As if it’s not big enough, The Walt Disney Company is looking to expand its empire by exploring more areas in which to make a profit.
Specifically, Disney is entering the field of sports betting through the ESPN television channel, that’s what Bob Chapek, CEO of the Walt Disney Company, has said.
“We are also moving towards a greater presence in online sports betting and given our scope and scale, we have the potential to partner with third parties in this space in a very meaningful way.” said Chapek during the financial results conference on November 10.
The decision to pursue a multi-million dollar betting deal is something of a strategic turn for the company, which for years said the only role sports betting had on ESPN was just another piece of its television programming.
Since 2018, the leaders of ESPN and Disney had been skeptical about an active role for the company in the gambling line of business, but with the passage of two and a half years, and with a new leadership, the company is changing. seem.
Disney had a weak year, reporting earnings below Wall Street expectations. However, on the positive side is sports, and Disney owns ESPN’s sports content.
The ESPN + streaming service increased its subscribers by 66 percent during the fiscal year. In addition, last year, 90 percent of the most viewed broadcasts on Disney-owned television networks were sporting events, and Disney signed a 10-year NFL rights agreement that begins in 2023. However, revenue by ESPN advertising were flat during the fourth quarter compared to the same period last year.
According to Chapek, betting could help the company create new sources of income while attracting and keeping a younger audience.
“We believe that sports betting is a very important opportunity for the company. Everything is driven by the consumer, particularly the younger consumer, who will replenish sports fans with time and their desire to have betting as part of their sports experience, ”said the CEO.
According to Chapek, to appeal to a younger audience, Disney must “seriously consider going into gambling more broadly, and ESPN is a perfect platform for this.”
While Disney is not following in the footsteps of Fox Corp., which has its own betting platform, Fox Bet, the company has been in talks with a number of betting operators about a partnership.
Betting operators’ favorite picks would be BetMGM, Caesars and DraftKings (and Disney owns a small stake in DraftKings that it acquired from Fox). This is what several sources familiar with the matter have confirmed (via The Hollywood Reporter).
Neil Begley, an analyst at the financial research agency Moody’s, says that “it is an opportunity that many companies are spying on.”
“The Disney brand on ESPN will certainly have strong advantages given its wide distribution and ownership of rights. But I think it could be a pitched battle between several of the big media groups, and there is the risk of oversaturation, which could dilute the opportunity, “said Begley, who also says that” it is a complicated plan for Disney, with its impeccable family image ”.
On the other hand, former Wall Street analyst Hal Vogel, CEO of Vogel Capital Management, said that “sports betting can be a significant opportunity, but also a huge headache.”
“This is already an area of tremendous competition, and Disney is already starting behind many others. Additionally, mixing ESPN coverage with betting operations could eventually lead to conflicts of interest, ”added Vogel.
Either way, consumer habits change over the years, and companies need to adapt to the market, so that’s what Disney is doing, even though it’s a little late to the party.
Gamification is becoming commonplace in apps and media, so ESPN +, as well as other media services. streaming, they are sure to add gamification features in the future as you look to increase engagement and your subscriber base.
It is worth mentioning that the main sports leagues are joining this. In April, the NFL, led by Roger Goodell, announced FanDuel, DraftKings and Caesars as its exclusive sports betting partners (including data and intellectual property rights).
Also, in August Goodell announced BetMGM, PointsBet and WynnBET as its authorized sports betting partners for the season, while the NBA, led by Adam Silver, unveiled a deal with DraftKings and FanDuel in early November. MLB, NHL, UFC and other leagues have also signed betting deals.
On the government side, since the U.S. Supreme Court struck down the sports betting ban in 2018, 32 states and Washington, DC have launched legal markets, and the industry is on fire.
According to data from the American Gaming Association, Americans gambled $ 24 billion with legal bookmakers in the first half of 2021, which translates to roughly $ 2 billion in gross gaming revenue. By 2030, the industry is expected to generate $ 30 billion in revenue from an estimated $ 400 billion in total bets, according to Macquarie Research.
“The market has changed. When you have leagues on board, when you have state governments on board, it’s hard to take a moral stance against getting involved in gambling, ”says David Schwartz, gambling historian and professor at the University of Nevada Las Vegas.
As a result, the perception of sports betting has changed in general, although it is something that Chapek has taken lightly.
“We have done substantial research in terms of the impact not only on the ESPN brand, but also on the Disney brand in relation to changing consumer perceptions of the acceptability of bets. And what we are finding is that there is a very significant isolation, ”said Chapek.
“This actually strengthens ESPN’s brand by having a gambling component, and it has no impact on the Disney brand,” said the CEO.