While ESPN had to pay for rights to the content at some point, many of the ESPN+ streaming sports rights were transferred from existing deals, according to analysts and one person who has knowledge of the negotiations.
Other streaming events were bundled with TV rights deals, making it hard to delineate how much everything costs.
ESPN is using the promise that sporting events could air on its TV channels to get additional digital rights for little to no cost, according to the person with knowledge of the negotiations. Outside the marquee events like college basketball and football and professional leagues like MLS, streaming rights to many of the smaller games and niche matches cost very little — no more than $1,000 per sports event, game or match.
But ESPN+ is acquiring streaming rights to more mainstream sports, which can be costly.
For instance, ESPN signed a five-year deal with the UFC in May to air 10 events on TV and stream 20 more a year. The total value of that deal was $150 million, according to USA Today.
Another league switched pay per view rights to ESPN+ in a deal worth $1.5 million, a source with knowledge of negotiations said.
ESPN+ also got multiyear nonexclusive streaming rights for Riot Games' popular video game "League of Legends," which were previously held by BAMTech. Terms of the new agreement were not discussed, but the original seven-year exclusive deal with BAMTech was worth $300 million.
Wedbush puts the committed content costs figure for the first year at $100 million to $200 million.
"The content deals are also likely very expensive, as the content providers don't want to risk failure of the service, and typically seek large guarantees," Pachter said. "The rest of their feed is primarily ESPN content already produced for broadcast, so the incremental cost is very low or zero."
BTIG's Greenfield estimates this year's committed content costs are around $150 million due to the UFC deal, with additional "incremental" costs. But he said it will need to add another $300 million to $400 million in sports rights over the next 12 months to continue to supplement the service.
"Because they've added on so many sports rights, those losses are going to balloon if they don't add more subscribers," Greenfield said.