According to CEO Bob Chapek, the company needs to "seriously consider getting into gambling in a bigger way" to help drive revenue to ESPN without hurting the family-oriented Disney brand. Chapek said changing attitudes toward gambling would make sports betting "no impact" on the business. It is not yet clear how ESPN and Disney will enter the market.
Chapek spoke about sports betting, which he described as a big "opportunity for the company," on an earnings call last Wednesday. The CEO acknowledged that there were concerns about brand recall if Disney pursued sports betting partnerships, but the company's research showed that the new market would not hurt the brand, according to Business Insider.
"We are also moving toward a larger presence in online sports betting and, given our reach and scale, we have the potential to partner with third parties in this space in a very meaningful way," Chapek said. Disney would expand into sports betting through its ESPN brand.
According to information presented Wednesday, Disney found that, in addition to broader acceptance of sports betting, the general public also views ESPN and Disney as separate brands. This would make the expansion of betting even more certain.
The wagering component is seen as offering an opportunity to strengthen ESPN, of which Disney owns an 80% majority stake.
Sports betting may appeal to younger consumers, who want to bet as part of their sports experience. "As we follow the consumer, we have to seriously consider participating in the betting sector more broadly," the CEO said.
While certain earnings have been below Disney's expectations, sports has been one of its brightest markets, presenting the company with new growth opportunities. The ESPN+ streaming service grew subscribers by 66% during the fiscal year, according to a Forbes report, and 90% of the most-watched broadcasts on Disney's television networks last year were of sporting events. Disney also signed a 10-year rights deal with the NFL that will begin in 2023.
However, despite the ratings surges, ESPN's advertising revenue was flat during the fourth quarter. Gambling could help the company create a new revenue stream amid widespread approval of sports gambling by the U.S. audience. "ESPN is a perfect platform for this," Chapek said, adding that gambling doesn't have the reputation it had "10 or 20 years ago."
This is far from the first time Disney, and ESPN in particular, have been linked to sports betting. Last year, ESPN inked deals with industry heavyweights Caesars Entertainment and DraftKings to link their bookmakers from ESPN.com.In August of this year, a Wall Street Journal report revealed that ESPN was holding talks to explore a potential brand licensing deal. Both Caesars and DraftKings were mentioned as possible partners in a deal that could be worth around US$3 billion.
However, Chapek did not fully address the question of how Disney and ESPN would enter the sports gambling business. Last September, this issue was raised at an investor conference, when the CEO was asked if the company would go beyond licensing and host betting.
"There's a long way between incorporating ESPN as a business model and licensing," Chapek said. "Let's say our fans are really interested in sports betting. Let's say our league partners are interested in sports betting, so we're interested in sports betting."
During the latest earnings call, Chapek also did not elaborate on market expansion.
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