Disney’s ESPN Classic will undergo a metamorphosis in the US from a linear service to a VOD-only service, beginning with a launch on DISH Network. By the end of October, there will be more than 600 Hours of historical sports events available on-demand to DISH customers who receive ESPN networks, accessible through the set top box, and then through mobile devices via Watch ESPN, in 2015.
The transition for ESPN Classic was part of the Disney and Dish carriage renewal made in March 2014. It marks the latest major change for ESPN Classic. At its peak in 2009, ESPN Classic had 64 million subscribers, and then it was demoted to sports digital tiers, switching places with ESPNU. Consequently, subscribers for ESPN Classic dropped to 31 million at the end of 2013. ESPN Classic will now be comprised of VOD sports content that will vary by season and sports relevancy, beginning with more than 250 combined games from College Football and College Basketball becoming available in 2014.
It is likely that ESPN Classic will receive the same treatment for other pay TV operators as carriage renewal deals are renegotiated with Disney.
There is nothing so constant as change, or so the saying goes, and for ESPN Classic that adage is holding true. IHS applauds the decision to begin transition under-penetrated linear networks made up of aging content to on-demand platforms. Content which is typically in its 3rd or more cycle likely has a small draw, outside of theatrical content. It is believed that theatrical content is more immune to this phenomena because consumers are happy to watch classic movies repeatedly.
For the ESPN team, the transition to on-demand for ESPN Classic is the fulfillment of a larger strategy to distribute more widely ESPNU, which airs more recent/popular content. The move to substitute ESPNU for Classic on basic tiers was a recognition of the age-versus-demand for sport content, as well as a recognition that college sports is currently red hot.
The move for ESPN Classic makes sense from a content perspective, and will likely be a positive for those sports fans who want to relive their past glories. ESPN will be able to competently stock the on-demand channel without the headache of formulating a linear schedule that appeals to a wide range of viewers - the rights associated with the channel are likely to be significantly less restricted as they would be for a sports channel which offers more recent content in an on-demand fashion.
Furthermore, the transition of channels which offer content in a 3rd or more cycle on TV may be a way for the pay TV business in general to mitigate the costs being passed along to consumers. If the number of channels which play 'classic' content decreases it is likely that overall carriage fee increases will not be so onerous, saving consumers some of the pain of passed-along rate hikes.
As the trend of cord-cutting and cord-nevers continue, making the proposition of pay TV video subscriptions palatable will be important. And to that end, any measure which has the potential to slow growth in ARPU while preserving margins for both pay TV operators and programmers should be whole-heartedly endorsed by both sides. If the transition of ESPN Classic is successful, it is likely that many linear channels which feature library content could follow suit