Via Axiomatic Gaming | News

What Disney’s Acquisition of 21st Century Fox Could Mean for Esports

December 15, 2017 | Author: Leo Hsu

The Walt Disney Company’s $52.4 billion acquisition of 21st Century Fox upturns every one of its business strategies, from billion-dollar franchises to streaming and international reach.

You can be sure this will impact esports in a big way. Disney made some forward-thinking investments in the space this year, and there’s plenty of potential ways the Mouse’s newest assets could help it secure a position in the growing competitive gaming market.

First of All, How Active is Disney in Esports?

Prior to the Fox acquisition, Disney’s most newsworthy equity purchase of the year was BAMTech—the advanced media subsidiary of Major League Baseball. Having previously held a one-third minority stake in the platform, Disney increased its stake to 75 percent for $1.5 billion.  Furthermore, BAMTech’s $300 million partnership with Riot Games was one of the most significant media deals in esports, set to run until the 2023 season.

In July of this year, The Walt Disney Company announced the companies for its annual Disney Accelerator program. Two esports entities made the cut: aXiomatic—an esports ownership group that bought a majority stake in Team Liquid in 2016—and Epic Games, developer/publisher of Gears of War and Fortnite.

In terms of media activations, Disney began targeting the youth audience with a new Disney XD programming block, D|XP, airing matches for Super Smash Bros. and Street Fighter V. It expanded this with a partnership with ESL, which developed a speedrunning program, and another featuring Street Fighter and Vainglory competitions.

Then there’s ESPN Esports. Disney owns 80 percent of the sports television network, which launched its online esports vertical in January 2016. Next year Disney will also host esports competitions at its ESPN Wide World Sports Complex, a 220-acre facility located in the Walt Disney World Resort in Orlando. Details are scarce right now—Disney haven’t said when these events will start, what games will be played or if the company intends to partner with established tournament organizers.

All New Verticals to Stream Esports With

Disney’s acquisition of 21st Century Fox has been framed as a rally against tech giants such as Netflix, Amazon, and Google. The company has stealthily been planning its move into the online video space over the year, with two planned streaming services: ESPN Plus (the name was announced alongside the Fox deal) and an unnamed platform for Disney movie and TV programming.

The BAMTech purchase was a key part of this—to build the tech out into multiple branded streaming services. Riot Games has been patiently waiting for its own, MLB.TV style premium content app for League of Legends, reportedly months overdue. With the Fox acquisition, such a platform might be redundant.

When the deal goes through, Disney will gain 22 new regional sports networks, which combined command a total of 61 million subscribers, and the media rights for 44 professional U.S. sports teams. Once all these network’s subscription TV deals expire, these channels will be funneled into ESPN Plus, upon which Disney will likely pursue the respective media rights for teams.

Combine this with the higher influx of sports franchise owners investing into esports, many of whom are already trying to tap into their regional fanbases, and it’s not unthinkable that esports competitions and esports teams might consider selling their streaming rights to Disney.

With Fox’s assets, Disney will also go from being a 30 to 60 percent stakeholder in Hulu. Remember, this was the first VoD streaming platform to jump into esports, with four exclusively held ESL programs that focus on the esports industry and its culture.

There is already speculation that Disney will just merge all its direct-to-consumer services. Disney CEO Bob Iger responded to this, saying there’s no reason why Hulu couldn’t co-exist with its two planned platforms, or even sold as a packaged deal. Unlike its competitors, Hulu offers live TV channels on top of on-demand content—some of its back-end services are even supported by BAMTech—and an analysis by MoffettNathanson Research estimated that the Hulu Live could generate over $600M in annual revenue for subscription and advertising fees.

While sports is still tied to the traditional pay-TV ecosystem, esports grew up as direct-to-consumer programming. Disney now has the luxury now to decide whether its future gaming programming is better suited for Hulu or ESPN Plus, and once it has a controlling interest in Sky (another Fox property), it could even overcome Hulu’s distribution issues, and approach esports as the global entertainment business it already is.


Leo Hsu

Director, Strategy


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