The Streaming Future: ESPN, Fox, and the Smiling Curve

The streaming landscape took a turn again this week after Disney announced pricing for ESPN streaming (as we expected) and Fox announced a new streaming app (a surprise).

Streaming was at the heart of my Disney stock thesis, and ESPN was a big part of that. But it’s taken a long time to get ESPN streaming from announcement to release, which is still a few months away.

Today, I want to go over how Disney set off dominoes that will result in Disney being the biggest streaming company in the world by the end of the decade. Once again, the “Smiling Curve” explains how this industry will play out.

Where Streaming Stands Today

We could debate who has the best content and what interface you like better, but what’s most important in streaming is how many subscribers a company has and how much money those subscribers are generating in revenue (subscription prices + ad revenue).

Here’s the landscape of streaming today on the subscriber side.

• Netflix: 293 million+

  • Note: Netflix stopped reporting subscriber numbers in Q1 2025

• Disney

  • Disney+: 126 million

  • Hulu: 54.7 million

  • ESPN+: 24.1 million

• HBO Max: 122.3 million global subs

  • Note: This includes traditional HBO, Discovery+, HBO Max, Max, and sports subscriptions. This would be like saying Disney has 204.8 million subscribers.

• Amazon Prime: 220 million+, includes many services beyond streaming

• Peacock: 41 million

• Apple TV: ~25 million

• Paramount+: 79 million

Here’s how the pricing breakdown works, including revenue per subscriber if available:

• Netflix: $7.99+ads to $24.99/mo

  • $11.69 in revenue per sub worldwide in Q4 2024

• Disney: Disney+ is $9.99 to $15.99/mo, Hulu is $9.99 to $18.99/mo, ESPN+ is $11.99/mo

  • Disney+: $7.77/mo

  • Hulu (streaming): $12.36/mo

  • ESPN+: $6.58/mo

• HBO Max: $9.99 to $20.99/mo

  • $7.11/mo

• Amazon Prime: $14.99/mo

• Peacock: $7.99 to $13.99/mo

  • $9.56/mo based on revenue/subscribers

• Apple TV: $9.99/mo

• Paramount+: $7.99 to $12.99/mo

  • $8.62/mo

When you look at subscribers and pricing, some themes start to emerge. You can see who is reaching scale (Netflix and Disney), who is struggling despite low prices (Peacock), and who is manipulating the numbers to look more successful than they are (HBO Max).

_{Note that I’m not including Amazon or Apple in this analysis because their motivations and the financial importance of streaming is different in their businesses.}

Streaming and the Smiling Curve

Longtime readers know I like the Smiling Curve as a simple tool to analyze how a market like streaming is playing out. The shorthand is this: Value (profits) accrue to the companies with either the most scale or a valuable niche.

So, companies either want to be in the top left of the curve or the top right.

In the case of streaming, YouTube owns the top left, and the companies discussed here are only fighting for the top right corner.

The reason “winning” is so important will become clear as we go through the numbers and services.

I’ve laid out each streamer on the curve the way I see them positioned, with total revenue as a ballpark metric for the y-axis.

Based on quarterly revenue, the current winners are clear. It’s Netflix #1 and Disney #2. The ESPN service may change the game, but I’ll get to that in a moment.

What makes the smiling curve useful is that it lays out a reinforcing loop we’re already starting to see play out with the winners winning and the losers losing.

All else equal, as companies scale to more users, they have more money to acquire content. In streaming and sports, content is usually paid for in a lump sum rather than per user, so having more users means more revenue, and that correlates to higher quality/quantity of content.

Buying better content means more subscribers and higher fees, and a feedback loop begins.

The Smiling Curve has an exponential impact. Winners have more subscribers AND more revenue per subscriber.

Just look at the discounts you can get to sign up for Peacock or Paramount+, and you can see how desperate those companies are, while Netflix and Disney are raising prices.

Here’s where we get to the changes this week.

The Cards Disney is Playing

In a move that’s been coming for over a year, Disney announced this week it will launch an ESPN streaming service and bundle it with Disney+ and Hulu. Pricing looks like this:

• Monthly subscription: $29.99

• Annual subscription: $299.99

• Disney+, Hulu, ESPN unlimited bundle: $35.99/month (with ads on Disney+/Hulu), $44.99/month (no ads on Disney+/Hulu*)

• Special offer at launch: Disney+, Hulu, ESPN unlimited bundle for $29.99/month for the first 12 months (with ads on Disney+/Hulu)

ESPN is bringing a lot of content to the table, too.

ESPN going over the top with the best sports content of any streaming service will supercharge the existing content and bundling strategy, pushing Disney up the smiling curve.

Now, if you want to watch NFL, NBA, college football, etc, and you don’t have cable, you’ll need ESPN. And while you’re at it, why not sign up for the full triple-play bundle for $30/mo?

The bundle is so compelling, why not ditch cable if you haven’t already? Here are the details.

This isn’t the niche content we see on Peacock, this is Monday Night Football, the NBA playoffs, and SEC football.

ESPN+ attracted 24.1 million paying subscribers.

At its peak, with ESPN as the tentpole, cable had 100 million subscribers.

Could the ESPN bundle have 70 million subscribers by the end of 2026?

If it does, that’s a $38 billion business!!!

_{(assumes $45/mo in revenue per subscriber, which is the top price point)}

What Disney is doing is edging out everyone else in streaming sports. If it’s the “must-have” service for sports fans, it’s no longer a niche service like ESPN+ is. And with ESPN streaming at scale, Disney would have enough revenue to win every rights deal that comes available in the future, creating a feedback loop of winning.

Fox’s Weak Hand

I thought ESPN’s streaming service would include content from other networks, like Fox, to bolster the service, and strategically, that would make sense for both companies. Fox doesn’t have a streaming service, so rather than starting one and struggling to attract enough subscribers to make a sustainable business, as Peacock, Paramount+, and HBO Max have done, why not just license content to the leader in sports streaming?

Fox executives went the opposite direction, announcing a new streaming service called Fox One:

I’m going to be blunt.

This is going to be a disaster.

Fox is too late to the party, is bringing third-tier content (outside the NFL), and has an awkward bundle of news and sports. If you’re making a list of streaming services to pay for, it’s probably not in your top three.

But without going to Disney, what choice do they have?

Fox has been growing simply because it’s been able to raise prices on cable subscribers. But the subscriber losses are getting too big to ignore, and now it’ll be easy to cut the cord if ESPN was the glue holding you there.

This experiment will go on for a year or two.

Fox will lose billions and find out it’s impossible to reach scale in a business where the winners continue accruing better content and more subscribers.

Disney’s Big Launch

Look for Disney to put a lot into the launch of ESPN streaming, including the aggressive initial pricing you see above (a repeat of aggressive Disney+ prices that were ratcheted up over time).

If they can get 50 million people, or more, to sign up for ESPN streaming, it would be another sign that the streaming business will continue to grow revenue and earnings. And there’s already more momentum on that front than you might realize, with experiences continuing to churn out cash.

At the current valuation, I love the risk/reward of Disney, and if I’m right that this will be the biggest streaming company by revenue by the end of the decade, it’ll be an enviable position Disney won’t give up for the foreseeable future.

People like sports.

People will pay to watch sports.

And ESPN has the best sports to watch.

Disney is finally leveraging that into being a behemoth in streaming.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor, or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.