ESPN Is Making More Money Than Ever Before Off Of Subscribers Despite Its Dwindling Subscriber Base
Instead of the typical 'lower the price when demand is low' that so often happens with supply and demand in the economy, when ESPN started losing customers, they raised their subscription prices even higher instead of lowering them. Now they are making even more money than they did before and here's why. In 2011, ESPN peaked with 100 million subscribers, but since then numbers have started dropping until 2017 they had lost over 13 million subscribers. Instead of lowering their prices, they raised them to $7.21 per subscriber becoming the most expensive network on cable. But they didn't start losing money, instead they brought in more due to the fact that there was still a high enough demand for the ESPN network and the subscribtion fee was growing at a faster rate than losing subscribers. ESPN still had enough subscribers willing to pay for the network at the raised price that the subscription revenue came in at higher than ever before.
- When ESPN began losing subscribers, they raised their subscription fee by more than 50% becoming the most expensive network on cable
- The subscription fee grew at a faster rate than the rate of losing subscribers
- ESPN made even more money than before because they still had a large amount of customers willing to stay with the network
1. What are some of the motives for a customer to continue paying for a good or service even after the prices have risen substantially?
2. Do you think ESPN will lose more customers later on because of the substantial increase in the price of the network? Why or why not?
3. What can ESPN do to be sure that they don't lose subscribers in the future due to the high subscription price?