June 22, 2022

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Walt Disney Gets Into the Sports Betting Industry

3 min read
Walt Disney Gets Into the Sports Betting Industry

Forbes said that “the company is known for creating The Happiest Place on Earth is looking for a place to place a bet.” The news that Walt Disney intends to enter the sports betting market was widely reported, especially in Japan, which is famous for its love for Walt Disney. Since 1983, the Tokyo Disney Resort has seen over 550 million people. Japan is currently developing its first integrated casino resort. It’s easy to see why Japan is so enthusiastic about Walt Disney’s plans for sports betting. But what does this all mean?

Disney’s Most Recent Performance

This announcement was made during Disney’s 2021 fourth-quarter earnings report. The entertainment giant’s performance this year was disappointing, but the sports business experienced a remarkable increase. The number of subscribers to ESPN+, a streaming service owned by Walt Disney Company, increased 66% in the fiscal year.

Reports suggest that sporting events accounted for 90% of all programs viewed on Disney-owned television networks last year. In response to this trend, Disney has signed a 10-year agreement with the National Professional Football League (NFL), and will also acquire broadcasting rights in 2023.

Why do you gamble?

According to Bob Chapek CEO, gambling can help Disney attract younger audiences and create new revenue streams. Sports betting is heavily consumer-driven, particularly by the younger generation. It attracts a large portion of sports enthusiasts who view it as part of their whole experience.

Therefore, ESPN is the ideal platform for Disney to venture into the world of gambling. In 2021’s final quarter, advertising revenue was flat on the sports channel. Gambling can be a new source of income. Despite the increase in subscribers, the trend for growth has been slowing since 2010 as more people move away from paid TV.

Additionally, Disney’s betting strategy is not new. It was already in place when ESPN signed deals with Caesars Entertainment and DraftKings to connect their sportsbooks to the ESPN website in 2020. This licensing agreement is a careful move to protect the image of the mother brand. This would give ESPN a greater role on the market, while DraftKings or Caesars will continue to handle the betting mechanics.

The Wall Street Journal also reported that there was a potential deal worth $3 billion between Walt Disney and these two companies for brand licensing in August 2021. But there is a catch. How will the family-friendly company get into the wagering action in the future?

Disney and Betting: Catch-22, or the Perfect Combo?

Disney’s traditional, family-friendly image can be seen as a hindrance to its plans for entering the sports betting market. When Chapek was asked if ESPN would host wagers on its website, he gave a vague response.

It is therefore likely that Walt Disney will continue to license, even if it is trailing behind FOX corporation which offers integrated betting services on its subsidiary FOX Sports.

The Supreme Court lifted the ban on betting in sports, which is causing the stigma around the industry to be challenged. More than 30 states in the United States, including Washington D.C., have opened legal sportsbooks to expand the market. According to the American Gaming Association, Americans placed around $24,000,000 in the fiscal first half of last year.

The American gambling industry is expected to rake in $30 Billion in revenue. However, it remains unclear whether Disney will invest in a direct betting platform. Its integration into the sports betting market will likely change its image.

While this is happening, Disney’s primary revenue stream will be from DraftKings’ advertising program. The advertising budget is huge at the betting giant and it focuses 80% on its ever-increasing revenues.

Walt Disney is struggling to keep its family-friendly image intact, but many other companies have changed their trajectories and entered sports betting, such as Sports Illustrated.

Also, it is important to remember that Disney’s licensing strategy may help fans stay interested in their screens and potentially increase ESPN’s core cable business. It will be fascinating to see where Walt Disney goes in the future as the company continues to follow CEO Chapek’s positive and bold outlook.

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