New sports streaming platforms: What you need to know

The American media world was anxious — or was it panicking? — Wednesday to try to figure out the implications. disney, warner bros discovery and Fox‘s new joint venture is an unprecedented move to collaborate in the years since the media companies launched their own competing streaming platforms.

service will launch this fall and cater to sports fans who don’t subscribe to traditional cable bundles. Consumers will have access to all of the company’s sports networks, along with Disney’s ESPN+.

Some of the companies’ motivations are clear, as they focus on sports to drive streaming profits.Other reasons for launching a product are more vague Company specific.

Many media executives are scrambling for answers about the deal, which could have major ramifications for the industry.

At first glance, This venture is a major concern for the three major pay-TV operators, charter, comcast and DirecTV.

However, it is unclear how much they will lose. A person involved in the new venture’s launch told CNBC that the platform will be a “monster” and disrupt cable TV.

It’s possible. A small percentage of those who end up signing up for a sports bundle cancel their traditional cable in favor of a new, cheaper alternative. Pricing for the new product hasn’t been determined yet, but officials told CNBC it will cost more than $30. One said $45 to $50 per month was reasonable after the discounted introductory offer ended.

At about $40 per month, the product is much cheaper than the $72.99 per month of YouTube TV, which is currently becoming a growing cable alternative for sports fans.

But it’s also possible that the platform simply doesn’t have a large audience. There’s a reason tens of millions of Americans canceled their cable TV. Many people simply don’t want access to sports and the costs that come with it.

Fox CEO Lachlan Murdoch said Wednesday that the product is aimed at people who have never subscribed to cable TV. But it’s a no-brainer that many of these people would want to spend around $40 a month on live sports.

Spokespeople for Charter, Comcast and DirecTV all declined to comment on the new service.

Charter and Comcast haven’t been too concerned about video defections in recent years. Broadband is a much more profitable product. Cable TV has been relegated to add-ons that help people stay subscribed to high-speed internet.

But broadband subscriber growth has stalled for both Comcast and Charter. verizon, T-mobile and AT&T has rolled out 5G home and fixed wireless broadband products. This could lead to further loss of video subscribers, which could be even more harmful for businesses.

Satellite TV providers DirecTV and Dish are potentially more at risk because they don’t have high-speed broadband products at all. GoogleYouTube TV, Fubo TV and Hulu with live TV, which is owned by Disney.

Disney, Warner Bros., and Fox services are not full sports services. NBC and CBS are not included. Both broadcast many sports, including the all-important National Football League. Indeed, NBC and CBS offer free wireless coverage with digital antennas, and streaming services called NBC’s Peacock and CBS’ Paramount+ already include sports.

Still, the more consumers feel the need to add on to the service, the more cost and hassle it becomes, and the less attractive it becomes.

Now that joint ventures exist, perhaps distributors will eventually have the flexibility to offer similar skinny bundles as well.

Another dynamic is at work. ESPN still plans to launch a full direct-to-consumer service in the fall of 2025, CEO Bob Iger said Wednesday. That product also has an audience.

It remains to be seen how many people have signed up for the new platform. Maybe it’ll be a game changer, maybe it won’t.

Traditional pay TV still has about 70 million subscribers. This includes so-called “virtual MVPDs” like YouTube TV, which just announced it has surpassed his 8 million subscriber count.

Cable bundles have largely survived because they still include exclusive live news and sports.

There are now cheaper ways to watch most sports, and that doesn’t include cable news networks like Fox News, CNN, MSNBC, and CNBC. This change could pose a threat to channels currently at risk of losing subscribers.

Could the news networks come together and offer a news bundle with less content, similar to the new sports bundle? Or will this new sports venture be the catalyst for news bundles, a concept CNBC has been writing about for years but never realized? Could Fox News be bundled with other conservative-leaning publications? Could CNBC partner with the Wall Street Journal or Financial Times to offer a combination of print and video?

These are hypotheticals, but sports packages may force executives to think in new ways.

LightShed media analyst Rich Greenfield called the new sports platform a “winner bundle.” To some extent, he has a point. Customers of the new platform will continue to pay Disney, Warner Bros. and Fox for content, and not NBCUniversal and Paramount Global.

But it also Risks to Warner Bros. and Disney.

Warner Bros. unbundled TNT, TBS, and TruTV from the rest of its networks in a skinny bundle. This could result in pay-TV distributors requiring customers to pay only for the same package, putting many of the older Discovery networks at risk, including HGTV, Animal Planet, TLC, and the Discovery Channel. These are low-cost and profitable channels for Warner Bros.

If you need the Discovery network, you can always subscribe to Max. All content is already there.

Fox is less risky. Cable providers will likely continue to need Fox News to appease the station’s rabid fan base.

Disney’s flagship ESPN streaming service feels like it’s going quiet with this new sports offering. Previously, the only way for cord cutters to get ESPN outside of a cable bundle was through the upcoming service. The new platform will make ESPN more affordable for cord cutters.

of The joint venture would require Disney to split the profits with the other two companies. All of Disney’s direct-to-consumer products are Disney. The platform’s launch appears to be a risk aversion at best and a critique of the potential popularity of expensive ESPN-only streaming products at worst.

One way Disney could add strength to its direct-to-consumer products is if the three companies’ sports platforms offer limited or no on-demand options. But if true, it could make joint ventures less attractive.

Part of the rationale behind this announcement comes down to competitive dynamics. There’s never been any love lost between Disney and Comcast.

After years of disagreements over Hulu’s direction, it’s perhaps no surprise that this product wasn’t a joint venture between the two companies. Ownership of the product is still split between the two companies, as valuation negotiations move forward at full speed for Disney to fully own the service.

This structure is a sign that Warner Bros. CEO David Zaslav has given Paramount Global and NBCUniversal a limited amount of warning that he may be interested in merging with either or both companies. It can also be seen as a not-so-subtle jab.

His message to Paramount Global and NBCUniversal is clear. “You’re no longer good enough on your own.” By not inviting the companies to the sports platform’s party, Iger and Zaslav feel the NBCUniversal and Paramount Global programming is simply not needed. It’s a sign of things.

For joint ventures It turns out Zaslav is actually a “monster”, but he may just have gained some leverage in future merger talks.

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

WATCH: ESPN should have been included in the sports bundle ‘from the beginning,’ says Right Shed’s Rich Greenfield

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