This is one of those "entirely predictable" evolutions. First off, because
"live" does not necessarily mandate "broadcast delivery," and secondly, because
even sports ultimately must follow the supply/demand model. Even if demand is
less elastic (we are told) than is demand for other content.
"Live sports content is a highly valuable commodity in the television
industry," the report cites. "The current media landscape is challenging both
operators and networks to maintain margins while traditional pay TV subscribers
decline and programming expenses increase."
The obvious market response would be, let sports also exploit the much greater
flexibility of online delivery. That's what the consumer wants, and the
consumer has been making this abundantly clear. No one has to fret about what's
best for the sports leagues, other than the sports leagues.
"Networks are in a predicament as there seems to be no sign that sports rights
fees will slow and yet cord cutting and cord shaving is causing most sports
channels to bleed subscribers, putting increasing pressure on the bottom line,"
the report concludes. "And the fact that most sports rights are wrapped up in
long-term deals for many years to come makes it difficult for channels like
NBCSN and FS1 to become a powerful competitor to ESPN."
Well, over time, this will inevitably change. The time when sports were
subsidized with "welfare payments" from the majority of MVPD subscribers, even
those who couldn't care less about sports, is gradually coming to an end. The
sports leagues now have to operate in a much more competitive marketplace. If
pro athlete salaries are absurd, this is one mechanism that will bring the
salaries more in line with actual demand. As it should be. "The bundle" has
been unravelling for some years now, and that's simply because it could not
exist in a competitive marketplace. It was an artifact of local MVPD monopolies.
The article seems to miss the point, though, when it insists with this
"increased sports rights costs." Seems a lesson that's hard to learn. The
higher the MVPD fees are, the faster people are bailing out. Same is happening
to the sports leagues. Raise prices, and no one pays. At some point, someone
will get what's going on.
Bert
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https://www.tvtechnology.com/news/ott-cordcutting-disrupting-televised-sports
OTT, Cordcutting Disrupting Televised Sports
The impact of new digital players is just beginning to be felt.
Tom Butts 8 hours ago
The increased interest among streaming networks to enter the live televised
sports market will cause more fragmentation, challenging the domination of
traditional broadcast networks. At the same time, the state of Regional Sports
Networks is changing, affected primarily by 21st Century Fox's sale of its RSNs
to Disney.
These are among the findings of Market Intelligence's "2019 Sports Report,"
detailing the business of live televised sports.
"Live sports content is a highly valuable commodity in the television
industry," the report cites. "The current media landscape is challenging both
operators and networks to maintain margins while traditional pay TV subscribers
decline and programming expenses increase."
According to the report, the NFL "arguably" produces the most valuable content
on television and with contracts expiring with Fox, CBS and NBC in 2022 (and
ESPN in 2021), the increasing interest among OTT players like Amazon Prime to
enter the market will prompt new rights packages that reflect new realities.
"There are early discussions around breaking up the AFC and NFC packages for
the next round of negotiations, with digital service providers increasingly
expressing interest in bidding on streaming rights," the report said.
In addition, with cable operators continuing to hemorrhage subscribers via cord
cutting (many of which are trying to escape expensive sports channels) and the
cost of rights packages on the rise, this could have an impact on the value of
so-called "linear" (broadcast) vs. digital rights, according to the report.
"An area of interest for the next couple of years is how the leagues will
decide to distinguish between linear and digital rights," the report noted.
"The cable bundle continues to lose subscribers, negatively impacting network
margins. At the same time, digital rights have thus far been packaged and sold
separately from linear rights. If this continues, there could come a time in
the next few years where one entity owns digital rights and another owns
linear. In this scenario, the value of local linear rights would diminish, at
least slightly, as there would be-for the first time in a local
market-competition for viewership in protected in-market territory."
For Regional Sports Networks, there have been several new entrants in the past
year, such as ESPN+, YouTube TV, Amazon, Sinclair and FloSports, that have had
an impact. But perhaps the biggest effect comes from the sale of 22 RSNs to
Disney as part of its $71.3 billion acquisition from 21st Century Fox,
according to the report.
"The surviving Fox entity will focus on live sports and news but is exiting the
local sports rights business, citing major differences from local versus
national sports rights segments," the report said. "New Fox's more focused
strategy will presumably make it a bigger force in the national sports segment."
Despite the rise in per subscriber costs in the pay-TV market for sports (for
RSNs, it's an average of $13.30 per subscriber, overall, $5.83 when adding in
all multichannel networks), the report notes that the costs still pale in
comparison to the even higher expense of attending games in person.
"While the cost to access live sporting events as part of channel lineups has
increased over the years-and fees within the pay TV industry are head and
shoulders above the non-sports channels-the cost to attend games in person is
even more eye-popping," the report said. "From a sports fan's perspective,
there is value in paying industry-leading sports programming fees, compared to
following a team in person or being disconnected from tuning in."
The bottom line is that for televised sports, the disruption caused by the
increasing number of digital newcomers (including the various professional
leagues' own streaming services) coupled with increased sports rights costs
will require viewers and networks to fasten their seatbelts for a bumpy ride.
"Networks are in a predicament as there seems to be no sign that sports rights
fees will slow and yet cord cutting and cord shaving is causing most sports
channels to bleed subscribers, putting increasing pressure on the bottom line,"
the report concludes. "And the fact that most sports rights are wrapped up in
long-term deals for many years to come makes it difficult for channels like
NBCSN and FS1 to become a powerful competitor to ESPN."
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