Q. Three giants of sports media are launching a joint streaming service – why is this a big deal?

It appears that we are finally starting to see signs of consolidation in the sports streaming market. Last week, we hosted a webinar on the state of sports in North and Central America, where, among other topics, we discussed some of the negative implications of the fragmented American sports rights market. Within the webinar we identified the fragmentation problem as two-fold: cost and confusion. The newly-announced Fox, Disney, and Warner Bros. Discovery sports collaboration will crucially address both, carrying a live channel package which includes ESPN, FOX, ABC, TNT, and TBS, all via streaming.

The first thing that makes this a big deal is scale. The new platform signifies collaboration between three of the five largest sports rights buyers in the US, which collectively account for 56% of all US sports spend. As of the 2024/25 season, out of the ten largest sporting leagues and events in the US by size of media rights contract, this platform will carry exclusive coverage of three – the NBA, NHL and NCAA College Football Playoff, the vast majority of one – MLB, and partial coverage of another five, including the NFL, NASCAR and other College sports. What’s more, of all the leagues covered by the partnership, 29% of US consumers follow at least one and 21% indicate they are willing to pay to watch at least one.

Meanwhile, the proposed structure of the platform also stands out. Rather than opt for a bundle in which consumers pay once but access content from each service separately, the partnership will see all content available within a single, unified platform. This addresses our previous point about cost and confusion – agreeing to make content available within a single interface for a single price crucially goes a long way to addressing these consumer concerns, simplifying the content discovery and user experience.

Q. How will the new streaming product impact sports fans in the US?

For casual sports fans who are interested in one or two leagues, the a-la-carte element of the sports streaming market is appealing. For example, someone only interested in the English Premier league can simply pay $6 a month for ad-tier Peacock, and access a significant number of games at a low price. But many fans are interested in multiple events (Ampere’s Consumer data shows that US sports fans follow, on average, 4.5 competitions) and the price of accessing the numerous streamed and linear TV services over which sports are spread can add up quickly. As such, a heavily unbundled model has significant drawbacks – both for fans who are now able and willing to access only their favourite sports, and for the leagues themselves, who face reduced reach and have less opportunity to grow their audiences beyond their existing super-fans.

Meanwhile, a bundled service may help counter another major issue faced by sports leagues – piracy. While sports have never been cheap, as detailed in the webinar, the modern streaming landscape introduced a serious problem of confusion. Even the most tech-savvy of sports fans have been begrudgingly forced to conduct semi-serious research to simply locate the games they want to watch. Per Ampere‘s Media Consumer survey, 42% of sports fans in the US feel overwhelmed by the number of services they have access to – which goes hand-in-hand with the issue of sports piracy. Those who illegally stream sports in the US are more likely (56%) than total US sports fans (45%) to state they would be “willing to pay extra to have access to all the sport [they] want in one location.” Therefore products like this – which begin to simplify content discovery – have an opportunity to also monetise those who access sports illegally through aggregating rights.

Q. Why have Disney, Fox and Warner Bros. Discovery chosen to partner directly?

Both Disney, through ESPN+, and Warner Bros. Discovery (WBD), through BR Sports on Max, have existing streaming services that include sports rights, and which can be sold a-la-carte or bundled with other services each owns, such as Disney+ or Max. The planned new platform launch does not change the business models of these existing services, and consumers will still be able to purchase them individually or as part of wider internal bundles. Meanwhile, for Fox this represents a first step into sports streaming. Until this announcement, Fox had no major streaming offering outside of its TV Everywhere services and its acquired FAST/AVoD platform Tubi, and CEO Lachlan Murdoch said as early as last November that there were no plans to put major sports rights on the platform.

More widely, this platform launch can be seen as a strategic middle ground, that sits between the traditional linear bundle and the unbundled early-era streaming landscape. On the one hand, the deal is an acknowledgment that some level of sports aggregation is more attractive than a fully a-la-carte model, both for user experience and through offering wider audience reach to sports rights partners. However, striking a partnership directly with each other, as opposed to partnering with a pay TV provider or other aggregator, allows each of Disney, Fox and WBD to maintain control of everything from pricing to distribution to marketing. In this model, each partner cedes a level of individual control, but carries a major stake and strong influence in the overall platform.

Q. What challenges might this partnership face?

The main challenge the partnership will face will revolve around pricing and revenues. Historically, each of the three parties has benefited from aggregating their content through pay TV channel packages, which had several structural advantages that the new platform will need to navigate. For one, affiliate fees enable sport channels to generate revenues while the aggregator does the heavy lifting and pays many of the distribution costs. So while Disney, Fox and WBD can share costs in the new partnership, they will ultimately still be responsible for marketing, technology, distribution and customer support, as in the case of their existing streaming services.

Secondly, affiliate fees provide an independent market for assessing how the overall income of the aggregated service should be split, with each company negotiating its share of the wider pot based on their importance to the bundle. While it has been reported that revenue split of the new product will be calculated automatically, it could pose a long term challenge should viewing dynamics between channels change, and also poses potential issues in expanding the platform to incorporate other streaming services.

Thirdly, the risk of push-back from cable companies on affiliate fees is likely to be elevated. Cord-cutting has already driven increases in the number of carriage disputes, as programmers look to drive affiliate fees up, but cable companies aim to manage their costs. The new platform will enable sports fans to find key content previously only available via cable service or VMVPDs, and as such is likely to raise the risk of cable operators reassessing the value to them of the sports channels included in the new streaming product, and may lead to more challenging distribution renewal negotiations.

And finally, the affiliate fee model also monetises non-sports fans who may be paying for the channels carried on their pay TV service (regardless of whether they want them or not), baked into their subscription price. For example, a Charter subscriber on a mid-level tier may not be interested in sports but ESPN (as the most lucrative earner of carriage fees) is making around $10 per month from that subscriber regardless. Put simply, as a sports-specific service, to avoid cannibalizing revenue, the loss of cable affiliate fees generated from the non-target audience must be priced in. This will no doubt be a key factor determining the monthly subscription fee for the new service.