1.
Identify the effects of the various marketplace changes and the risk factors identified in
this chapter on ESPN, and rank those potential effects on ESPN.
Risk factors that were identified in this chapter were declining subscribers, decreasing ratings,
rising sports rights fees, workforce layoffs, political controversy, and sexual harassment claims.
There was a loss of approximately 12 million subscribers between 2013 and 2017, this can have
a serious impact on several businesses, ESPN included. When losing this many subscribers there
was a serious drop in annual revenue. Low ratings is also another risk factor, the ESPN ratings
went down 7-11% in a year, which can reduce advertising revenue which then can result in a
disinterest from viewers. ESPN’s has many long term agreements with major sports leagues, this
has significantly increased its annual rights fee obligation. This financial strain can affect the
ability for ESPN to invest in other content they may want to invest in. Workforce layoffs are
another big factor, ESPN laid off 550 workers, this can indicate the many financial challenges
they faced. Political controversy has caused ESPN to lose advertisements due to the fact that
some stated that they were making political comments rather than sports related comments
during some games. Claims of sexual harassment can harm the networks reputation and lead to
legal and financial repercussion, including settlements and potential damage to sponsor
relationships. I would rank these potential risks:
1.
Declining subscribers
2.
Rising sports rights fees
3.
Decreasing ratings
4.
Workforce layoffs
5.
Political controversy
6.
Sexual harassment claims
2.
Based on ESPN’s business model as of 2017–a $7.25 per month subscription fee, paid by
88 million cable/DBS subscribers, producing 75% of ESPN’s revenue– construct an
alternative model (including existing revenue sources as well as new sources) to generate
equivalent revenue.
Digital subscription services: Increasing the number of digital products it offers, like the
subscription-based streaming service ESPN+, may help it draw in more customers and boost
earnings.
Advertising innovation: Increasing advertising revenue can be achieved by implementing
targeted advertising and investigating new forms of advertising. ESPN might spend money on
data analytics as well to enhance ad targeting.
Merchandise licensing: ESPN may enter the merchandise and licensing market by using its brand
to sell branded goods and content rights.
E-sports and gaming: ESPN can provide competitive gaming-related events and content to draw
in younger viewers and possible sponsors by leveraging the expanding e-sports and gaming
industries.
