Sports and television flourished together. Our future in entertainment will depend on whether streaming and sports can replicate this mostly happy partnership.
My colleagues informed Recently, Amazon, Apple and Google YouTube may have been willing to pay billions of dollars to popular sports like the National Football League and National Basketball Association to move their games from TV to tech streaming services.
For decades, broadcasters, including CBS and ESPN in the US and Sky in the UK, have been paying sports leagues huge amounts of money to be the only place people can watch matches. Television money has made sports rich and influential in entertainment and culture. Showing sports also made television rich and powerful.
Today’s newsletter addresses three questions that would be relevant if tech companies followed the old school TV play and broadcast sports more widely online.
1) Why do tech companies need sports?
This is an obvious answer: companies want to attract subscribers to their video streaming services, and many people love sports.
For the bosses of Silicon Valley, there are two unknowns. First, no one has yet proven that a group of people will sign up and use a streaming service to watch baseball games or top-tier European football for six months. (Honestly, there are still only a handful of popular sports that are only available to watch online.)
A related unknown question is whether big tech companies would find it logical to pay sports leagues stupid amounts of money like old-school television does.
The math may not work for streaming companies. Disney collects billions of dollars a year from cable companies to include TV channels like ESPN in their programming, and more from advertising. That’s a huge pile of money to pay for NBA games, squash or whatever.
Paying for a streaming subscription doesn’t have the same appeal. The largest streaming company, Netflix, has about the same annual revenue as the relatively small broadcaster Paramount Global, which owns the CBS and Comedy Central television networks, as well as the Paramount+ streaming service. Streaming is great in many ways, but it may not be profitable enough to sustain a sports-industrial complex.
Counterpoint: Apple, Google and Amazon have endless dollars and can afford to lose money to see if the sport brings in a bunch of new subscribers. But they also don’t hesitate to drop sports webcast contracts if they no longer fit corporate goals.
2) Why do sports leagues want streaming?
The major sports leagues are made up of two sometimes conflicting missions. They need as much money as possible and they need a huge number of viewers for the games. Technology companies may offer the former, but not necessarily the latter.
At the moment, sports on television have far more viewers than sports on the Internet. It’s puzzling, really. Kevin Draper, a sports reporter for The New York Times, told me that when the same NFL game is broadcast simultaneously on Fox and Amazon Prime, the number of viewers on Fox is many times greater. During the Super Bowl about 90 percent of viewers watch on boring old TV, not online.
This is a dilemma for sports executives. They’re thrilled that Apple, Amazon, and Google can dump money on them for broadcasting sports. They are also concerned that streaming services could reduce viewership, which could greatly reduce the value of their leagues, teams, and players.
There is a possibility that sports leagues will take a lot of money from technology companies – provided that the money is there. Or they will hedge their bets and keep the hottest stuff on TV while selling low profile games to streaming companies.
3) What does this mean for us?
Probably higher streaming bills.
Anyone who pays for television, whether you watch sports or not, pays the cost when ESPN or CBS pays for the right to broadcast college football games or March Madness basketball games. These sports expenses have only grown over time.
This has made sports a double-edged sword in the entertainment industry. Games are by far the most watched television program and they are the main reason Americans continue to pay for cable or satellite television. But the rising cost of sports is also compelling. people are turning off television.
Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising their streaming subscription prices. But hahahaha. If programming costs a lot more, streaming subscription prices will probably be the same too.
I don’t know what’s next. I can sketch a scenario in which streaming services have a long and mutually beneficial alliance with sports, as conventional television has for decades. This can be useful for fans, team owners and players.
I can also imagine sports and the streaming death spiral. If people get tired of big bills for sports broadcasts, then leagues have less money and fewer fans.
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Before we go…
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Hugs to it
Yo-Yo Ma plays the cello in the forest. This is the four minutes of beauty you deserve.
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