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NESN 360 Streaming marks “critical experiment” for local broadcasters –

NESN 360 Streaming marks “critical experiment” for local broadcasters –

The New England Sports Network (NESN) recently became the first regional sports network to introduce a true over-the-top direct-to-consumer streaming service – NESN 360. For $ 29.99 a month, fans without a pay-TV subscription can go live inn. -market the Boston Red Sox and Boston Bruins games (along with some additional content) online and on mobile and streaming devices. Annual subscribers will also receive eight tickets to Red Sox home games during the 2022 season.

Chris Russo (CEO, Fifth Generation Sports) said that the accompanying offer is an indication of a new reality. Teams and their local broadcasting partners will have to work together in new ways to sell subscriptions. Finding out what gets fans to sign up for an expensive streaming service will be “one of the more critical experiments happening in sports” over the next six to nine months, he said.

JWS ‘assessment: Sports rights holders have historically sold their broadcasting rights to media companies, and these entities then made money on the rights in the form of transportation fees and advertising. Ultimately, the cable or satellite company was responsible for marketing the fan, getting the fan to register and collecting money from the fan.

The dynamics began to change in 2018 with ESPN’s introduction of ESPN +. Suddenly, there was a national sports network that “encourages consumers and builds their business as a direct-to-consumer company,” Russo said. DAZN introduced a martial arts-centric DTC service in the United States the same year.

Almost five years later, regional sports networks follow. Dan Cohen (EVP, global media rights consulting, Octagon) explained that the RSNs have been a bit slower than their larger, national counterparts to make the transition to streaming, mainly due to the capex required to do so. Existing associated contracts and the fragmented, geographical nature of the rights presented further challenges.

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Local sports broadcasters also did not have the rights to stream games on the market. “[Those rights] was packed by the leagues [and some still are today] so that they can offer their own SVODs, “Cohen said.” It was not until recently that MLB relinquished centralized control over these rights. [and] MLB teams were allowed to negotiate their own streaming deals in the local market. “

RSNs are looking for a means to recapture cord cutters (and cord cutters) and the revenue associated with these customers. But professional sports teams are equally motivated to see a new DTC streaming service succeed. Local TV is still a large part of the NBA, NHL and MLB team’s revenues, and the assumption is that if no alternative revenue stream arises to compensate for lost transportation fees, RSNs will struggle to pay the rights fees – no matter where the fees increase – the teams apply.

Professional sports teams are also motivated to serve fans and potential fans who live outside the pay-TV universe. “The next generation of fans are largely digital first-time video consumers,” Cohen said. “We are all aware that the cable universe is shrinking [at ~7.5% rate annually] In recent years. As [the number of] string-nevers and -cutter increases, [sports teams] need to build their next fan audience where [those] fan audience is naturally live – without cable. The key to this transformative time is to be able to offer local market fans the opportunity to watch on cable or via an SVOD offer, whether it is standalone or through a vMVPD [the latter proving difficult for RSNs of late]. “

NESN is the first RSN operator with a streaming service, and Sinclairs Diamond Sports Group, which owns the 21 Bally Sports-branded RSNs, is not far behind. The listed telecom conglomerate plans to roll out its unbound OTT offer – Bally Sports – later this summer (Diamond Sports has the rights to five MLB clubs). Russo expects to see a number of similar offers introduced in markets across the country over the next 12-24 months.

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Independent local sports facilities will not be cheap. The NESN 360 will reportedly cost $ 29.99 / month. (or $ 329.99 / year), while Sinclair’s service is expected to sell for $ 19.99 / month. or $ 189.99 annually. Russo says that for DTC services to succeed at these price points, clubs need to start acting more as partners than content retailers.

This may require many clubs to develop new skill sets (remember that tickets are really the only thing they sell DTC) and operate differently than they have done in the past. In the past, teams have tried to help their broadcast partners by “providing production support and access. They were not concerned about how many subscribers were added to the service,” Russo said. [in the rights agreement] or encouraged [economically] In order to market these DTC streaming services, they will have a much more important role in registering people. “

The emergence of local streaming services is also likely to affect how future RSN agreements are structured and what they consist of. Russo envisions that RSNs tell the teams that they will pay the increase in rights applied for if The club comes up with a way to sweeten the pot for subscribers and is committed to promoting the service. For example, fans who sign up for an annual NESN 360 subscription will receive eight tickets to Red Sox games. But baseball teams have more ticket stocks than clubs in other sports, and it may not be possible for NBA or NHL organizations to offer that type of package deal.

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Russo suggested goods, promotional items, subscription content and / or entertainment services that could potentially be included in packages to entice fans to sign up. “It’s about providing a value proposition that justifies what may appear to be a high price point.” Expect to see a “laboratory for experimentation” in the coming months as teams and operators try to figure out which combinations resonate with consumers.

Sports betting is not yet legalized in the state of Massachusetts, but it is easy to imagine RSNs that create extra value for fans (and themselves) with the integration of a sports betting partnership. “They could offer [several hundred] dollars in free games if [the fan] sign up for the service, “said Russo. A binding may also allow the streaming service to add additional sports betting content to the platform – including sports betting-focused streams of games that will appeal to bettors.

Fenway Sports Group owns Red Sox and a controlling stake in NESN, so cross-marketing and collaboration between the two to promote NESN 360 should be easy. Russo also believes teams and networks owned by separate entities will find ways to work in harmony. “Their interests are so cohesive that there are good opportunities for cooperation and collaboration. … Both desperately need this to work. “

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