A plan by Walt Disney Company subsidiary ESPN along with Fox and Warner Bros. Discovery to form a new JV to create a sports-oriented streaming video service will have broad ramifications across both the pay-TV and over-the-top streaming video ecosystems.

“This is a blockbuster deal that will further decimate the traditional US pay-TV sector. For many viewers, sports has been the thread keeping them attached to pay-TV, but that thread frays a bit more every time a streaming video provider gains control of popular live sports programming,” said Tammy Parker, Principal Analyst of Global Telecom Consumer Services at GlobalData.

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“Having ESPN, Fox, and WarnerBros. Discovery combine their vast portfolios of sports content into a single streaming service will make sports fans think twice about subscribing to pricey linear programming bundles offered by cable and satellite TV providers. The lure of an all-in-one app with a smorgasbord of appealing sports content will be tough for sports fans to resist,” Parker added.

Will the price be right?

One big question revolves around pricing for the still-unnamed service, especially given how expensive sports rights are. The standalone app might cost more than potential viewers are willing to pay. However, subscribers will have the option to bundle the new service with Disney, Hulu, and/or Max and will thus be able to take advantage of discounted value pricing for a full package of streaming services.

The new sports service will be positioned to build a healthy subscriber base quickly. In addition to siphoning subscribers from cable and satellite TV providers, which are considered multichannel video programming distributors (MVPDs), it will also pose a significant threat to other sports-oriented streaming services, such as FuboTV, a virtual MVPD with a focus on live sports.

Philo, a rival vMVPD, is already pitching its service as the perfect complement to the planned streaming sports service. Philo’s market approach has long-revolved around eschewing sports and local channels in favour of focusing on entertainment and lifestyle networks, enabling it to offer more affordable subscription tiers.

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JV taps into live event enthusiasm

The sports-oriented JV planned by the three leading media companies also reflects the growing importance of live event programming for streaming service providers. That is the reason Netflix recently signed a deal worth more than $5bn for exclusive rights to World Wrestling Entertainment’s popular Raw program starting in January 2025.

But live events do not need to be restricted to sports, or hybrid sports-entertainment programming as in the case of Raw, to create must-see, destination programming. Pure entertainment events such as live comedy stand-up specials or concerts are also fair game for streamers seeking to create higher engagement with viewers.

GlobalData predicts that US pay-TV household penetration will continue to plummet from the industry’s halcyon days of 2009-2010, when penetration exceeded 85%, and will fall to around 32% in 2028.