Disney Finally Announces Over-the-Top Streaming ESPN Service

New service will not include current content from ESPN’s linear channels

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The Walt Disney Company announced Tuesday that it will acquire a 33 percent stake in BAMTech, a video streaming company formed by Major League Baseball, and that it plans to partner with BAMTech to launch an ESPN-branded subscription over-the-top streaming service that will deliver content from multiple sports, including live games.

However, the new service will not include current programming from ESPN’s linear channels, making it an add-on and not a replacement for ESPN’s cable package. ESPN has shed 11.3 million subscribers over the past five years — 4.6 million in the last year alone — as cord-cutters and cord-nevers increasingly balk at subscribing to pay-TV. And at an estimated $7 per subscriber according to research firm SNL Kagan, ESPN is by far the most expensive channel.

“Our investment in BAMTech gives us the technology infrastructure we need to quickly scale and monetize our streaming capabilities at ESPN and across our company,” Disney Chairman and CEO Bob Iger said in a statement. “We look forward to working closely with BAMTech as we explore new ways to deliver the unmatched content of The Walt Disney Company across a variety of platforms.”

“Every day the powerful partnership of technology and content becomes more important to consumers,” MLB Commissioner Rob Manfred said in the statement. “We are excited to get to work with Disney and our longtime partners at ESPN in the important and ever-changing area of content distribution.”

Disney will pay $1 billion in two separate installments for its stake in BAMTech, and it maintains the option to acquire majority ownership.

Disney’s decision to launch its own streaming ESPN is just the latest step in a gradual embrace of the “skinny bundles” that the wave of cord-cutting has created a market for. On its third-quarter earnings call Tuesday afternoon, Iger announced that ESPN, Disney Channel and its other cable channels will be available on DirecTV Now, the forthcoming over-the-top service from AT&T’s DirecTV. ESPN and the other Disney networks were added to Sony’s PlayStation Vue, its over-the-top offering, in March, and they will be part of the new live TV streaming service to be launched by Hulu next year.