Disney and Amazon are in talks to strike an ESPN partnership

The news: Amazon could be the partner for ESPN that Disney has been looking for. The two companies are in talks to strike a partnership for a planned revamp of ESPN for streaming, which could involve a distribution deal via Amazon Prime Video or even a minority stake in the sports network, The Information reports.

  • Disney is reportedly considering charging as much as $25 to $35 monthly for the new service.

Finding a fit: Disney has been unsure how to fit ESPN into its growing streaming empire. Though it has a digital offering in ESPN+, its linear counterpart drives much higher viewership and is where the highest-profile events are broadcast.

  • Before streaming became the norm, ESPN was the definitive brand for watching sports on television. But now, major sports leagues have been splintered across a variety of streaming services: Amazon hosts Thursday Night Football, YouTube has acquired Sunday Ticket rights, and that’s just the NFL. Other leagues like Major League Baseball are also fractured across platforms.
  • Despite still owning some competitive streaming and broadcast rights itself, ESPN’s brand—and financial contribution—has been diluted. Disney’s network revenues have fallen 30% in the last three quarters, and now the company once synonymous with sports broadcasting has to seek a partnership with a tech competitor newer to the video scene.
  • A $25-to-$35 price point would make ESPN one of the most expensive streaming services on the market. That’s a tough sell when consumers are already sour about price hikes and beginning to cancel services. But ESPN is lining up a suite of extra features like a possible tie-in betting service that could soften the steep pricing.

Thursday Night Football: Sports streaming rights are long, expensive contracts. Amazon is paying $1 billion yearly for the next 11 years to keep streaming Thursday Night Football; YouTube is paying about $2 billion for the next seven.

  • For their long-term bets on viewership growth to pay off, both companies need to show that their costly services offer something more than simple broadcasts. Case in point: YouTube recently announced a suite of features for Sunday Ticket like chats and multiviewing.
  • Amazon is doing the same. A potential deal with Disney could make Prime more of a destination for sports content, but Amazon is also launching several AI-powered features for Thursday Night Football, including automatically generated highlight reels.