Bamtech is Major League Baseball’s fastest-growing streaming division and Disney has just purchased a 33% stake in the company for $1 billion with the option to purchase a majority stake in the company in the future. The investment is a direct response to the viewers that ESPN and cable television as a whole are losing a significant amount of users every day. Disney will be developing an over the top streaming service for ESPN that will debut by the end of the year.
HBO and multiple baseball teams already use BamTech for their streaming services. Like HBO, the over the top programming created by Disney will be a subscription service. CBS also used BamTech for streaming the NCAA men’s basketball tournament. The NHL has a six-year agreement with the streaming company.
From the article by the New York Times:
Disney said separately on Tuesday that operating profit for its vast cable division, which includes ESPN, Disney Channels Worldwide and A&E Networks, totaled $2.37 billion in the most recent quarter, essentially flat from a year earlier. Disney shares fell slightly in after-hours trading.
Disney has already been measuring the capabilities and possible success through their streaming service DisneyLife in Europe. DisneyLife is a subscription model streaming service showing Disney programming.
There are two strong factors that make this a smart investment for Disney. First, they are getting ahead of a possible disruptive technology. Many companies have failed to adapt to market trends that make certain technologies obsolete. An example would be Kodak film cameras, the CD, and Sports Illustrated failing to recognize that a sports television channel would work. The opportunity costs of investing is too much to not invest in BamTech.
Second, there is clearly a demand for streaming sports now. Even if viewers don’t end up cutting the cord altogether there is an immediate need for streaming as a supplementary distribution channel. With more people watching programming on laptops and mobile devices there has to be a distribution channel to accommodate those needs. Streaming may not become the industry standard but it is not going away anytime soon.