Disney is buying a one-third stake in streaming video company BAM Tech for $1 billion and will eventually launch what it calls an ESPN-branded subscription streaming service that — here’s the important part — won’t include ESPN.
Disney is investing $1 billion in streaming tech and will launch a streaming sports network — but it won’t include ESPN
If cord-cutting ever gets bad, Disney now has an easier way to go direct to consumer.
Photo by Robertus Pudyanto/Getty Images
The deal values BAM Tech, backed by Major League Baseball, at $3 billion.
We told you about a potential deal between the two earlier this year, and now it’s official. The company also said the investment gives it the option to buy a majority stake down the road, which shows it’s pretty serious about streaming video.
Disney already sells some of its channels, including ESPN, to online streaming services like Dish’s Sling. But with its new investment Disney can stream stuff on its own and plans to sell a bunch of ESPN-type channels in a new subscription video service at some point in the future.
Crucially, it won’t include regular ESPN since that’s the channel that makes the most money for Disney, and selling it directly to consumers would hurt its standing with the cable and satellite distributors that already pay Disney a lot of money to carry the network.
But by owning a piece of the tech, Disney has an easy way to sell more of its content directly to consumers, and if cord-cutting ever gets really bad, it can include ESPN in the mix.
This article originally appeared on Recode.net.
