Analysis: DAZN Could Achieve Profitability in 2024; What Lessons Could ESPN+ Learn From the Sports Streamer?

As the old saying goes, money talks. That’s why more and more attention is being focused on DAZN, one of the largest over-the-top (OTT) sports streaming services in the world.

In the United States, DAZN is primarily geared toward combat sports, offering boxing, mixed martial arts, wrestling and more. Outside the U.S., the service offers a much wider array of sports, from soccer to NFL football and beyond. That balanced approach is part of why the service has had so much success in growing, according to a new report from the London-based market analytics firm Ampere Analysis.

According to Ampere, DAZN has become one of the leading companies in the world when it comes to acquiring sports rights. DAZN has risen to fifth overall in terms of media outlets that buy live sports rights, accounting for 6.6% of the total global sports rights buy in 2022.

DAZN has adopted a strategy of heavy investment in top-tier rights to accelerate subscription growth at an early stage. In Europe, the service holds the rights to show NBA, Bundesliga, UEFA Champions League, and LaLiga games. It also recently secured the rights to NFL Game Pass, which will allow it to show more live NFL games as well.

The service has yet to turn a profit, but Ampere’s projections show that goal is quite attainable. To further boost revenues, DAZN has undertaken a number of strategic initiatives, including the expansion of its programmatic advertising inventory (both on-platform and off-platform); a greater reliance on distribution partnerships —such as its recent addition to Prime Video Channels— to boost reach and manage seasonal churn; and the launch of new ancillary revenue verticals such as betting, digital collectibles (NFTs), retail, merchandise and ticketing.

Subscriber revenue is the biggest share of total revenue by far for DAZN. Ampere estimates that 80% of the company’s total revenue will come from subscriptions this year, and that DAZN will have to grow that revenue by 34% to reach break-even status by the end of 2023. That would represent a lower annual growth rate than the service has shown in all but one of the years of its existence.

The future sounds much rosier for DAZN than it does for ESPN+, at the moment. ESPN’s parent company Disney is still losing more than $1 billion per quarter from its streaming segments, including ESPN+, though the company has not specified how much of that number its sports streamer is responsible for. So what can ESPN+ do to be more like DAZN?

The first answer is the one most likely to upset users: raise the cost of a subscription. A higher cost is one of the primary reasons DAZN is on the path to profitability in 2024 with just 15 million global users, while ESPN+ and its 24.9 million users are not. In the U.S., DAZN runs $19.99 per month, double the cost of an ESPN+ subscription. In Europe the service is even more expensive; a Standard subscription costs €29.99($31.77), while an Unlimited subscription now runs €39.99 ($42.37).

That’s a high price, to be sure, but that money is put to good use by DAZN, as shown above with their large and increasing spend on sports rights. Such rights are increasingly expensive, especially if streamers want to be able to offer games without local blackouts as DAZN can in many regions. If ESPN+ wants to chase prestige assets like an increased amount of NFL or NBA games, users will have to support those additions with their wallets.

ESPN may be looking to do just that. A recent corporate shuffling at the company could indicate a pursuit of wider NBA rights is on the way for ESPN+. DAZN offers so many of the biggest sports leagues and teams abroad that users have begun to think of it as a one-stop source for all the games they value most. If ESPN+ wants to be thought of in a similar light, it will have to add more contests from the biggest American sports leagues.

From the looks of things, ESPN+ is taking a different approach to profitability. The company has reportedly been reaching out to other major media outlets about the possibility of showing ESPN users where they can stream all live sports currently airing, even on competitors like DAZN. But if DAZN is able to reach profitability by 2024, it may force ESPN executives to start thinking about adopting some of its tactics.