It’s happened. More people in the U.S. are now using streaming video services than have a cable subscription. This is according to a May 2017 study from Fluent LLC, as reported in eMarketer. The survey found that 67% of U.S. internet users watch or have access to a streaming service, compared to just 61% who have cable TV.
Millennials, unsurprisingly, lead the way, with 77% of them reporting access to a streaming service compared to 65% of non-millennials. Of the different streaming video services, Netflix is far and away in the lead with a 48% share, followed by Amazon Prime and Hulu (each at 16%). Low cost, convenience, and access to original content were all cited as reasons to subscribe to these services.
Netflix’s popularity in recent years can be credited to two factors: extremely popular original content and their decision to release that content all at once. This allows viewers to ‘binge-watch’ these must-see shows. It is this binge-watching experience that is “transformative” according to Netflix’s CEO and founder, Reed Hastings.
This is one reason that Netflix cites for their intention not to get into live sports—and it’s good news for ESPN, since live sports are this network’s raison d'être. But although ESPN is the worldwide leader in sports programming, it's still primarily a cable network without a standalone streaming option—and they’ve been losing subscribers. From a peak of 100 million households in 2011, the network counts only 88 million now, according toa recent article in The Economist.
ESPN is undoubtedly aware of all of this, and The Economist article states that the network plans to begin selling a direct-to-consumer ESPN-branded internet service. But it will only supplement the TV channel, not replace it. Not yet anyway.
The transition from a B2B to a B2C model—where ESPN markets their product directly to consumers—is a key aspect of the pivot ESPN may need to make, to respond to the loss of cable subscribers. In marketing themselves directly to consumers, they’ll have to deal with all the specific challenges that model presents that they haven’t encountered in selling their network as part of a bundled cable subscription.
As a B2C subscription service, they’ll need to figure out their plans and pricing, hone their customer acquisition strategy and optimize their customer retention. They’ll need to manage their recurring billing and payments, mitigate fraud, and make sure declined transactions don’t spike their churn rate. They’ll need a subscription platform that makes all these things straightforward, one that’s flexible, secure, and stable. In short, they’ll need a platform like Recurly. We’re here when you’re ready, ESPN. Call us.
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