ESPN once boasted over 100 million subscribers. With cord cutting only increasing that number could be heading towards as low as 50 million in a few years or less resulting in a potential shortfall of as much as $3 billion. In that context, there has been a lot written about ESPN’s desire to get into the sports betting business to make up for the potential lost subscriber revenue.
With recent rumors of Disney spinning-off the worldwide leaders in sports, however, the time might be right for ESPN to explore how to directly engage with sports betting. Disney-owned ESPN has strong brand equity and a built-in user base consisting of tens of millions of subscribers. Access to its brand and its subscribers could help a sportsbook reduce its currently unsustainable user acquisition costs.
For the past few years, the network has partnered with FanDuel, DraftKings and Fanatics to create customized betting content and branded on-air segments to further engage football, baseball and basketball fans. In the past two years, ESPN launched the Daily Wager, a show to appeal to the sports betting audience by providing regular updates on betting lines, over-unders and lineup changes.
Initial conversations have been reported around ESPN licensing its brand to a current sportsbook for approximately $3 billion, with Caesar’s and DraftKings reportedly approached. Licensing models create complexity when it comes to brand management. Fixed fee licensed models may leave substantial dollars on the table while revenue share models come with inherent risks and are often perceived by sportsbooks as expensive.
Alternatively, ESPN could consider acquiring a sportsbook. Betsson and Rush Street Interactive have been reported as possible targets. At the present time the majority of sportsbooks in the U.S. do not offer streaming video. Should ESPN pursue an acquisition strategy and be able to extend their current streaming video rights deals to include betting video rights, they could offer fans/bettors a game-changing product with an extraordinary amount of live sports content from which to bet on.
In order to pursue this strategy, however, ESPN would need to improve upon the user experience and streaming technology that is used by today’s sportsbooks. Most streaming applications still rely on HTTP streaming for scalability, but it inherently increases the latency of the stream. Current sportsbook applications that include video streaming do not deliver sports content in real-time (defined as sub half-second latency) and are thus forced to cut bets off well before the game begins. Prop or in-play bets have been defined as betting during a game, but with significant time elapsed for the bet to be decided (e.g., will the Lakers score more points in the second half than they did in the first half).
To give ESPN a competitive advantage over other sportsbooks, ESPN could employ real-time streaming technology from Phenix Real Time Solutions offering fans a Watch and Bet experience. With real-time streaming, ESPN’s fans would have the ability to bet on every play in a game, known as micro-wagering (e.g., will Pat Mahomes throw a touchdown on THIS play). This would drive significant handle and fan engagement.
Phenix has proven how its real-time streaming technology can not only power micro-wagering, but can also synchronize streams across all devices to millions of users globally with less than 0.5 seconds of latency. From the largest horse racing event in Europe at the Cheltenham Festival, to the newest Yahoo! Fantasy Football and Verizon NFL Fan experiences, Phenix is working with the largest names in sports to deliver championship-level streaming applications to fans, anytime, anywhere.