WWW

Looking at the future of sports TV: While We’re Waiting…

Cleveland Sports

As many of you know, I’m fascinated by the sports media business. I’ve talked about it in several other recent WWWs (here and here). The main topic that is on my mind today: sports television.

ESPN has had a massive growth trajectory for years and years now. That is how, in part, they’ve been able to afford and rationalize the massive TV deals being signed in sports of late. The issue, of course, is that consumer behaviors are starting to change, at least ever so slightly.

Awful Announcing’s Dave Warner had one of my favorite articles on this subject back in July. The problem for ESPN hasn’t been that people are running away from cable in boatloads and that the company is a sinking ship. No, it’s all about expectations. ESPN was growing by double-digits every year. Now, its subscription base has stalled and declined ever so slightly. That’s the difference.

One of my favorite ESPN stories actually comes from my MBA program here at the University of Oregon. During our annual New York City trip, we’ll visit with alumni and friends over at The Worldwide Leader. Back on the 2013 trip, one ESPN executive polled the room of 20-something MBA students and asked how many had an expanded cable TV subscription or satellite of some kind. The room was a near 50/50 split.

The ESPN executive replied in this way: “Don’t worry. When all of you are older, own a house, and start to have kids, you will buy cable. That’s just the way the world works.” By the 2015 trip, and certainly by our trip earlier this year, the tone had changed drastically. ESPN is starting to realize that cable is not a certainty for all consumers and not even sports consumers. And it’s all a matter of how quickly the evolution will occur.

We live in an era of password-sharing and small price amounts. Yes, sports is unique because it is one thing that must be consumed live. For over 90 percent of sports consumers, there’s absolutely no value in going back to watch the game once you’ve learned the result. And with social media today, it’s almost impossible to ignore results as they are happening. So yes, sports is somewhat an anomaly in the overall TV world. But that doesn’t mean it is completely immune to these issues.

One of the most fascinating facts I’ve learned recently is this: Of the 90 million-plus subscribers to ESPN, only about 15-20 percent actually ever watch the channel. That’s because of the way cable bundling works, where non-sports fans are also required to purchase ESPN if they’d like to buy any other premium channels. With ESPN alone requiring $6.61 per month right now (and likely to increase substantially in the future), this is a gigantic chunk of lost revenue if TV packaging ever changes.

Big news broke earlier this week when AT&T (which also owns DirecTV) announced that it will be offering some type of over-the-top Internet TV package by the end of this year. The details of how this will exactly work are still to be determined, but the possible ramifications for how it will affect ESPN, the various sports leagues, and other sports media companies are massive. “Over-the-top” has been viewed as the way of the future for a while now. It’s just been so daunting to align the needs of all of these different constituents to find some type of reasonable solution for all of them.

Personally, I subscribe to an expanded sports TV package through Comcast here in Eugene, Oregon. I do it because both of my roommates are also massive sports fans and we’re in a sports-themed MBA program out here. If I lived alone, would I still do it? If I lived in Northeast Ohio, when I could easily head over to another friend’s house or my parent’s house to watch Cleveland sports games, would I still do it? If there was an over-the-top option where I could find a way to pay for the missing football games I don’t currently own a separate subscription to?

This is certainly the future and we’re not certain yet how fast things will change. But one line has been stuck in my head from a separate New York City visit. One speaker, with a background in venture capital and technology, said this: “Media companies always rise faster and crash harder than you’d first imagine.” This was more in reference to how Facebook, Twitter, and Snapchat have emerged over the years. But it’s another reminder that there’s no good way just yet to project the next 5-10 years for ESPN.

Other links:

— A brief life update: I’ll be gone from Oregon from March 9-April 3 traveling from Boston to Dublin to Madrid to Israel. My MBA program calendar somehow contains a three-week spring break, so I’m taking advantage of it with a quarter-life crisis vacation. I’ve also been fairly sentimental of late about this month marking my 7-year WFNY anniversary and about an Akron Beacon Journal article about me from 2007.

— The low Oscar ratings likely have nothing to do with the actual content of this year’s politically controversial Oscars, writes David Sims of The Atlantic. Whether the ratings matter or not, you should always have in the back of your head that TV ratings are antiquated and usually pretty bad. Never read into them too much.

— A huge congratulations goes out to Ken Babby, owner of the Akron RubberDucks and Jacksonville Suns, for being named to this year’s Sports Business Journal “40 under 40” class. It’s also crazy to consider that Ken bought the Akron team in October 2012. It’s already been three and a half years. But he’s done so, so much for the Akron community and that team. I’m very excited to see what’s next for him as the full-time owner in Jacksonville now, too.

Vasu Kulkarni, founder of the innovative sports technology company Krossovr, wrote about Stephen Curry last week. It was actually after the Orlando game, not the Oklahoma City game, where Kulkarni realized that there’s a non-zero possibility Steph could actually be the new Greatest of All Time. He’s doing things that were considered impossible for generations.

— A couple stories in the ticketing world: Disney is installing “surge pricing” at its parks this year. That means prices will be different based on low-demand, regular, or high-demand times of the year. The Brooklyn Nets also are slashing ticket prices by 24 percent for the 2016-17 season. I worked in ticket pricing for the Charlotte Hornets last summer, so this is a topic that is more and more on my mind these days.

— Finally, I really, really enjoyed this Nicole Silverberg of GQ open letter to other fellow millennials writing open letters. Not everything in here has to be sports-related, right?

  • maxfnmloans

    Ive reached a point in life where I enjoy following sports more than watching sports. If I get three hours a weekend to watch one football game, thats a win in my book.

    I just went though the cord cutting debate and it went like this: The bundles suck, they’re forcing consumers to take things they dont need (like a land line) so then they can tell you how your $120 a month bill is a “value”. If you just get internet as a stand alone, thats $60, then you add Netflix and Hulu or HBO now or whatever and you’re pretty much right back where you started. AND I have a 4 year old, and God forbid Nickelodeon have any sort of decent app that has multiple full episodes. The DVR with a library of his favorites is sine qua non, so even if I cut the cord and could save $20-$30, its just not worth it.

    And pretty soon, the carriers might start throttling internet service to make up for the money they’re losing to cord cutters. Awesome.

    DONT HAVE KIDS, ITS A SCAM. CORPORATIONS WANT YOU TO BE THEIR PATSY

  • Hopwin

    Chalk me up to the never watches ESPN crowd. I have STO for the Indians and CBS for the Browns. Nothing on ESPN holds any interest for me.

    If I could cancel them to save $7 a month, I would in a heart-beat.

  • Hopwin

    This is my situation exactly. I’d love to cut the cord but Hulu, Amazon Prime, Netflix with internet access all add up to basically a cable bill and I still lose out on the Indians.

  • Natedawg86

    Sucks for me. Live in MD and only have directv to watch NFL and OSU football. If it weren’t for that, see ya. I do get to see some cavs games too on tbs tnt.

  • Greg Popelka

    Maybe you should get a digital antenna for CBS, and subscribe online for the Indians?

    I’m in my 50s. Grown children. Seems every time I channel surf, I end up turning off the TV. My wife likes watching nighttime network dramas, which she can watch with a digital antenna (or online I guess). What I’d miss without Dish would be NFL Network, but just during the draft (they cover it on radio though); some games broadcast on ESPN (but not many, and none of the talk show stuff). I think that’s it. Cable election coverage I guess.

    Even the channels I used to watch have crap I;m not interested in now. The History Channel doesn’t even show history shows in prime time.

    A long way of saying we;re now much less willing to put up with bundling channels than ever before.

    We’ve been talking a lot about canceling Dish. Maybe after the election.

  • Hopwin

    With you on abandoning History, Discovery, etc.

    But back to the main point: MLB.TV is $110 per year to get local market games. So $10 for MLB+$10 for Netflix +$12 for Amazon Prime + $10 for Hulu plus $70 for broadband capable of streaming to multiple devices.

    I am back to a capable package price at that point 🙁

  • maxfnmloans

    and I actually like the mindlessness of channel surfing. I dont like having to actively choose something to watch (at least not EVERY time I want to tune out for a while). I like flipping, something looks interesting, Ill stick until I hit a commercial, and flip some more. Maybe its because for the first 20 years of my life I literally had 2 channels, I dunno.

    All I want to do is zone out, turn my brain off, forget about work and annoyances, and eat my “late plate” until its time to go to sleep and do it all over again the next day. I feel like if I actively choose something on an app to watch, then I actually have to pay attention. The only thing I try to keep up with at this point is the OJ show, and thats mainly because Courtney B. Vance is KILLING it (and I just realized he was Jonesy in Red October…Jonesy is one of my favorite Clancy characters)

  • RGB
  • Natedawg86

    you are probably getting internet either way right? So in your price you maybe should only include possibly bumping to higher speed (+$20?). Also, do you have amazon prime for the shows, or you use it and the shows are a benfit

  • maxfnmloans

    internet as a stand alone, for any kind of bandwidth you need to stream video, is going to run about $50-60 a month. Amazon prime is $99 a year div/12 is $8 a month, Hulu is 10, Netflix is 10, if he wants MLB thats $10.

    Basically if you get internet access and 2-3 services youre looking at 80-90 a month. That doesnt include cost of peripherals if you need them like a roku, or chromecast.

    We’re getting closer, but cord cutting just isnt worth it quite yet for a lot of folks

  • Hopwin

    TV and internet are bundled so when I back out the cable portion versus the internet (for true apples to apples) I am looking at about $70 a month for just the cable portion versus about $42 for cutting the cord. But I’d have to bump my bandwidth to allow for multiple users streaming different content and even then I still wouldn’t have everything I watch.

  • tigersbrowns2

    mmmmm … now i’m hungry.

  • tigersbrowns2

    this obviously isn’t at Denny’s , as the presentation is first-rate.

  • tigersbrowns2

    i no longer watch ESPN … i am pretty much a baseball , football , golf & sometimes soccer guy. being into fantasy sports , if i want baseball info i go to MLB network & if i want football info i go to NFL network.

    ESPN used to be a bigger deal until everyone started branching-out into 24-hour sports channels.

  • LMK

    how many times can you put “MBA” in one post? Classic #MediocreButArrogant

  • I only watch ESPN when a game is on—last night’s Thunder/Clippers, for instance—but never for that commentary-based nonsense or highlight shows. Would love to watch SVP, but he’s on too late for my old ass.

  • Natedawg86

    yeah that makes sense. I would love to cut it, but like others I have small children and DVR is nice, also I have found streaming to be a little dicey when not doing it live (pause for bathroom or starting after beginning).

  • mgbode

    Depends on if you need the high speed internet anyway. I need for work, so the rest is less including mlb.TV which is supposed to start showing local games after they lost a court battle.

  • Hopwin

    I have high speed access, but I don’t have the bandwidth to support two simultaneous HD streams in addition to whatever the phones and/or laptops are doing.

    Holy crap, just ran through a mental list of all the internet devices I have…

    2 Wifi controlled outlets
    Rapsberry Pi2
    Xbox One
    2x Laptops (sometimes an additional work laptop)
    Desktop Intranet Server
    2x Cell phones
    Tablet
    2x Firesticks
    Roku
    2x Smart TVs
    A smart bluray player

  • mgbode

    Then you don’t have true high speed access 😉

  • Hopwin

    I think I have too many devices

  • CB Everett

    Damn. The Hemmingway of WFNY GIFs appears to be enjoying himself in the Key!