The world of sports betting is heating up, and the Walt Disney Company is considering making a wager.
CEO Bob Chapek hinted earlier this month at the Goldman Sachs Communacopia Conference that Disney intends to break into a world that has long been associated with vice.
"Strategically, what sports betting gives us is the ability to appeal to a much younger sports fan viewer, who can be very strong in their affinity for those sports," said Chapek.
The 61-year-old executive who took over for Bob Iger last year has overseen a massive reimagining of the once family-centric entertainment giant. Chapek, who once reigned over Disney's theme parks, has made streaming front and center for the Mouse House, shaking up the organization's pecking order. And now, he appears to be looking at folding gambling – a pastime that's seems far from the company's roots – into the company's franchise.
Chapek reiterated last week the idea he has been floating since earlier this year. Disney is looking to bring sports betting to ESPN, heeding the call from some investors that have been clamoring for the company to make more use of the channel and its synchronicity with DraftKings. Disney gained a stake in the wagering site when it acquired 21st Century Fox in 2019, but hasn't done much with it.
In August, the Wall Street Journal reported Disney was in talks to license its ESPN brand to casino operator Caesars Entertainment and DraftKings. Nothing is finalized, and the deal sources valued at $3 billion could fall through, but the move is an indication of Chapek's style and Disney's evolving focus.
"They're very deliberately and carefully realizing that their brand is maturing and people have matured with it," said Tom Nunan, the former president of NBC Studios and lecturer at the UCLA School of Theater, Film and TV.
Nunan pointed to the company's decision made in 2016 under Chapek's direction to begin allowing alcohol in parts of some parks and added that Disney is realizing its fans are "human beings who have hobbies that can be addictive."
"They're kind of letting that play itself out naturally and trying not to ignore it," he said.
An ESPN-licensed sportsbook could be a big revenue driver for Disney, not just because of its potential for gambling content, but the overall brand.
The global sports betting market was worth roughly $67 billion in 2020, and it's expected to grow at least 10% through 2028, according to Grand View Research.
"They have one of the most trusted brands and sports, if not the most trusted brands in ESPN, and anything that follows from that including DraftKings is the gold standard for sports entertainment," Nunan said of Disney.
The sports betting industry is growing quickly, but it's still a small fraction of the overall gambling market, said David Schwartz, gaming historian and professor at the University of Nevada Las Vegas. UNLV research reported that revenue from sports betting in July was roughly $210 million, a figure dwarfed by the revenues of casino gambling.
Still, with so much going online, there's a calculation that these sites will be able to capture and eat up some of that market.
DraftKings reportedly made a $20 billion offer to buy Entain, a U.K.-based company that operates a sportsbook with casino magnate MGM earlier this month. If the deal is finalized, DraftKings would need to link up with MGM in order to operate Entain's U.S. assets, a move that could be an eventual benefit to Disney as well -- both as an added revenue stream and a way to keep customers streaming ESPN Plus and other sports content.
But Disney is moving cautiously around the gambling industry. Chapek has implied the company's trying to find a way to avoid embedding betting directly into ESPN.
"We know that it represents very little risk to the company and very little risk to ESPN," he told investors in April. "I think there's a long way between (being) embedded into the ESPN business model and licensing out, right, there's a lot of room between there."
The Journal reported that an insider said the deal would also mandate the buyer spend a certain sum of advertising dollars on ESPN's platforms, as well as giving the sportsbook access to the ESPN branding.
One complicating factor is that states vary on the legality of sports wagering. CBS Sports reported that 22 states have embraced some form of legal sports betting, while 18 states including California are considering bills that could legalize it. It remains illegal in seven states and three are in the process of figuring out regulations.
Schwartz said it might be easier for Disney to license a brand name like ESPN to a sportsbook instead of creating its own and getting swept up in regulations. If Disney created its own sportsbook, the owners and operators would need to be approved by gaming commissions in every state it operated in.
And while Disney will definitely add a new revenue stream if it gets into gambling, Schwartz said it is unlikely to see explosive growth overnight since the sports betting industry is still developing.
What it will add, Schwartz said, is eyeballs to ESPN and its ESPN Plus counterpart, which saw considerable growth during the pandemic -- paid subscribers were up by one million to a total of 14.9 million, compared to 116 million paid Disney Plus subscriptions.
It could also eventually use betting to drive viewership to its more traditional channels, including creating more TV shows, podcasts and written content around gambling. ESPN publishes some betting odds and has a handful of sports betting podcasts and TV shows, but it's directly avoided facilitating any bets on the platform.
"It's not necessarily going to transform Disney, it'll just be an added revenue stream and it probably would be a pretty small one," Schwartz said. "It's just the question of building those synergies -- if people are betting the games, they're more likely to be watching the games, which means ratings go up."
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- ESPN Explores Sports-Betting Deal Worth at Least $3 Billion - WSJ ›
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- ESPN's Jimmy Pitaro Talks Future of Sports at Disney - Variety ›
- Disney Wants to Build Sports Gambling's Future on ESPN - Bloomberg ›
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BallerTV Picks Up High School Sports Streamer Nextpro, and Gets the Rights to Film Hundreds of Lacrosse, Soccer Games
BallerTV, a livestreaming service for youth sports, is expanding from the gymnasium to the playing field, adding millions of games that it can broadcast into people's homes.
The Pasadena-based company announced Tuesday it acquired NextPro, which films outdoor youth sports and has exclusive rights to record games from nearly 400 of the top soccer and lacrosse event operators.
BallerTV livestreams scholastic and club basketball and volleyball using proprietary autonomous technology. With the acquisition of NextPro, it will increase the scale of its operations from streaming hundreds of thousands of games to millions. The company declined to reveal the terms of the deal.
"Our technology, our platform, is pretty sport agnostic and our business model to connect families and communities to the power of live sports isn't confined to just indoor sports," Baller TV CEO and co-founder Aaron Hawkey said. "It's going to accelerate our entrance into soccer and other field sports which are massive sports in the market."
El Segundo-based NextPro was founded in 2013 by Craig Hochstadt and Amin Edalat and focuses on filming large-scale youth recruiting events in soccer, lacrosse, baseball and softball. It had not delved into livestreaming.
There are 50 million youth sporting events each year and less than 1% are livestreamed, Hawkey said. It's also a lucrative market. Spending in youth sports in the U.S. was $15.3 billion in 2017 and grew to $19.2 billion in 2019.
Critics say that parents are spending thousands on coaches, equipment and other things needed to play competitive youth sports, but only a small percentage of kids will get a college scholarship or go pro.
Still Hawkey said the value of sports is immeasurable.
"All the benefits that I got from sports didn't mete out into a college scholarship. I don't think that was what my parents were hoping for," he said. "The leadership skills I take in building a startup from what I learned from sports, it's hard to place a value on."
From left: Sandeep Hingorani (EVP of BallerTV), Craig Hochstadt (co-founder, NextPro), Robert Angarita (co-founder, BallerTV), Aaron Hawkey (CEO, co-founder of BallerTV), Amin Edalat (co-founder, NextPro) and Kavodel Ohiomoba (chief technology officer, BallerTV)Photo courtesy BallerTV
During the pandemic, when sports returned but spectators were limited, family members and recruiters turned to BallerTV, Hawkey said.
The service has 3,000 college Division 1 through Division 3 scouts, according to the company, although it did not provide a total number of subscribers. The biggest audience though are family members of the athletes who can't make it to games, Hawkey said.
"I do think there's a lot of upside in providing value and coverage of these events," he said.
Another initiative that BallerTV undertook this year was selling NFTs of the top athletes at a high profile youth basketball tournament. The tournament's MVP earned $4,000 from his NFTs. The idea was inspired by the U.S. Supreme Court ruling that college athletes could be paid modest sums related to education. It does not apply to high school athletes.
"There's a lot we can do in terms of really trying to help these athletes," Hawkey said. "Clearly there's an opportunity for them to make money, not only on NFTs but in other ways and we're trying to push the ball forward on allowing that given all the restrictive rules in the high school space right now."
When it first began, BallerTV hired videographers to stream the games, growing to a network of 30,000 across the country. But soon, Hawkey, who is an engineer, realized that technology would be key to reach the scale that he envisioned.
With a team of engineers, it developed proprietary machine learning to automatically record the action.
It requires less manpower as iPhones, equipped with fisheye lenses, are used rather than video cameras with an operator at each camera. One person can monitor several devices at a basketball tournament where 10 games are being played at once, for example. That person can watch a sort of master feed to monitor whether a basketball crashes into the device or other technical difficulties arise.
Outdoor sports do present a challenge compared to the climate-controlled environment of a gym. Hawkey had wanted to move into outdoor sports eventually, but NextPro's experience will help that expansion.
A favorite social media tool of the NBA and MLB, Santa Monica-based Greenfly just scored with an $8.4 million funding round and backing from 16-year NBA veteran Chris Paul.
Created by former MLB All-Star Shawn Green, Greenfly is a software-as-a-service content management system that lets organizations share, crowdsource and distribute photos and videos on social media. It's popular among sports teams, with a roster of about 250 organizations.
The software lets them see where their images are shared and the amount of social media engagement. And it last month inked a deal with Getty Images that gives athletes and other users access to Getty photos.
Teams like the Los Angeles Dodgers have tapped the app to create a virtual celebration when the pandemic prevented them from celebrating their 2020 World Series with fans.
The company was founded in 2014 by Daniel Kirschner alongside Green, a 14-year MLB veteran, who realized that the way sports teams needed a central hub.
The platform is targeted toward large organizations who manage lots of photo and video content taken from fans and others. Its customers include high-profile sports organizations and political campaigns, including Joe Biden's 2020 run for president.
Greenfly helps those organizations share content with individual influencers, who often work with multiple brands.
"Most of the content never sees the light of day," said Kirschner. "A majority of that content is incredibly valuable and relevant for people in the network. And so just to get it into the hands of the athletes themselves for example so they can share or broadcast partners or sponsors is super valuable."
Paul, now a point guard for the Phoenix Suns, joined Greenfly as a sponsor and partner during Greenfly's strategic growth round after using the platform to manage his on- and off-the-court social media presence, the company announced Tuesday.
Other investors include Verance Capital, Higher Ground Labs, DD Venture Capital, SW19 Ventures, LinkinFirm and Allievo Capital as well as participation from previous investors Go4it Capital, Elysian Park Ventures, Alpha Edison and Iconica Partners.
"Greenfly is one of the most recognizable names among athletes," Paul said in the announcement, "but its application and impact extends far beyond the court or field."
Paul, who spent six seasons playing for the Los Angeles Clippers, has a track record as an active investor. He has backed companies including the Los Angeles-based sports NFT marketplace Dibbs and New York-based agro-tech startup Bowery Farming.
Greenfly has over 500 client organizations and more than 44,000 users. Users can access Greenfly through its desktop and mobile apps. Pricing is determined by how many users are within the customer's network.
Kirschner declined to comment on Greenfly's revenue figures, but said the company is experiencing "strong growth."
Kirschner said Greenfly is hoping to make the most out of its relationship with Paul, who is also the president of the NBA Players Association and a State Farm spokesperson.
"He's just an incredibly engaged and thoughtful person and somebody who doesn't just want to write a check, he really wants to bring what he brings to bear, which is like his insight, his perspective, his relationships," Kirschner said. "And so it's just a really special opportunity for us to team up."