The US multinational entertainment and media conglomerate that is known for creating “The Happiest Place on Earth” is looking for a new arena to gamble on.
In November 2021, the CEO of The Walt Disney Company, Bob Chapek, revealed that the company was to pursue further expansion into the lucrative sports betting market through the local basic cable sports channel ESPN. He explained that the company was willing to get a better presence in online sports betting, which Disney believed to have the potential for, considering its scale. Mr. Chapek shared that the media and entertainment conglomerate could partner with third parties operating in the sports betting industry in a meaningful way that would be beneficial not only for the company but for players as well.
The Walt Disney Company’s CEO explained that the addition of gambling to the company’s operations could help it by establishing new revenue streams, not to mention the fact that it would help it keep its younger audience. According to him, sports betting represents a significant opportunity for Disney, but the best part is that is all driven by the consumer, and the younger consumer in particular.
According to Mr. Chapek, Disney needs to seriously consider entering the gambling sector in a more significant way in case it wants to attract a younger audience. He further noted that, in his opinion, ESPN was the perfect platform for such a move.
Disney Currently Explores Opportunities for Further Growth, Including Sports Betting
At the time The Walt Disney Company had its fourth-quarter earnings call in November, it became clear that the company’s earnings were lower than the ones that had been previously unveiled by some analysts.
Sports were the silver lining in the report. The streaming service ESPN+ saw a 66% increase in its subscribers over the fiscal year, with 90% of the most-watched broadcasts on the TV networks owned by The Walt Disney Company in 2020 being sports events. Furthermore, Disney inked a 10-year contract with the National Football League (NFL) that would provide it with exclusive NFL rights as of 2023. The advertising revenue of ESPN remained flat over the last three months of the fiscal year in comparison to the same period a year earlier.
The US entertainment and media giant has already explored some opportunities for further growth. In 2020, ESPN made agreements with DraftKings and Caesars Entertainment to link to their sportsbook services from its website. In August 2021, ESPN was reported to have been in discussions to explore a potential brand licensing deal with either one of the two aforementioned gambling and sports betting operations that could be estimated at $3 billion.
Disney is not the first media and entertainment company that has demonstrated interest in the newly-opened sports betting sector in the US. Media giants, such as Sports Illustrated and Fox, have already announced they reached agreements with sports betting operators. In September 2021, the executive vice-chairman of the owners of Sports Illustrated revealed that the company inked a deal with a sports betting operator because it pursued the chances of taking advantage of a promising new revenue stream in sports betting and getting a piece of a fast-growing industry.
Still Unclear How Disney Would Use ESPN to Enter the Gambling Sector
One of the most important issues regarding Disney’s entry into the gambling sector is how exactly would the entertainment and media conglomerate get in on the gambling industry through ESPN.
At the time when an investor conference took place in September, the company’s CEO faced some questions on whether ESPN would move beyond mere licensing procedures and will directly start hosting wagers. Mr. Chapek shared there was a long way from moving from one business model to another to licensing out but the Walt Disney Company was truly interested in expanding in sports betting.
As CasinoGamesPro previously reported, the federal ban on sports betting services was officially struck down by the US Supreme Court in 2018. Since then, more than half of the US states have moved to roll out the new form of gambling that has created an extremely competitive market in the country. According to data provided by the American Gaming Association, Americans wagered a total of $24 billion with legal sports betting operators over the first six months of 2021.
Experts from Macquarie Research have estimated that the industry would probably produce $30 billion in revenues by 2030, while the total wagers in the sector would rise to $400 billion.
According to analysts, unlike some time ago, gambling, and sports betting in particular, no longer bears the social stigma it once did because the culture of how people engage with sports has significantly changed.
Disney Had Surprising Change of Heart Regarding Sports Betting
The confirmation that The Walt Disney Company came as a surprise to everyone with interest and knowledge of the local gambling industry. As a company that based its reputation primarily on family entertainment, the media and entertainment conglomerate has long been against gambling. Disney has been known as one of the most eager lobbyists against the expansion of gambling services anywhere near its Walt Disney World Resort situated in the central part of Florida.
The company was considered a fierce opponent of gambling and sports betting, with Disney’s Wi-Fi network even blocking access to certain websites, including ESPN, because they displayed gambling content, even at times when ESPN did not feature such content.
However, following a long trend of the company distancing itself from the gambling and sports betting business, Disney officials now confirmed a change of heart, with they now willing to embrace the whole new world of opportunities provided by the recently legalized sports betting sector in the country. The popularity of sports and sports betting among the younger audiences would help Disney and ESPN expand their customer bases, not to mention the fact younger people are generally the ones who tend to embrace fantasy leagues and betting.