ESPN has reached the 1 million paid subscriber mark for its direct-to-consumer streaming service called ESPN+.
Why it matters: The service is the company's biggest effort yet to offer content to fans directly, rather than via pay-TV operators. The early success of ESPN+ is a good sign for ESPN's parent company, Walt Disney, which is planning to launch other direct-to-consumer streaming products for other parts of its business.
Yes, but: Some of these subscribers were converted from ESPN's paid ESPN Insider program. ESPN says, however, that that vast majority of the 1 million subscribers are new subscribers, who’ve signed up for ESPN+ since its launch in April.
- "Adding ESPN Insider to ESPN+ did add some subscribers, but they account for a significant minority of the total. Adding ESPN Insider to ESPN+ was about simplifying and clarifying our ESPN digital subscription offering to fans – while also adding value to their subscription," says a spokesperson.
Between the lines: Some analysts were bearish on ESPN's ability to get people to pay for its content directly, since for many years consumers have been getting it as a part of a much bigger cable or satellite package, where it isn't as obvious how much more expensive ESPN is in comparison to other channels.
The bigger picture: Disney has made big investments in streaming over the past year, so that it can launch other streaming product across its portfolio of entertainment studios and television networks.
- Disney, which is acquiring 21st Century Fox's entertainment assets, plans to build out a streaming service for family-friendly entertainment programming in late 2019.
- It also plans to pump more resources into Hulu, which it will become a majority stakeholder in with the completion of its Fox acquisition.
Be smart: ESPN has been losing Pay-TV subscribers for years, leading to painful layoffs and reorganizations. The future of the network relies on its ability to migrate pay-TV subscribers over to digital, and this shows that the strategy has potential.
ESPN launched ESPN+ in April as destination for serious sports fans for a $4.99 monthly subscription fee. Subscribers get 1) News, scores, highlights and audio; 2) Authenticated video access to ESPN programming with a cable subscription login; and 3) Exclusive live sports and content, including ESPN's popular 30 for 30 series.
- ESPN worked with Disney's newly-launched Disney Direct-to-Consumer and International (DTCI) unit to build the product.
- Disney acquired a majority stake in BAMTech (a top sports streaming tech companies) last year to help build out ESPN+, but also other products.
- ESPN president Jimmy Pitaro told reports in August that consumers should expect to see a limited ad experience in ESPN+, mostly through the form of sponsorships.
Go deeper: What you get with ESPN+.
Note: This post was updated to include information about ESPN's Insider Program.