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Disney Hopes Star Wars Can Rescue Its Bottom Line

Photo by Brian McGowan on Unsplash

Over the weekend, Star Wars showed us once again how it is in a league of its own when it comes to successful movie franchises. On Friday the latest installment, “Star Wars: The Force Awakens” finally hit theaters.

It crushed box office records earning $517 million in global ticket sales. If Star Wars continues on its present path, the latest Star Wars film could potentially unseat the Avatar as the “highest grossing film in history.”

Star Wars was everywhere from a White House Press Conference to routine by the Atlanta Hawk’s cheerleaders. The franchise even made a surprise cameo during the last Democratic Presidential debate this past Saturday.

At the end of her closing statement, Hillary Clinton declared, “Good night! And may the Force be with you!” — referencing one of the most iconic phrases from Star Wars.  Thankfully neither Bernie Sanders nor Martin O’Malley had to give closing statements after this clever sound bite.

While Star Wars continues to, in the words of Brook Barnes of New York Times, show “an astounding display of cultural and commercial domination,” the same day Star Wars hit theaters, there was buzz that Disney, the franchise’s parent company, was struggling. Stock prices declined 4 percent on Friday and over the last month declined by 8.9 percent.

Deadline reporter David Lieberman explained that investors engaged in a bit of overspeculation, assuming that a big opening weekend for Star Wars would lead to great returns on the Disney stock. But a great opening weekend couldn’t mask that like many of its competitors, Disney is struggling to find grounding on the new digital frontier. As audiences consumption patterns change, networks have to explore and adopt new methods for delivering content.

Disney’s real cash cow is ESPN, making up 44 percent of Disney’s total operating income and it appeared as if ESPN was adapting to meet consumer needs. ESPN became an early adopter of online streaming when it hired the leading sports streaming company MLBAM (also referred to as BAM) in 2010 to stream games.

Even with its long-term relationship with BAM, since 2011 ESPN lost a total of 7.2 percent of all its subscribers, losing 3.2 percent of its subscribers during 2015 alone.

In May 2015, Fast Company published how TV networks “could exploit…new technologies [including Periscope, Meerkat, and Snapchat] to deepen their relationships with viewers and move from digital cable to smartphones.”

Two months later in July 2015 it was reported that ESPN and several other media outlets partnered with the Snapchat team. ESPN appeared in Snapchat Discover where it uploaded ad-sponsored content. But even with using Snapchat Discover to reach younger audiences, ESPN is still losing subscribers.

The winners and losers in the online video streaming market will be those who adapt to meet the consumer needs: cheap, convenient, and fast. Unfortunately, it is ESPN’s archaic online streaming business that is holding ESPN back from reaching its full potential.

Access to live programming and events on ESPN “requires a video subscription from an affiliated [service] provider.” If subscribers are opting out of expensive bundle packages in a phenomenon described as cord-cutting, ESPN needs to offer cheap alternatives, including single game, one-day, or other short-term passes. ESPN could benefit immensely from partnering with Netflix or Hulu to stream games from those online platforms.

ESPN could also make a move similar to HBO Go where audiences can pay to watch ESPN from the ESPN app or website. This could open up doors for ESPN by allowing users to watch old games stored in the ESPN vault.

ESPN does have options, it just needs to adapt nimbly and quickly to meet consumers where they are at.

Will the company be able to transition to a web-first business model as ESPN falls captive to the long-standing trend of cable television fading away? That’s something not even a Jedi Master could foresee.

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