We're living through something of a schadenfreude moment for sports media.
ESPN, the Disney (DIS) cable-TV juggernaut that reshaped, overwhelmed or held sway over sports viewers and advertisers for more than 20 years, is retrenching. The 24-hour cable-TV sports network this week laid-off some of its best known on-air personalities as ESPN President John Skipper chartered a plan to adjust the network's programming and cost structure to focus on mobile platforms.
For Martin Floreani, CEO and co-founder of FloSports, a nascent streaming service based in Austin, Texas, these are days of opportunity. While the internet hasn't exactly leveled the playing field, it has lowered the bar to entry. Size matters less than specialization, digital distribution and controlling costs. Those are areas, Foreani says, where ESPN may be its own worst enemy.
"ESPN is in an innovator's dilemma," Floreani told me over lunch earlier this month. "The faster they cultivate a direct-to-consumer digital online property, the faster they're going to canabalize their cable-TV network. They're waiting for the right time to switch over but right now they have to play the difficult game of trying to figure out when is the right time to move completely digital."
For FloSports, that time is now, or even four years ago when Floreani began laying the groundwork for the company with his brother Mark, the company's operations chief. Floreani moved to Austin, where his brother was in college, after graduating from California Polytechnic State University with a degree in engineering. A former college wrestler -- Mark was a track star at Texas -- the brothers came up with the idea of a sports streaming service after hearing the frustrations of fellow athletes that their games and events weren't getting much exposure.
After some tinkering, FloSports charges $12.95 per month or $150 for a year, for a deep dive into sports that don't often get played on ESPN: wrestling, gymnastics, track & field, martial arts, rugby, lacrosse, cheerleading, climbing, rodeo, elite fitness, singing, dancing and swimming. Yes, singing and dancing. The list is currently at 24 though its expected to reach 30 by year's end.
As of May 1, Floreani said FloSports will have 150,000 subscribers. That's a tiny speck when compared to ESPN's 89 million. But while FloSports is growing, albeit by thousands rather than millions, ESPN is losing subscribers. Disney's most valuable network has lost 12 million subscribers since 2011, and most alarming, lost 621,000 subscribers in October alone. That eye-popping decline likely sparked the soul-searching that led to this week's layoffs.
But if FloSports has a sustainable future, it's built around the notion that viewers in the digital age want to create their own bundle rather than have a media conglomerate do that for them. They also want to pick the content they want to watch, putting a premium on streaming. Equally important, Floreani says, most people have one or two favorite sports, but not five or six. Their interests, he never tires of saying, are usually an inch wide and a mile deep.
"What you're seeing right now is the complete transformation of sports media," said Floreani, who speaks with the rapid-fire enthusiasm of a student who just figured out a complicated problem. "This is about catering to a digital-first clientele that wants to be interactive, that wants more than just appointment viewing. That's something linear television just isn't built to offer.
For devotees of a sport like wrestling, FloSports emerged just as Rich Bender, president of USA Wrestling, was looking for a way to broadcast his association's live events without having to pay the upfront costs.
Up until last year, USA Wrestling had been producing and posting videos of matches on Alphabet's (GOOGL) YouTube. Though the videos were shared by the federation's members, the site's cookie-cutter presentation limited its appeal, he said. To pay for production, USA Wrestling would sell advertising in addition to allocating money from its annual budget to cover the costs of filming two or three multi-day tournament per year.
But even that effort was underwhelming, he said.
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