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Why Is the Number of Disney’s ESPN Subscribers Falling?

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Disney struggles with ESPN subscribers

Disney’s (DIS) ESPN network seems to be in troubled waters lately. ESPN, which forms part of Disney’s Cable Networks segment, has been witnessing a fall in subscribers over the last several years.

In fiscal 2017, which ended in September 2017, Disney reported its fourth straight year of falling US subscribers. Disney reported 88 million US subscribers at the end of fiscal 2017.

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Reasons for falling ESPN subscribers

Disney’s ESPN network is closely watched by investors, and it’s evident that falling advertising revenues and higher programming costs are negatively impacting the performance of ESPN. ESPN has also failed to attract young people to ESPN channels.

In fact, nowadays, consumers are shifting from traditional cable channels to video streaming services, which are gaining popularity among the younger generation and are cheaper. Players such as Netflix (NFLX), Amazon’s (AMZN) Prime, and Alphabet’s (GOOGL) YouTube are leaders in the video streaming industry.

Direct-to-consumer offering

Due to the company’s falling subscriber base, CEO Bob Iger has been trying to negotiate the inclusion of ESPN in new digital forms of pay TV, such as Sling TV and AT&T’s (T) DIRECTV NOW. Earlier, Disney also sealed a deal with Hulu and another entity for ESPN.

Disney is now planning to roll out its online ESPN subscription service through an ESPN app. The app will include live games that are usually not available on the network’s regular channels. Disney’s will launch its online streaming services for ESPN (called ESPN Plus) in the spring of 2018 for $4.99 per month.

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