Hulu Redux or Something Else for Disney-Warner Brothers Discovery-Fox

If they can work out the details, ESPN (owned by the Walt Disney Company), Fox and Warner Bros. Discovery have reached an understanding on principal terms to form a new joint venture to build a new sports streaming service. 

Those of you who remember what happened with Hulu--originally founded by News Corporation, NBCUniversal and the Walt Disney Company in 2007--might assume the venture ultimately will prove unstable, as the present concept is for each of the firms to own a third of the venture. 

Many of you will predict that management issues ultimately will arise, that interest in participating might wane or that other priorities will convince one or more of the owners to sell their interests. 

Keep in mind that the venture will only license content from each of the owner firms: there will be no transfer of content ownership rights. 

And Disney says it will continue to develop its own branded “ESPN” sports streaming service, while Warner Brothers Discovery will continue to add sports to its “Max” streaming service. On the other hand, some will argue that the new service will represent a sort of “super bundle” of sports programming that could appeal to sports fans who might see the “one service” as preferable to buying three. 

Studies often suggest the “sports enthusiast” portion of the viewing audience ranges from 12 percent to 34 percent of viewers. So it is a significant segment of the audience. 

Study	Methodology	Target Audience	Estimated Percentage	Key Findings
Parks Associates, 2022	Online survey	U.S. broadband households	34%	34% of respondents consider sports "very important" in choosing a streaming service.
Magid, 2022	Online survey	U.S. pay-TV subscribers	18%	18% of respondents said sports are the "primary reason" for keeping their cable subscription.
Ampere Analysis, 2022	Consumer survey	Global markets	20-25%	Estimated 20-25% of global SVOD subscribers watch sports regularly.
Nielsen, 2021	Streaming viewership data	U.S. adults	12%	Sports accounted for 12% of total streaming viewing time in the U.S.
Light Reading, 2021	Survey of industry executives	Global pay-TV market	20-30%	20-30% of pay-TV subscribers are considered "avid sports fans".

Though the new venture might not directly address the cost of sports programming directly, it is among efforts content owners must make to transition to a future where streaming is the primary model, not linear distribution. 

Content Type	Average per-subscriber cost per month (USD)	Range
ESPN	$8.00	$7.46 - $8.54
Other National Sports Networks (e.g., TNT, TBS, NFL Network)	$1.50 - $3.00	Highly variable depending on network and specific rights
Regional Sports Networks (RSNs)	$3.67 - $5.00	Projected to rise. Varies by region, team popularity, and number of teams carried.
Basic Cable Networks (e.g., USA, TNT, TBS)	$0.50 - $2.00	Wide range based on network popularity and content type.
Premium Cable Networks (e.g., HBO, Showtime)	$5.00 - $12.00	Highly variable depending on network and specific content.
Broadcast Networks (e.g., ABC, CBS, NBC, FOX)	$0.00 - $1.00	Primarily advertising-supported model, but retransmission fees charged in some cases.
Streaming Services (e.g., Netflix, Hulu)	$1.00 - $3.00	Varied pricing models based on content library and tiers.

To be sure, this venture could create some economies of scale. If it leads to higher subscriber volume, that could potentially command better deals from rights holders.

It is conceivable the partners might avoid competition for some sports rights and operating savings in marketing might be feasible.

But potential competition from the hyperscalers (Amazon, Alphabet, Apple) would still remain in place, especially as those contestants look to add sports programming.