Our Take on the ESPN, Fox, Warner Bros Discovery Joint Venture and Apple Sports
In our Sports Tech Round-Up for February, we analysed two significant news stories originating from the US. Discover our insights on the upcoming streaming platform, a joint venture between ESPN, Fox, and Warner Bros. Discovery, and Apple's recent launch of Apple Sports.
ESPN, FOX and Warner Bros. Discovery Forming Joint Venture to Launch Streaming Sports Service in the U.S.
The New Joint Venture Will Bring Together Sports Linear Networks and Direct-to-Consumer Service ESPN+
🔎 Our Take:
In today's ever-evolving media landscape, content aggregation has become increasingly prevalent, primarily due to the fragmentation of rights. This phenomenon compels consumers to navigate through multiple platforms to access their desired content. The recent formation of a joint venture between industry giants ESPN, Fox, and Warner Bros. Discovery exemplifies this trend, marking a significant development in merging linear TV with direct-to-consumer content.
By pooling their resources together, Fox, ESPN and Disney (The Broadcasters) aim to mitigate the financial strain of acquiring expensive sports rights. For instance, ESPN would mutually and indirectly benefit from rights they initially did not purchase - such as the NBA games originally held by Warner bros which would be available now as part of the joint streaming venture.
Adopting this strategy will allow the companies to compete more aggressively with tech companies such as Apple and Amazon, which have been capturing the rights to some of the most significant sports properties. That being said, the primary challenge that broadcasters will have to contend with would be to figure out the correct pricing and advertising model to expand their 'bundle' offering without cannibalising their existing services.
The rights to live sports could be the most viable option. The alternative could be offering content in the form of highlights or on-demand content, and this is where user acquisition could get most tricky owing to the existence of other streaming platforms.This move simplifies the need for sports fans who have shifted to broadband (cord cutters as they are popularly referred to) to have multiple subscriptions to access different sports content. However, this joint venture would lack access to showcasing the sports properties and competitions licensed to other networks such as NBC and CBS, which could further fans' confusion in accessing their preferred content across multiple platforms.
This new signals a trend that seems inevitable in the coming years - In the foreseeable future, all television content will likely be delivered through streaming platforms. Major media companies are currently in a race to develop a sustainable business model that ensures profitability while showcasing ongoing growth. A testament to this shift is the advent of 'Freely' - a new streaming service, backed by the BBC, ITV and other 'broadcasters', to be launched later this year in the UK. The concept of Freely resonates with the news of the joint venture in the US for how content aggregation and mutually gathering intellectual property has become essential in a day and age in which consumers have to toggle between different channels and services. Freely, aims to end that by 'future-proofing' live TV by bringing together 'live' and on-demand' content together in one place, on its platform - for free.
Again, this may not necessarily solve the sports rights fragmentation (subjective to existing rights) concern most sports fans have. Still, it showcases an evident global trend: the aggregation of content, not just exclusive to sport as evidenced by the advent of 'Freely'. Similar local projects have been initiated across Europe, such as in Belgium with the formation of the new streaming joint venture between VRT, DPG Media and Telenet.
The joint venture's success by ESPN, Fox, and Warner Bros. Discovery will be closely monitored, with considerations extending beyond sports to encompass news and other forms of content. However, it is premature to make definitive predictions regarding its success at this stage, as the landscape evolves rapidly.
Key takeaways
Pooling rights across three broadcasters only solves fragmentation for the fan if the venture can price a single bundle without cannibalising each partner's existing subscription business.
A joint venture between competitors is a hedge against being outbid by tech companies for the biggest rights, though it still leaves fans needing separate subscriptions for content held by NBC or CBS.
Similar bundling moves appearing at the same time in different markets, from Freely in the UK to VRT, DPG Media and Telenet in Belgium, points to content aggregation as a broader industry response to fragmented rights.
FAQ
What does the ESPN, Fox and Warner Bros Discovery streaming joint venture mean for leagues whose rights sit across multiple broadcasters?
It gives leagues like the NBA a way for their rights to reach a combined audience across three broadcasters through one product, rather than fans needing separate subscriptions. Rights held by non-partner networks like NBC or CBS remain outside the bundle, so it does not fully solve fragmentation for every league.Why are ESPN, Fox and Warner Bros Discovery combining their sports rights into one streaming service?
Pooling resources helps the three broadcasters manage the rising cost of sports rights and compete more directly with tech companies like Apple and Amazon, which have been acquiring major sports properties. It also lets each broadcaster offer fans access to rights, like NBA games, that it did not originally hold itself.Is the ESPN, Fox and Warner Bros Discovery joint venture part of a wider industry trend?
Yes, similar content aggregation moves have appeared elsewhere, including the BBC and ITV-backed Freely service in the UK and a streaming joint venture between VRT, DPG Media and Telenet in Belgium. All reflect broadcasters combining rights and content in response to how fragmented and expensive sports rights have become.
Introducing Apple Sports, a new app for sports fans
The free app for iPhone delivers real-time scores, stats, and more, all designed for speed and simplicity.
🔎 Our Take:
Apple's new sports app marks the device maker's latest foray into the sports world. After launching its streaming service, Apple TV last year and having secured the global rights to the MLS - The tech company seems to have strong ambitions to scale within the sport industry.
The new sports app would provide every sports fan (iPhone/Apple users) with curated scores, stats and news from their favourite sports and competitions worldwide. This new product from Apple is a new entrant in an already crowded marketplace with sports teams having their dedicated apps for scores and other media businesses occupying this space as well. It will be interesting to see how Apple's direct access to its device owners may reshape the dynamic within this space, potentially rendering other apps redundant.
The timing of this app launch seems ideal, coinciding with the start of the MLS Season last week, aligning with Apple's broader strategy. This strategy includes recent developments such as Apple TV, MLS rights acquisition, and the unveiling of Apple Vision Pro. These steps appear to be incremental components of a larger plan to establish a significant presence in the sports sector. Apple likely aims to compete for sports rights, generate revenue through app subscriptions, enhance hardware sales by leveraging its brand and user loyalty, and potentially secure lucrative NBA rights in 2025.
It is essential to acknowledge the prowess of Apple's brand, especially concerning the impact new product announcements have. For instance, the NBA, MLB, and the PGA Tour have each introduced apps for Apple's 'Vision Pro', seeking to take advantage of the product's 3-dimensional display. Product adoption and usage rates are typically high with Apple's new services and products. However, the Apple Sports app appears more straightforward and lacks the typical "wow" factor, posing a challenge to making it super attractive to users.
The sustainability of the sports app's 'free' business model remains a key aspect to monitor. How can it offer a comprehensive sports experience for fans, incorporating personalisation and enhanced engagement? Merely delivering scores and statistics may not suffice in the long term. Meanwhile, existing media entities may need to explore avenues such as gamification and gambling to maintain relevance and drive subscriptions. These considerations showcase the competitive nature of sports media and how it has become essential to provide the right 'value exchange' for fans to get them to adopt your product.
Key takeaways
A simple scores-and-stats app fits into a much bigger strategy: Apple already holds MLS rights and a streaming service, so this app is another point of contact with sports fans rather than a standalone product.
Launching a free, no-frills product signals Apple building daily habit and data first, saving bigger bets like broadcast rights for when that audience is already established.
A "good enough" product from a company with Apple's reach and device ownership can still reshape a crowded market, even without a standout feature, simply through default access to millions of existing users.
FAQ
What does the Apple Sports app mean for leagues like the NBA negotiating future media rights with Apple?
It shows Apple building a habit-forming, everyday touchpoint with sports fans ahead of bigger rights negotiations, such as the NBA rights potentially available in 2025. A free scores app that keeps fans engaged daily strengthens Apple's case as a serious long-term rights holder, not just a streaming newcomer.How does the Apple Sports app fit into Apple's broader sports strategy?
It follows Apple TV's launch, Apple's acquisition of global MLS rights, and the unveiling of Apple Vision Pro, positioning the app as another piece of a longer-term push into sport. Launching alongside the start of the MLS season reinforces that connection.Can a free app like Apple Sports compete with dedicated sports data and news apps?
Its main advantage is Apple's direct access to iPhone users rather than any standout feature, since the app itself has been described as straightforward rather than groundbreaking. Whether that reach is enough to sustain a free business model long-term, without added personalisation or engagement features, remains to be seen.
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