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Disney's Streaming ESPN+ Service Has Arrived -- Here's What Investors Should Know

Daniel Sparks, The Motley Fool

Walt Disney's (NYSE: DIS) long-awaited direct-to-consumer streaming service for ESPN, called ESPN+, is finally here. ESPN+ is a subscription service users can pay for to get access to content beyond what's included in existing network content. ESPN+ launched alongside the new "re-imagined" ESPN app on Thursday.

"The innovative new app elevates the digital sports experience and becomes the premier, all-in-one digital sports platform for fans, giving them easy access to all of ESPN's news, scores, analysis, video and audio content," Disney said a press release Thursday. 

Disney's redesigned ESPN app and the launch of ESPN+ together signal one of the company's first major steps to up its ante in a multiscreen environment.

A man using the ESPN+ app on his smartphone.

ESPN+. Image source: ESPN.

The details

Priced at $4.99 a month, or $49.99 per year, ESPN+ will feature more sports content, direct access to "thousands of live games," original programming, exclusive content, and access to ESPN's entire library of on-demand content. In addition to monetizing the app by selling subscriptions to ESPN+, the app will include advertising. But advertising will be limited for ESPN+ subscribers.

Content will be able to be streamed in three different tiers within the overhauled app: "video clips and highlights for all users; 'TV Everywhere Streaming' of live and on-demand content from ESPN's U.S. linear and digital networks for pay TV subscribers; and ESPN+, for the direct-to-consumer streaming service's subscribers."

The redesigned app will use technology Disney gained last summer when it acquired BAMTECH, a leader in direct-to-consumer streaming technology, from MLBAM. The "state-of-the-art" video platform enables Disney to deliver "an incredible experience," Disney said.

From its launch, ESPN+ is available on Amazon.com, Apple, and Alphabet's Google streaming-TV devices, smartphones, and tablets.

This is just the tip of the iceberg

Investors should realize that ESPN+ is a platform. In addition to making three tiers of video content -- clips and highlights for all users, pay-TV content, and ESPN+ content -- available to users on the app, Disney also offers more add-on options. The app currently includes the ability for users to subscribe to additional streaming services like MLB.TV -- and it will offer NHL.TV sometime this year or next year.

A teenager using the ESPN+ app on a tablet.

ESPN+. Image source: ESPN.

Furthermore, this redesigned ESPN app is just the beginning for Disney in its transformation to becoming a direct-to-consumer company. The company has several major initiatives on the horizon that could help accelerate Disney's transformation. As part of its acquisition of the entertainment assets of Twenty-First Century Fox (NASDAQ: FOX), which Disney expects to close by June 30, the latter will gain a controlling stake in streaming TV service Hulu. Disney also plans to launch an aggressively priced Disney-branded streaming service in 2019, which will feature Disney, Pixar, Marvel, and Star Wars films as well as original programming.

Disney is bullish on its long-term vision to transition from a licensed to third-party model to a self-distributed model. "[T]he profitability, the revenue-generating capability of this initiative is substantially greater than the business models that we're currently being served by," said Disney CEO Bob Iger in the company's third-quarter earnings call last year.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of Apple and Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Walt Disney. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.