partnered with ESPN,” Iger said. “As we look to the future, we’re obviously mindful of one, the state of the multichannel ecosystem, two, where people are spending their time and their money with media.”

Domestically, ESPN generated around $4 billion in revenue for Disney in the quarter ending December 30, 2023, while posting $255 million in operating income.

Also on Wednesday, Disney announced a deal with Epic Games that will see Disney acquire a small equity stake and launch a new “games and entertainment universe” that leverages the company’s brands and franchises with the highly popular video game Fortnite. Iger said in this immersive universe customers will be able to “play, watch, create and shop for both digital and physical goods.”

Streaming losses decline, so do Disney+ subs

As for its first quarter fiscal year 2024 results Disney improved direct-to-consumer streaming losses by nearly $300 million compared to the prior quarter. Disney reported a DTC operating loss, including ESPN+ in its sports segment, of $216 million in the period, compared to a loss of $1.05 billion in the same quarter a year ago. Direct-to-consumer revenue including ESPN+ grew 14% year over year to $6.07 billion for the quarter ending December 30, 2023. It continues to expect to reaching streaming profitability across its combined businesses in the fourth quarter of fiscal 2024.

Still, it marked losses for its Disney+ Core subscriber base (which doesn’t include Disney+ Hotstar in India), which decreased by 1.3 million sequentially for a domestic and international base of about 111 million. That includes losing 400,000 Disney+ domestic subscribers for a U.S. and Canada subscriber tally of 46.1 million. The remaining 900,000 sub losses came from International Disney+ (excluding India), for a base of 65.2 million. Disney attributed the subscriber losses to a substantial domestic price increase in the quarter, as well as the end of a global summer promotion. While subscribers declined, Disney+ Core average revenue per user (ARPU) was up sequentially by $0.14 to $6.84. The company guided for a reversal in subscriber trends next quarter, when it expects to add between 5.5 million and 6 million net Disney+ Core subscribers.

The Hulu SVOD, meanwhile, added 1.2 million subscribers in the quarter for a base of 45.1 million.  The Hulu + Live TV virtual MVPD stayed flat at 4.6 million.

Within its entertainment segment, revenue at Disney’s linear networks declined 12% year over year to $2.8 billion, while content sales and licensing dropped 38% to $1.6 billion.

Total revenue across Disney’s business segment was flat year over year at $23.5 billion, while total segment operating income grew 27% to $3.87 billion.

Article updated to reflect DTC operating loss and revenues inclusive of ESPN+ at the Sports segment.