Venu Sports activities faces a troublesome advertising and marketing problem to seek out an viewers

Actor Jon Hamm plays Don Draper in Mad Men.

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Call Don Draper, Venu Sports may have a marketing problem

The Disney, Fox And Warner Bros. Discovery The jointly operated streaming service announced Thursday that it will launch in the fall for $42.99 per month. That's much more expensive than NetflixMax, Peacock, or another major streaming subscription service. It's much cheaper than YouTube TV at $73 a month or a standard cable package – but those deals include a wide range of entertainment content beyond sports.

Venu offers consumers access to a bundle of networks: ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, Fox, FS1, FS2, BTN, TNT, TBS and truTV. Subscribers also get ESPN+. It plans to launch in time for football season. It does not include CBS and NBC, two networks that own the rights to many sports, including college football and NFL games.

Venu's theoretical user is someone willing to pay a hefty monthly subscription for a narrow segment of media — live sports, but not all live sports. The service markets itself as a product for the so-called “cord nevers” — a group of younger consumers who didn't want to buy cable TV because it's too expensive, but who crave access to ESPN and other live sports.

It is completely unclear whether this user base will come into being.

There are two major obstacles to Venu's success. First, the overall market of users willing to pay $43 a month for some sports but unwilling to pay for cable TV may not be that large. Many non-cable subscribers are content to watch highlights on YouTube and get commentary from their favorite influencers. According to a survey by Kantar, cited by YouTube in its 2024 forecast, 54% of people would rather watch the creators analyze a major live event than actually watch the event.

At the other end of the spectrum, NFL-mad young people will need to buy Peacock and Paramount+ — the streaming services owned by NBC and CBS — to get a full lineup of NFL games. They could also get a digital antenna to pair with Venu, but antenna adoption among younger viewers might be a little inconsistent.

Other major sporting events – such as the ongoing Olympic Games – will simply not be available on Venu because the Olympic broadcaster Comcast's NBCUniversal is not part of the service.

An existing player

The second problem may be even bigger: A product like Venu already exists – and it may already be a better deal than Venu.

For $60 a month, Echostar's Sling TV offers the popular channels that come with Venu – ESPN, TNT, TBS, Fox and ABC – but also NBC. It also includes CNN, Fox News, MSNBC, Bravo, USA, HLN, Discovery NFL Network and a whole host of other channels – 46 in total, compared to Venus' 14. There's also an introductory offer where consumers pay just $30 for the first month.

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At the end of March, Sling TV had 1.92 million subscribers and the number is not growing. In the first quarter, the company lost 135,000 customers, but that was less than the 234,000 subscribers it lost in the first quarter a year ago.

At the end of 2021, Sling TV had 2.5 million customers, down from the 2.7 million subscribers it reached in 2019.

The company blamed the existence of other streaming services for its decline last quarter.

“We continue to experience increasing competition, including competition from other providers of video-on-demand subscriptions and live linear OTT services, many of which provide our content and offer football and other seasonal sports programming directly to subscribers on an à la carte basis,” Echostar said in a statement.

In summary, Sling TV – a more comprehensive offering than Venu for about $17 more per month – has been losing subscribers for five years and never had more than 2.7 million subscribers at its peak.

This presents quite a marketing challenge for Venu: the company must convince consumers that a subscription is worthwhile because of its strong brand and technology.

Or the company is hoping its $43-per-month offer will last long enough to capitalize on the $17 difference. The typical pattern with live network packages is that they start with an introductory offer and then increase prices. Venu hinted at this in its press release, telling consumers they could lock in the $43-per-month price for 12 months from the time they sign up – suggesting a price increase could be coming.

Venu plans to add more sports to the service over time, but that will likely result in a price increase, making it even harder for wireless to sell the value proposition.

To undercut Venu even further, Disney is planning an ESPN flagship streaming service as early as fall 2025 that will include ESPN at a lower price than Venu.

Disney, Warner Bros. Discovery and Fox will argue that they are aiming for maximum reach here – much like the Apple iPad mini did, slotting into the tech company's existing lineup between its phones and larger tablets.. Maybe there is an audience for Venu, and if so, the companies want to serve it. Fox CEO Lachlan Murdoch has already predicted that the service can gain 5 million subscribers in the next five years.

But even $5 million seems ambitious given Sling TV's difficulties. To achieve that, a lot of money will have to be invested in marketing.

And this effort can be so costly that it defeats the purpose.

Disclosure: CNBC parent company NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder for all Summer and Winter Olympics through 2032. NBC Sports broadcasts NFL games.