Will streaming save sports or kill it?

Will streaming save sports or kill it?

Sports and television have flourished together. Our entertainment future will be shaped by whether streaming and sports can repeat the happiest 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 move their games from television to tech streaming services.

For decades, broadcasters – including CBS and ESPN in the US and Sky in the UK – have paid sports leagues a fortune to be the only place people can watch games. The TV money has made the sport wealthy and influential in entertainment and culture. Broadcasting sports made television rich and powerful as well.

Today’s newsletter looks at three questions that would be relevant if tech companies follow the old-school TV playbook and get bigger into broadcasting sports online.

1) Why do tech companies want sports?

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

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

The related unknown is whether big tech companies will find it logical to pay sports leagues stupid amounts, the way old-school TV has.

The math may not work as well for streaming companies. Disney collects billions of dollars a year from cable companies to include TV channels like ESPN in their programming lineup, and more from advertising. That’s a huge pile of money to pay for NBA games, squash or whatever.

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

A counterpoint: Apple, Google and Amazon have endless dollars and can afford to lose money to see if sports draw a bunch of new subscribers. But they also won’t hesitate to drop sports broadcast contracts if they no longer suit 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 numbers of viewers to play with. Technology companies may offer the first, but not necessarily the second.

Currently, sports on TV have far more viewers than sports on the internet. It’s puzzling, actually. Kevin Draper, a sports reporter for The New York Times, told me that when the same NFL game is simulcast on the Fox television network and on Amazon Prime’s streaming service, Fox’s viewership is many times greater. During the Super Bowl, around 90 percent of viewers watch boring old TV instead of online.

This is a dilemma for sports managers. They are excited that Apple, Amazon and Google can rain money on them to stream sports. They are also anxious that streaming services could reduce sports viewership, which could make their leagues, teams and players worth far less.

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The odds are that 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 sell streaming companies the lower profile games.

3) What does this mean for us?

Probably higher electricity bills.

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

It has turned sports into a double-edged sword in entertainment. Games are by far the most popular television programming, and they are a big reason why Americans continue to pay for cable or satellite television. But the rising cost of sports is also persuading people to ditch TV services.

Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahahaha. If programming costs much more, the prices of streaming subscriptions are likely to as well.

I don’t know what will happen next. I can outline a scenario where streaming services have a long marriage of mutual benefit with sports, as conventional TV has for decades. This can also be good for fans, team owners and players.

I can also imagine a death spiral for sports and streaming. If people get tired of huge electricity bills for sports, the leagues have less money and fewer fans.

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Yo-Yo Ma plays the cello in a forest. It’s four minutes of beauty you deserve.

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