Sports and TV have grown up together. Our entertainment future will be shaped by whether streaming and gaming can repeat a mostly happy partnership.
My colleagues recently reported that Amazon, Apple and Google’s YouTube are paying billions of dollars to popular sports such as the National Football League and National Basketball Association to move their games from TV to tech streaming services. Can be prepared.
For decades, TV companies – including CBS and ESPN in the United States and Sky in the United Kingdom – have paid a bunch of money to sports leagues just to create a place where people could watch the games. TV money has made sports rich and influential in entertainment and culture. Sports broadcasting also made TV rich and powerful.
Today’s newsletter looks at three questions that will be relevant if tech companies follow the old-school TV playbook and move to broadcast sports online.
1) Why do tech companies want games?
It’s an obvious answer: Companies want to attract subscribers to their video streaming services, and many people love sports.
There are two unknowns for Silicon Valley bosses. First, no one has yet proven that a group of people will sign up and stick with a streaming service for six months to watch baseball games or top-tier European soccer matches. (In fairness, so far, a few popular games are only available to watch online.)
A related unknown is whether big tech companies will find it logical to pay sports leagues stupid amounts of money, like old-school TV has.
The math doesn’t work out for streaming companies either. Disney collects billions of dollars annually from cable companies to add TV channels like ESPN to its programming lineup, and more from advertising. That’s a huge wad of cash to pay for NBA games, squash or whatever.
Streaming subscription fees are not the same. The largest streaming company, Netflix, has the same annual revenue as a relatively small TV company, Paramount Global, which owns the CBS and Comedy Central TV networks and the streaming service Paramount+. Streaming is wonderful in many ways, but it may not be profitable enough to sustain the sports industrial complex.
A counterpoint: Apple, Google, and Amazon have unlimited dollars and can afford to lose money to see if a game generates a bunch of new subscribers. But they also won’t hesitate to terminate sports webcast contracts if they don’t suit corporate goals.
2) Why do sports leagues want streaming?
Big-time sports leagues have two sometimes conflicting missions. They want more money, and they want more viewers for the games. Tech companies may offer the first but not necessarily the second.
For now, the viewership of sports on TV is far greater than that of sports on the Internet. This is actually surprising. New York Times sports reporter Kevin Draper told me that when the same NFL game airs simultaneously on the Fox television network and Amazon Prime’s streaming service, Fox has many times the viewership. During the Super Bowl, About 90 percent of viewers Watch on boring old TV instead of online.
This is a dilemma for sports executives. They are thrilled that Apple, Amazon and Google can shower cash on them to run games. They also worry that streaming services could reduce sports viewership, devaluing their leagues, teams and players.
Odds are that sports leagues will take big money from tech companies — assuming the money is there. Or they’ll hedge their bets and keep the hottest stuff on TV and sell lower-profile games to streaming companies.
3) What does this mean for us?
Probably a higher streaming bill.
Anyone who pays for TV — whether you watch sports or not — is setting a cost when ESPN or CBS pay for the rights to broadcast college football games or March Madness basketball. . The costs of these games have only increased over time.
This has made sports a double-edged sword in entertainment. Games are by far the most popular TV programming, and they’re a big reason why Americans continue to pay for cable or satellite TV. But the rising cost of sports is also prompting people to ditch the TV service.
Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahaha. If programming costs a lot, streaming subscription prices can too.
I don’t know what will happen next. I can sketch a scenario in which streaming services have a long marriage of mutual benefit with sports, as traditional TV has done for decades. It can also be great for fans, team owners and players.
I can also imagine the sports and streaming death spiral. If people get tired of huge streaming bills for sports, the league has less money and less fans.
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Before we go…
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