ESPN+ witnessed strong subscriber gains amid the coronavirus pandemic, which impacted the OTT service for only a couple of weeks in Walt Disney’s fiscal second quarter.
As of March 28, the streaming service had 7.9 million subscribers, nearly four times as many as last year. ESPN+ launched in April 2018. The figure also represents a 4% increase in users from ESPN+’s previous peak, reported by Disney in February.
The average monthly revenue per paid subscriber for ESPN+, however, decreased 17% to $4.24 due to the introduction of a bundled subscription package of Disney+, ESPN+, and Hulu at the end of last year, the company said.
As sports went dark in mid-March, ESPN+ was left with only its library of original programming to offer fans. And while other sports OTT providers opted to forgo charging customers in light of no live games, ESPN+ stuck with its $4.99 monthly price tag.
UFC 249 on May 9 in Jacksonville will be the streaming service’s next exclusive major live sporting event, and will be held without fans. ESPN+ also owns the streaming rights to Top Rank Boxing and several soccer leagues, including Italy’s Serie A, though none of those properties are offering live competition yet.
Meanwhile, ESPN continues to aggressively target media rights for leagues around the world to bolster its linear live sports lineup. The network has resorted to airing esports League of Legends and NBA 2K League with sports on hiatus. The Korean Baseball League also made its debut on ESPN’s networks this week.
April’s virtual NFL Draft brought some initial reprieve for the network. The three-day event drew more than 55 million viewers, according to the company. The NFL Draft, coupled with the early release of “The Last Dance,” helped ESPN’s prime time audience in April grow 11% year-over-year.
“Sports will come back and when they do, we believe ESPN is best positioned to benefit with more offerings than anyone else,” Disney CEO Bob Chapek said on the company’s earnings call with investors. “If it’s a gradual process, where sports return for a period without spectators in the stands, we can count on ESPN to bring the same level of innovation we saw with the [NFL] draft.”
Despite the growth in viewership, ad revenue at ESPN fell 8% in the second quarter.
So far in Disney’s fiscal third quarter, ESPN’s ad revenue is behind 2019 levels, reflecting both a lack of live sports inventory and limited advertiser demand, Chief Financial Officer Christine McCarthy, said.
While the company has seen an uptick in ad spending from brand categories such as financial services and direct-to-consumer streaming apps, interest from restaurants, travel tourism, and retail has declined.
“The net of all of that is a significant decline in ad sales. And we will see it reflected more at ESPN because of lack of sporting events than we will at broadcast networks,” McCarthy said.
Disney reported revenue of $18 billion in its second quarter, up 21% from 2019. Of that number, approximately 40% came from its media networks. Net income fell 37% to $2.4 billion due to the coronavirus’ impact on its parks business.
Disney opted not to provide guidance on the remainder of its fiscal year. In April, the company cut the pay of ESPN executives by as much as 30% beginning on April 5. Disney also began company-wide furloughs on April 19.