Disney is a very large, very successful company. The company is made up of many different parts: consumer products, theme parks, film studios, and media networks. Many parts of the company are doing very well right now, but other parts are not. One of the parts that seems to be struggling is the ESPN sports network. In fact, this part of the company has been doing so poorly lately that it has driven the company’s stock value down by 24%. Clearly the Disney product managers are going to have to take steps to change their product development definition and deal with this problem.
What’s Wrong With ESPN?
Everyone likes sports, right? If you like sports and you like to watch sports on TV and you live in the U.S., then when you sit down to watch sports there is a very good chance that you turn to ESPN. For a long time ESPN has been a powerhouse in the world of sports and that has looked good on people’s product manager resume. However, lately things have be changing. Operating income generated by ESPN for the parent Disney company has fallen by 6%.
As with all such things, there are many reasons why this is happening. One key reason is because ESPN’s costs have been going up. ESPN pays a great deal of money to have the rights to broadcast both professional and college football. It turns out that their bottom line can also be affected by football schedules. This time around the college football playoffs occurred later in the year and so this meant that any ad revenue from those games didn’t show up in the current quarter.
However, a bigger problem that ESPN is facing is that they are losing subscribers. Two years ago they had 99M subscribers, last year they had 95M subscribers, and this year they have 92M subscribers. They are losing a lot of their subscribers to so called “cord cutters” who are customers who are walking away from cable TV subscription packages. There has been some customers who have come back to ESPN in so-called “skinny packages” where a customer only buys a few select cable channels. However, this has not been enough to make up for the overall subscriber loss.
What Can Disney Do To Fix ESPN?
ESPN is facing a real problem. At the very time that cord cutters are turning the channel off, their costs are starting to skyrocket. Their agreement with the NFL has increased to $1.9B, up from $1.1B. They’ve just signed a new NBA basketball contract that is 200% more expensive than the last contract that they had. These deals are long term deals (8 and 9 years) and since there is no other alternative, they tend to benefit the sports franchise.
The problem is when you take a look at what cable customers are paying in order to have access to the ESPN channel. No matter how you feel about sports, if you subscribe to a cable package that includes ESPN, $6.61 of your monthly cable bill is going towards paying for it. That’s why people are starting to cut the cable cord. This means that ESPN product managers need to take steps to cut their costs. They’ve done this by getting rid of hundreds of ESPN jobs and dropping some of their on-air star talent. This has freed up a lot of money, but not enough.
ESPN needs to understand that streaming has become very popular. In order to meet the needs of this type of market, they need to make their on-air staff become edger. They need to be willing to tackle topics like gambling and other racier topics. The product managers need to look beyond cable and investigate creating a streaming service of some sort to meet the needs of their cord-cutting internet viewers. They may also want to look into ways to revamp their SportsCenter program to better meet the needs of viewers who don’t spend all day watching ESPN. No matter what they do, the ESPN product managers are going to have to make some changes if they want to stay in the game.
What All Of This Means For You
The Disney Corporation is made up of a number of different businesses. One of their most successful businesses is the ESPN sports broadcast channel. ESPN has been a powerhouse in the broadcast business for a long time; however, lately they have started to lose subscribers as more and more people start to become “cord cutters”.
The revenue that Disney gets from ESPN has started to decrease because of the number of subscribers that they have been losing. At the same time that they are having fewer viewers, ESPN is struggling with the fact that the cost of their content has been increasing. The ESPN product managers have been trying to find ways to deal with these challenges. They have laid off a lot of workers and slimmed down the number of on-air star talents that they employee. Going forward they are going to have to find ways to get back the cord cutters. One way to do this is to create some sort of streaming service.
ESPN is still the place that sports fans go to get their fill of the sports that they love. ESPN is not going to be going anywhere. However, in order for it to remain as profitable to its parent company as it has been, it’s going to have to change. The ESPN product managers need to take a look at their product manager job description and determine what their subscribers want and then change their channel to meet those needs.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: What would be the best way to provide ESPN content to internet-only subscribers?
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What We’ll Be Talking About Next Time
As a product manager, you know just how important the name of your product is. We spend a great deal of time trying to come up with the right name that will match the product development definition for each of the products that we manage. Our goal is always to create a name that will capture what the product does, be memorable, and in this confusing age of the internet be unique enough that we can brand it. That’s why it can be very important for us to take the time to watch other product managers when they try to create a valuable product name. At Coke-Cola, their product managers are struggling to show that they own the rights to a very popular name: “zero”.
