ESPN layoffs are a sign of the shift from TV to online sports programming
The apparent shift from cable and satellite subscriptions to other online platforms is causing ESPN to cut jobs across all of its departments.
On Wednesday, an ESPN spokesperson is in the process of laying off 300 of its employees, which amounts to four percent of its workforce.
The reason for the layoffs seems to lie within fact that the number of ESPN’s cable and satellite subscribers is dropping. According to Nielson, ESPN currently reaches 92 million satellite and cable subscribers, which is considerably less than its peak of 98 million.
Even though ESPN remains highly profitable, the drop in subscriptions causing a drop off in money they generated, which accounted for $10.6 billion of its revenue during the 2014 fiscal year. The network is said to be under pressure by its parent company Disney to cut costs and move towards the online market rather than TV.
Since 2012, the number of cable and satellite subscribers has been decreasing while the number of households without cable and satellite subscriptions has been increasing. This trend is due to the amount of online streaming services such as Netflix and Hulu and is expected to continue during the next couple years, according to Business Insider.
Although ESPN’s streaming service, WatchESPN has seen its viewership grow, it appears that the network is looking to move to digital-only platforms, which would include a lot more online streaming options.
Jeffrey Cole, director of the Center for the Digital Future at USC Annenberg School for Communication and Journalism told the LA Times he expects ESPN will keep its deal with cable providers because they are still its biggest customers. But Cole said ESPN will eventually have to take an “over the top” approach in order to meet the consumer demand for online content.
“Ultimately, I think all of these channels are going to go over the top, they will have to,” Cole said. “ESPN will probably go over the top but right now they don’t want to antagonize their largest customers, the pay-TV operators.”
With cable and satellite subscriptions on the decline, and now these layoffs, it seems like ESPN, one of the most profitable media networks, is preparing to expand its online platforms. And once ESPN moves to the Internet, their counterparts will follow.
While the shift to a bigger online platform seems like a good move for the company, it will be a tough one for its employees.
