Will streaming save or kill sport?

Will streaming save or kill sport?

Sports and television have thrived together. Our entertainment future will be shaped by whether streaming and esports can repeat this 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 National Basketball Association to shift their games from television to tech streaming services.

For decades, television companies — including CBS and ESPN in the United States and Sky in the UK — have paid big bucks to the sports leagues to be the only place people can watch games. TV money has made the sport wealthy and influential in entertainment and culture. The broadcasting of sports programs also made television rich and powerful.

Today’s newsletter addresses three questions that would be relevant if tech companies followed the old-school TV playbook and got more involved in broadcasting sports online.

1) Why do tech companies want sports?

This is an obvious answer: companies want to get subscribers for their video streaming services, and many people love sports.

There are two unknowns for bosses in Silicon Valley. First, no one has yet proven that a ton of people will sign up and stick with a streaming service to watch top-flight baseball games or European soccer games for six months. (To be fair, few popular sports are online-only so far.)

The related unknown is whether big tech companies will find it logical to pay sports leagues stupid amounts of money like old-school television did.

The math might not work so well for streaming companies. Disney rakes in billions of dollars each year from cable companies to add television channels like ESPN to its programming, and more from advertising. That’s a huge pile of money to pay for NBA games, squash or whatever.

Streaming subscription fees don’t have the same swing. The largest streaming company, Netflix, has about the same annual revenue as a relatively small television company, Paramount Global, which owns television networks CBS and Comedy Central and the streaming service Paramount+. Streaming is great in many ways, but may not be lucrative enough to sustain the sports industrial complex.

A counterpoint: Apple, Google and Amazon have endless amounts of money and can afford to lose money to see if sports attract many new subscribers. But they also won’t hesitate to terminate sports webcast contracts when they no longer meet the company’s goals.

2) Why do sports leagues want streaming?

Major sports leagues have two sometimes conflicting missions. They want as much money as possible and they want huge viewership for games. Tech companies can offer the first, but not necessarily the second.

Sport on television currently has far more viewers than sport on the internet. It’s actually confusing. Kevin Draper, a sports reporter for the New York Times, told me that when the same NFL game airs simultaneously on Fox TV and the Amazon Prime streaming service, Fox viewership is many times larger. During the Super Bowl, about 90 percent of viewers watch boring old TV, not online.

This is a dilemma for sports managers. They’re excited that Apple, Amazon and Google could rain money on them to stream sports. They also worry that streaming services could reduce esports viewership, making their leagues, teams, and players worth far less.

Chances are that the sports leagues will take the big bucks from the tech companies — assuming the money is there. Or they will hedge their bets and keep the most popular stuff on TV and streaming companies will sell the lesser known games.

3) What does this mean for us?

Likely higher streaming bills.

Anyone who pays to watch television — whether you watch sports or not — bears the cost when ESPN or CBS pay for the rights to broadcast college football games or March Madness basketball. These sports costs have only increased over time.

This has made sport a double-edged sword in entertainment. Games are by far the most popular television program, and they’re a big reason Americans continue to pay for cable or satellite television. But the rising cost of sports is also persuading people to quit television service.

Apple, YouTube, and Amazon can afford to spend billions of dollars on esports without raising subscription prices for their streaming services. But hahahahaha. If programming costs a lot more, it’s likely that streaming subscription prices will too.

I don’t know what will happen next. I can outline a scenario where streaming services have a long, mutually beneficial marriage with sports, as traditional television has for decades. This could also be great for fans, team owners and players.

I can also imagine a sports and streaming death spiral. When people get fed up with the big esports streaming bills, leagues have less money and fewer fans.

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