The Walt Disney Co. is buying a 33 percent stake in Major League Baseball Advanced Media’s BAMTech, effectively separating the online video streaming service from MLBAM. Disney plans to use the platform as a launching pad for a new ESPN-branded, multi-sport subscription service.
The theme park and media giant will pay around $1 billion to MLBAM in two installments – half now and half in January – and has the option to purchase majority ownership of BAMTech in the future.
The purchase “will enable us to make a major leap into the direct-to-consumer video space and enable us to expand in this space as the consumer market takes off,” said Disney CEO Robert Iger during the company’s fiscal third quarter earnings call on Tuesday.
MLBAM spun off BAMTech as its own company in 2015, keeping its MLB streaming at Advanced Media while the new arm focused on non-baseball streaming services. Disney gains an established, scalable streaming platform from which to launch any number of media initiatives, as well as more control over how that platform is used. In addition to the new ESPN service, Disney said it will offer other streaming products from Disney/ABC Television Group.
“The idea, presumably, is that both Disney and its ESPN unit have big ambitions to create their own streaming services, and they’d rather own the tech that will help them do that, instead of renting it,” Recode’s Peter Kafka wrote, adding that the purchase is the biggest investment so far of the Bob Iger era.
ESPN’s new DTC service will contain all original content, both live and on demand, according to a media statement. Current content on ESPN’s linear TV networks will not appear on the new service. A launch date for the subscription service has not yet been announced, with Disney promising to provide more information over the next few months.
Kafka was somewhat skeptical about Disney’s ability to capitalize on its billion-dollar investment, saying that “In the near term, its choices look constrained.” Netflix is exclusively streaming Disney’s latest movies, including its new Star Wars films, he pointed out.
Engadget’s Richard Lawler mused on what kind of content the ESPN direct-to-consumer service would have, if not events from its TV networks. Iger told CNBC that the service would include college sports, Major League Baseball and National Hockey League games -- content that is already licensed to ESPN. “Reading between the lines, it seems like there may be a bundled way to buy things that we've already seen in products like MLB At-Bat,” he said.
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