Sports and television have thrived together. Our future of entertainment will depend on whether streaming and sports can repeat that mostly happy partnership.
My colleagues recently reported that Amazon, Apple, and Google’s YouTube may be willing to pay billions of dollars for popular sports like the National Football League and the National Basketball Association to move their games from television to streaming services. technology.
For decades, television companies, including CBS and ESPN in the United States and Sky in Britain, have paid sports leagues big bucks to be the only place people can watch games. TV money has made sports rich and influential in entertainment and culture. Broadcasting sports also made television rich and powerful.
Today’s newsletter looks at three questions that would be relevant if tech companies follow the old-school TV playbook and get bigger in streaming sports online.
1) Why do tech companies want sports?
This is an obvious answer: companies want to attract subscribers to their streaming video services, and many people love sports.
There are two unknowns for Silicon Valley bosses. First of all, no one has yet proven that a group of people sign up and stay with a streaming service to watch six months of top-tier European baseball or soccer games. (To be fair, so far few popular sports are available to watch online only.)
The related unknown is whether big tech companies will find it logical to pay sports leagues stupid amounts of money, as old-school television has done.
The math may not work out so well for streaming companies. Disney collects billions of dollars a year from cable companies to include TV channels like ESPN in their programming listings and more from advertising. That’s a lot of cash to pay for NBA games, squash or whatever.
Streaming subscription fees don’t have the same oomph. The largest streaming company, Netflix, has about the same annual revenue as a relatively small television company, Paramount Global, which owns the CBS and Comedy Central television networks and the Paramount+ streaming service. Streaming is amazing in many ways, but it may not be lucrative enough to sustain the sports industrial complex.
A counterpoint: Apple, Google and Amazon have infinite dollars and can afford to lose money to see if sports attracts a bunch of new subscribers. But they also won’t hesitate to ditch Internet sports broadcast contracts if they no longer fit corporate goals.
2) Why do sports leagues want to stream?
Major sports leagues have two sometimes conflicting missions. They want as much money as possible and they want a large number of viewers for the games. Tech companies may offer the former, but not necessarily the latter.
For now, sports on TV have far more viewers than sports on the Internet. It’s puzzling, actually. Kevin Draper, a sportswriter for The New York Times, told me that when the same NFL game is broadcast simultaneously on the Fox television network and the Amazon Prime streaming service, the viewership on Fox is many times larger. During the Super Bowl, about 90 percent of viewers watch it on boring old tv instead of online.
This is a dilemma for sports executives. They are delighted that Apple, Amazon and Google can rain money on them to stream sports. They are also anxious that streaming services could reduce sports viewership, which could make their leagues, teams and players worth much less.
Sports leagues will most likely take a lot of money from tech companies, assuming the money is there. Or they’ll hedge their bets and keep the hottest stuff on TV and sell the low-key games to streaming companies.
3) What does this mean for us?
Probably higher transmission bills.
Anyone who pays for television, whether they watch sports or not, is paying the cost when ESPN or CBS pays for the rights to broadcast March Madness college football or basketball games. Those sporting costs have only increased over time.
That has made sports a double-edged sword in entertainment. Games are by far the most popular television programming, and are one of the main reasons Americans continue to pay for cable or satellite television. But the rising cost of sports is also persuading people to ditch the television service.
Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahahaha. If programming costs much more, streaming subscription prices likely will too.
I don’t know what will happen next. I can sketch a scenario where streaming services have a long, win-win marriage with sports like mainstream TV did for decades. This could also be great for fans, team owners, and players.
I can also imagine a death spiral in sports and streaming. If people get tired of big sports broadcast bills, then leagues have less money and fewer fans.
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Before we go…
Mark Zuckerberg is eager (or desperate) to turn his company around quickly: My colleague Mike Isaac takes us inside the Zuckerberg project to guide Meta through a difficult phase.
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Apple AirTag in the face of air travel chaos: You have to respect the ingenuity of the people. using Apple’s tracking gadgets to track your lost luggage, as explained by Bloomberg News. But AirTag won’t actually help you get your bags back. (A subscription may be required.)
The President of the United States has a better Zoom setup than you: The analyzed edge President Biden’s West Wing Work Tech Team.
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Yo-Yo Ma plays the cello in a forest. It’s four minutes of beauty that you deserve.
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