A ton of chatter today following some comments from The Walt Disney Company's Bob Chapek at D3 regarding ESPN's sports betting plans. I think this is one where the typical headline ("Disney hard at work on sports betting app") is getting very far ahead of the story. The source for most of the re-reporting appears to be a Bloomberg News article. Here's the relevant excerpt: “Sports betting is a part of what our younger, say, under-35 sports audience is telling us they want as part of their sports lifestyle,” Chapek said in an interview at Disney’s D23 fan event in Anaheim, California. Asked if the company was developing an ESPN sports-betting app, Chapek said: “We’re working very hard on that.” The tricky part here is that Chapek could mean a few things by "that," including: 1. Sports betting generally. 2. Layering in some kind of sports betting component to the existing family of ESPN apps. 3. Layering some kind of sports betting component to the ESPN viewing experience. 4. Developing an actual sportsbook app. The last one is by far the least likely one. Why? Myriad reasons, including: 1. Building a sportsbook app is really hard, time-consuming, and resource-intensive. That's not Disney's MO in the status quo. 2. No one I talk to has seen any meaningful "footprints" of Disney developing this kind of app. No hiring, no M&A tire-kicking for acqui-hires, etc. 3. Running a sportsbook is a challenging business where capital expenditure is intense and profits are uncertain. Also not really Dinsey's MO at this stage. 4. Disney would also be absorbing a ton of opportunity cost by operating its own sportsbook (e.g., taking marketing dollars from sportsbooks). 5. It is highly unlikely that Disney would be interested in opening up another front with state policymakers (see: recent tussles with Florida), but running their own sportsbook would leave them exposed to regulators and potential political pressure in every state where they operate. Licensure for a corporation like Disney is complex, invasive, and likely not worth the hassle. This is one where it's worth looking beyond the words and into the context. Sports betting is one of a couple of dozen things occupying Chapek's mind at any given point. It's not an area where he's likely to have given a lot of thought to the nuances of phrasing. He was asked a question - likely among a barrage of other questions - and he gave an informal answer. He also benefits from keeping Disney's plans somewhat vague. Better to analyze what's most probable from Disney's likely risk/reward calculus vs reading too far into six words with no stakes. #sportsbetting
Bob Goodoien
1y
I got a little coin says the Mouse House has been hard at work on a betting and content App for months.
What about licensing? Offering up the ESPN name, so they don’t have to own it.
Adam Small
1y
So when are they launching?
Ian Ritchie
1y
Partner with an existing gambling company as a white label and they are busy building the app.
Killing dreams! Haha
THIS a 1000x.
David Gzesh
1y
Nice analysis behind the headline attention grab, Sounds familiar to anyone with experience in online gaming or betting industries.
Gil Varon
1y
I agree with your analysis Chris!
Chief Investment Strategist
1yChris, these are all very good points, in some respects this reminds me of the delayed response to fantasy sports that all the major companies had to it, when it started blossoming in the early 90's. The NFL, Sports Illustrated and the Major Media outlets were barely dipping a toe. Eventually, they all stepped in as Disney will, but it will be a very measured and tested approach. In terms of an app, it seems more than likely Disney would partner initially when they choose to move forward at least to review the viability and learn the ropes.