Ah, the mid-2010s. I remember them as if they were just five years ago. It was in 2013 that I wondered, “Will ESPN Bring Down The Whole Pay-TV Industry?” Obviously, five years later they still haven’t.
There was a lot of talk back then about how ESPN was getting too big for its britches. A source at the time estimated that up to $25 of your average cable bill (which at the time was about $90) was going straight to ESPN. Add the cost to carry other Disney-owned channels and up to 45% of your cable costs could have been passing straight to the house of mouse.
Why that’s a problem
We’ve seen a massive move toward cord-cutting in recent years, and it’s largely due to costs. Many people don’t find that traditional cable TV is a good value anymore, and it’s not surprising. Cable TV bills have outpaced inflation for over two decades. I remember clearly back in 2000, thinking $35 for a mid-level cable package was about all I would ever want to pay. Oh, to have those days back.
Even though pay TV has brought DVRs, interactive services, HD and eventually 4K, there’s no disputing that prices have gone up. A lot of that money has gone straight into the hands of content providers like Disney. For its part, a company like DIRECTV (and now AT&T) has actually trimmed a lot of the fat, cut support costs and integrated new technologies over and over to keep costs low. Yet, bills keep rising. Why? It’s the content providers and their expensive contracts.
ESPN didn’t crash the whole industry but…
It’s hard to avoid the impact ESPN and other high-priced content providers have had. If it weren’t for those high prices, Sling and DIRECTV NOW probably wouldn’t exist. People wouldn’t be looking for options.
ESPN itself has suffered year after year. They’ve found themselves shut out of lower-tier channel lineups, something that would have been unthinkable just a few years ago. They’ve had two rounds of layoffs, which no one in the early 2000s would have expected. The once golden boy is taking it on the chin, perhaps more than the pay-TV companies are. After years of saying that streaming was “secondary” to their business, they finally launched their own streaming service in a “can’t beat em, join em” move a few months ago.
Five years ago, I didn’t forecast exactly what happened, but I sure sounded the alarm. I forecast big changes ahead and struggles for everyone around the Disney industrial complex. Sounds like for once, I was actually right.