The mass migration to on-demand TV streaming has been in progress for years, but the live sports streaming industry is just getting started. The self-proclaimed Netflix of sports recently announced that it is coming to the U.S. this fall.
DAZN (pronounced da-zone) will launch in September with live boxing, mixed martial arts matches, and on-demand programming for $9.99 per month. For Disney‘s (NYSE: DIS) recently-launched ESPN+ service, this could mean some early and stiff competition.
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What is DAZN?
DAZN is a subsidiary of Perform Group, a U.K.-based global sports media company. DAZN is the streaming service the company launched a couple of years ago. It is already available in parts of Europe, Japan, and Canada. The platform gives subscribers access to NFL, NBA, and MLB games, among other professional leagues.
Those premier American sports won’t be part of the U.S. package when it launches on September 10. DAZN has instead gone another route, signing an eight-year, $1 billion deal with Matchroom Boxing and a five-year, nine-figure deal with Bellator MMA. DAZN will stream an average of at least one boxing or UFC fight each week at an affordable monthly price, putting it in direct competition with the pay-per-view TV fight industry dominated by the likes of AT&T‘s HBO.
DAZN doesn’t plan on stopping there. It remains to be seen what other programming it will venture into stateside, but the streaming platform’s CEO, James Rushton, has promised to be a disruptor to the way consumers watch live sporting events.
Should Disney be worried?
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Not yet, but DAZN’s aggressive deals could mean a future headline battle between the two platforms. In the spring of 2018, Disney’s long-awaited ESPN+ streaming service launched for a monthly price of $4.99. ESPN+ features a selection of live professional baseball, hockey, and soccer games, as well as college sports, select golf and tennis matches, Top Rank Boxing matches, and on-demand access to ESPN original shows.
In August, Disney will report on the third quarter of its 2018 fiscal year: the first period to include operating results from ESPN+. It will be an important scorecard for the segment, as Disney’s Media Networks division is its largest, but also most stagnant. Cord-cutting has been weighing on results there, as viewers migrate from cable TV packages to streaming services. As a result, affiliate revenue and advertising have been under pressure for years.
|
Disney Media Networks |
Revenue |
% of Total Revenue |
Year-Over-Year % Growth |
|---|---|---|---|
|
FY 2018 Year-to-Date |
$12.4 billion |
41% |
2% |
|
FY 2017 |
$23.5 billion |
43% |
(1%) |
|
FY 2016 |
$23.7 billion |
43% |
2% |
Disney has been investing heavily to push this underperforming segment back into gear. Operating profit from the media networks division declined 9% in the first half of fiscal 2018. This was due in part to the loss at its majority-owned subsidiary BAMTech, which was used to launch ESPN+ and is hard at work readying Disney’s answer to Netflix for launch in early 2019.
At this point, there isn’t a lot of overlap between DAZN and ESPN+ programming, so Disney doesn’t need to sweat yet. However, a sizable competitor making its U.S. debut and threatening to expand its reach could be bad timing for ESPN’s proper entrance into the digital age. If DAZN is greeted with success in September, don’t be surprised to see Disney get aggressive in signing new live sports distribution deals for its fledgling streaming platform.
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Nicholas Rossolillo and his clients own shares of Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.
