How has the company dominated the market for so long, without any real competition threatening its place at the top? What have they done that sets them apart from other sports broadcasters? According to Thompson—who writes and speaks about ESPN and paid media at length—they “guessed right in a billion-dollar version of the simplest sport there is: heads or tails.” While there's definitely a market for niche sports like food-eating contests, high-stakes poker tournaments, and horse racing, ESPN owes its success to focusing on only the most popular sports. “[ESPN] seeks to maximize the odds that whenever a middle-American male tunes in, he’ll see either a major sport, or coverage of a major story line,” Thompson says. Their secret to success was to become “aggressively mainstream” and place a large bet on a small pool of content. And it's working.
So we know how the company hooks its viewers, but how does it make money from that? The company operates on a simple formula: Two-thirds TV subscription fees plus one-third advertising. Thompson breaks down the formula in a separate post, showing that a little more than half of their overall revenues is drawn from cable subscription fees. The rest is generated from a combination of digital and print advertising. Not only that, but the company is extremely fast-moving digitally. “As a brand, ESPN is everywhere. On your phone, on your laptop, on magazine stands,” Thompson says. While 91 percent of their revenue comes from television, the ESPN brand has its consumers surrounded. “For better or worse, that’s unlikely to change anytime soon.”
Derek Thompson is an editor at The Atlantic and a prominent speaker on Millennials. He is also an expert on paid media, delivering enlightening and practical keynotes on the future of cable TV and digital ads. Using ESPN as a case study, he tailors his talk to apply to advertisers, consumers, or media conglomerates. If you're interested in hiring Derek Thompson as a speaker for your event, contact The Lavin Agency Speakers Bureau.