« Back to Posts

Week In Review: ESPN Launches Their OTT App, Shari Redstone Launches Les Moonves

1. ESPN Launches Their OTT App

ESPN announced details on their ESPN+ app this week and it’s just as underwhelming as everyone feared it would be. It’s as if TPTB at Disney said “okay, you can have your precious little app, propeller-heads. Just make sure it doesn’t mess with our main channel.”

So the app will have no NBA or NFL, but will have one MLB game each day and one NHL game, plus a whole lot of college sports from smaller conferences like the Ivy League. (Not just football and basketball from those colleges, either, but the whole gamut, including soccer, track, gymnastics, swimming, lacrosse, wrestling, volleyball and golf.)

Or, to put it more succinctly, everything ESPN has rights to that wouldn’t attract a whole lot of advertisers were it to appear on linear TV.

Why It Matters

If we’re being charitable, the ESPN+ app will attract sports superfans, people who can’t get enough sports from the 8 linear ESPN channels and are attracted to a particular sport or event or NCAA conference that’s on the Plus app and then stick around because, hey, it’s only $5/month.

We suspect however, that ESPN+ will see a whole lot of churn, as hardcore Dartmouth lacrosse fans (all 857 of them) all sign up to watch games during the season but then eventually drop the app when the season is over.

That said, the idea of having Plus as complementary to the main channel rather than as a replacement for it is an interesting strategy, one that other networks have been using in an attempt to keep their OTT apps from cannibalizing their linear channels.

For most networks, that’s likely overkill (e.g., no one is holding on to cable just so they can watch CBS) but for ESPN there may be some validity, and keeping the NFL and NBA off the app lets them price it at $4.99 rather than $14.99.

That said, we’re not overly optimistic about the future of network OTT apps in general.

We think that vMVPDs are going be the main choice for people who want to lower their bills and watch via a broadband connection—they offer everything in one easy to manage interface that’s paid via a single monthly bill, and give users a much wider array of options for a whole lot less money than a collection of apps.

Which is not to say that apps are worthless. They can be a great add-on revenue stream, especially for networks like ESPN that have a large cadre of superfans. We just need to be realistic about what they are and what they can do, which is provide a secondary revenue stream for those networks, while giving them an additional outlet with which to promote their linear content to viewers who are predisposed to watch that content.

What You Need To Do About It

If you’re a network, be realistic about what an OTT app can and can’t do, as per above. Remember that your intended audience probably already has a couple of OTT apps like Netflix and Hulu and HBO Now, so you’re really going to need to convince them they need to add your app to the mix too, and that’s not going to be easy.

If you’re an MVPD, read this piece to understand why you really need to get your vMVPD act in order while focusing intently on the user experience aspect of it.

If you’re an advertiser, apps like ESPN+ offer an excellent way to reach a very targeted audience in a place where they’ll be happy to see that you’re sponsoring their favorite programming. Superfans may be a lot of things, but grateful for their corporate sponsors is generally foremost among them.

2. Shari Redstone Launches Les Moonves

While CBS Chairman Les Moonves has made no secret of the fact that he’s not happy about the remarriage of Viacom and CBS,  he may not have much of a choice in the matter. Viacom’s Shari Redstone (Sumner’s daughter) through her company National Amusements, is the controlling shareholder of both Viacom and CBS, and if she wants a merger (which she clearly does) there’s not much that Moonves can do to stop her.

Though he can try—CBS released a lowball bid for Viacom earlier this week, in what was seen as a major dis. At issue is Redstone’s alleged insistence that Moonves appoint Viacom CEO Bob Bakish as his heir and give him some control over the newly merged companies.

But since Redstone controls both companies, it’s rumored that she’s looking to replace current pro-Moonves board members at CBS with ones who are more likely to see things her way.

And not leak insultingly low proposals to the press.

Why It Matters

CBS has been fairly successful in navigating the new realities of the TV business and Viacom has not. While Bakish has started to turn things around, especially overseas, Viacom’s flagship MTV and VH1 brands have fallen a long way from their 1980s glory and it’s not clear they can ever regain it.

What this situation a sign of, more than anything, is the difficulty of merging companies of any kind, which, given the merger mania gripping the television industry right now, is something to think about.

Many of the current crop of MVPDs are the result of multiple mergers and acquisition and it often shows, as similar teams in different cities are frequently unaware of/out of touch with what their colleagues are up to.

Take that down to a network level and it can become a much bigger problem.

What You Need To Do About It

If you’re any of the companies that are currently merging or thinking about merging or waiting for the DOJ to lose its lawsuit so you can merge, remember how important it is to have an extremely well thought out and detailed plan in place so that the merger goes as smoothly as possible. Blending two distinct corporate cultures is never easy, but you need to find a way to get everyone working together.

Which means that planning is key. Lot of org charts and thinking about processes and procedures and other operational details around who does what.

Fortunately there are many companies that specialize in that sort of corporate marriage counseling, so we’d advise you to hire one that works and pay them handsomely—it will be worth it in the end.

The rest of you can just sit back, grab your popcorn and enjoy the show.