Hulu announced on Tuesday new “affiliate agreements” with 21st Century Fox and Disney to add certain channels, including Fox Sports and ESPN, to Hulu’s planned over-the-top subscription service. While it was already widely known that a Hulu streaming package was coming, the addition of live sports is another big step in the ongoing explosion of options for cord-cutters, and the ongoing fragmentation of live sports television.
The news is exciting for consumers, but part of a troubling trend for traditional cable networks.
Fox and Disney can see the writing on the wall: consumers want content brought to them on the platforms they already use, and those platforms, for many people, no longer include a cable-connected television. ESPN (with the WatchESPN app) and Fox (with Fox Sports Go), as well as non-sports networks like FX (FX Now) and TBS (Watch TBS), to name just a couple, offer streaming options that still require authenticating through a cable subscription to a participating TV provider. That’s not good enough anymore.
A so-called ‘skinny bundle’ from Hulu will pose another major challenge to cable, though there are fair questions over how many different streaming services the average consumer is willing to pay for. A monthly diet of Netflix, HBO, and Amazon Prime already totals at least $33 per month.
Hulu’s current service with limited ads sells for $5.99 per month (a temporary discount on the usual $7.99) and now has more than 12 million subscribers. And Hulu has ramped up its own content creation, with original series like “Difficult People,” “Casual,” and “Chance.”
![](https://webarchive.library.unt.edu/web/20161103050909im_/https://s.yimg.com/g/images/spaceball.gif)
ESPN first got friendly to cord-cutting when it signed on with Sling TV this year, a Dish Network (DISH) service that offers ESPN and other channels over-the-top for $20 per month. HBO (TWX) yielded to the trend at long last when it launched HBO Now last year, a $15-per-month OTT option that gets you everything HBO offers with no cable subscription. AT&T will launch DirecTV Now this month, which will stream more than 100 channels (including ESPN, but not Fox) for $35 a month.
Live sports has long been cited as the one remaining holdout keeping would-be cord-cutters from ditching cable, since the options for getting sports without cable were so fragmented and limited. But those options are growing, which means the motivation to pay for cable in order to get sports is dying.
ESPN knows this—it is losing cable subscribers each month, and is no longer in denial about that fact. Disney CEO Bob Iger recently told the Hollywood Reporter, “Is it inevitable that ESPN will have a more direct consumer product in the marketplace? Yes. What that product is, to what extent it mirrors the product they have now… I can’t get into those details.”
For now, ESPN has put some of its programming, but not all, on OTT platforms like Sling TV and, next up, Hulu. It is visibly adapting to cord-cutting and has innovated on the digital side: in September it had its most digital streams ever in a single month. In addition, parent company Disney announced that as part of its $1 billion investment in BAM Tech, the video-streaming company spun out of Major League Baseball Advanced Media, BAM Tech will eventually create “a new ESPN-branded multisport subscription streaming service.
Hulu says the new agreements will bring 35 Fox and Disney networks to Hulu, and it lists as examples Fox, FS1, FS2, Fox News, Fox Business, and ESPN, ESPN2, ESPNU, SEC Network, and ESPN3—all the big daddies. With the cost of Hulu’s eventual offering rumored at $40 a month, Re/code writes that it’s hard to imagine every program from every one of those networks making it in. But it’s also unlikely Hulu would tout all of these channels and then not deliver.
Fox and Disney are co-owners in Hulu, along with Time Warner and Comcast. Time Warner, which acquired a 10% stake in Hulu in August, has already said it would let Hulu stream TNT, TBS, CNN, and other networks on its eventual bundle. (Time Warner’s library of networks includes a lot of sports broadcast rights.) Expect Comcast, which owns NBCUniversal, to also sign on to Hulu’s OTT package, though it has not yet.
In other words: while the specific programming in Hulu’s eventual bundle is unclear, and the cost is unclear, it will include a significant volume of live sports. That’s another win for sports-fan cord-cutters, and another sign of the big dogs working to adapt to shifting TV behavior.
—
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.
Read more:
The AT&T-Time Warner deal has massive sports implications
117