ESPN considering high charge for streaming service

As ESPN considers charting a new course for its future, consumers might need to start banking some savings in advance.

The company is considering charging anywhere between $20 and $35 per month for a future direct-to-consumer streaming service, according to a Thursday report from Sahil Patel of The Information. This comes a week after Patel reported that Amazon is considering a strategic partnership towards building that platform with ESPN.

Disney has discussed creating a live direct-to-consumer service for ESPN that would show the same exact programming as its linear cable channels, including all studio shows such as "First Take," live games and more. This differs from ESPN+, the over-the-top service that launched in 2018 as an addition to the traditional channels. ESPN+ largely features boxing, mixed martial arts, college sports, out-of-market soccer and NHL games, and other live events that wouldn't typically air on the linear channels.

The price point would make ESPN's proposed service by far the most expensive in the streaming space.

One reason for the high price might be that Disney could be footing the bill for the service's distribution. Cable and satellite operators provide the infrastructure for traditional channels - physical wires throughout a home or building - and disseminate channels based on the package a household subscribes to. Save for those who opt to install cable boxes themselves, operators make money by renting their equipment to the consumer and charging them for the content. The operators then pay media companies for access to their channels. Although Disney would still need those same companies for internet distribution, the media giant could be pricing its future service with the idea of making all of the money as both the programmer and operator. Amazon's potential involvement could help Disney share the costs - and the profits - of operating the new platform.

Another reason, of course, is because the content ESPN provides is the most expensive in all of television. The decline of traditional cable and satellite subscribers means a decline in revenues from both the consumer and the operators that pay the channels for their content. If a direct-to-consumer service is meant to make up for those losses, it will charge consumers accordingly.

In July, Disney's CEO Bob Iger told CNBC that the company is considering a "strategic partnership" for ESPN as the conglomerate reconsiders the future of its linear properties. Iger and ESPN president Jimmy Pitaro had discussions with sports leagues, which included potential ownership stakes. ESPN's recent entry into the betting market signals that Disney still believes in the sports media company's power to generate revenue, even if it competes against established firms like FanDuel.