Sports fans love their teams – why else would my daily mental health be so maddeningly linked to the performance of “my” teams? But is that love worth $30 a month? The Boston Red Sox and the Boston Bruins – coincidentally, my lifelong teams – are about to test that proposition with the launch of the first direct-to-consumer streaming app for live regional sports. The way it plays out could resonate widely in the lucrative sports media market.
The inextricable link between the sports business and the TV business has never been closer. In 2021 according to the Sports Business Journal, 95 of the top 100 most highly rated TV programs were live sports. Sports isn’t just the business driver of ESPN, but for every major media company with broadcast and cable networks. NBCU has the NFL’s Sunday Night Football and the Olympics, CBS and Fox have longstanding NFL ties, and the most recent upfront presentations showed off the importance of NBA basketball, NHL hockey and Major League Ball for Turner’s networks under Warner Bros. Discovery. Of lesser ratings prominence but growing youth appeal are properties such as soccer with the World Cup and the UK’s Premier
Despite the fact or maybe because the overall consumption of sports media remains strong, NESN and its NESN 360 app are plunging into uncharted streaming territory, especially with its $30 per month price point. Certainly, the service can boast marquee year-long sports programming with baseball and hockey in a rabid fan market, but there are only a few hours per day maximum of live events, with hours of wrap-around studio programming, talk radio simulcasting, bass fishing and food guides.
NESN 360 is asking a lot of consumers navigating a basketful of still-new streaming services from every major media company, and you’re charging double the price of HBO Max (the ad-free tier) and 50% more than the highest price you can pay for Netflix
Who are the sports fans of the future and what is the business model to reach them?
Despite the overall scale of sports audiences, viewership of live TV sports, especially MLB, clearly skews older than the population at large. In part this is a product of who still subscribes to traditional multichannel video packages. But the “one size fits all” packaging also helps draw in not just the household breadwinners but the young members of their families as well. As practically the last bastion of large-scale live TV viewing, this scale is critical for advertisers. The acceleration of cord-cutting of the traditional bundle, helped not coincidentally by the array of enticing streaming options, undermines the hallowed dual revenue stream of monthly subscriber fees as well as the potential audiences to drive ratings and ad dollars.
But is the reliance on a high-priced streaming service the long-term answer? I’ll be watching to see not just the gross numbers but the demographic make-up of NESN 360 buyers. On cable the price of NESN is baked in. Will young families that don’t subscribe to cable make the separate and pricey decision to add this service? Will those that do subscribe be a wealthy-skewing demographic that might be attractive to advertisers but excludes a big portion of the populace? And for the inevitable large numbers of young single people and families that don’t sign up, where do professional sports find and nurture the next generation of fans? I don’t the answer will be plying young kids with their own Draft Kings accounts.
How many more blows can the regional sports network (RSN) business take?
Beginning with the Madison Square Garden (MSG) network in the 1980s, most passionate sports fans watched their local teams on RSNs. High monthly wholesale sub fees and big local ratings have driven this business for a generation. But it’s getting more and more difficult, largely due to the broader cord-cutting phenomenon, which has seen RSNs lose 20% of their household subscribers in the last decade. But the lure of streaming outlets is also further undermining the RSN golden goose.
Fox owned a slew of regional sports nets which they sold to Disney, which in turn sold most of them to Sinclair. Almost as soon as Sinclair took ownership of what they have rebranded as Bally’s Sports Networks, they seemed to grasp the challenges confronting them. They have been focused on creating new direct-to-consumer streaming apps for delivering the live sports that heretofore were exclusively available on RSNs.
In fact, everywhere you look, games are moving from RSNs to streaming. Amazon
Is this a one-off or a trend?
The trending parts of the equation here are clear. A continuing downdraft of multichannel video subscribers, sub fees and advertising dollars in linear TV. Little doubt that streaming is going to play a central role in live sports viewing over time. But what about the existence of media middlemen such as RSNs and their media company owners? Boston and New England form an unusual if not unique sports market but NESN is not the only RSN owned by teams themselves. Do team owners increasingly take charge of their own destiny? Will other teams follow suit with not only NESN’s strategy, but their pricing approach? Just like with live games themselves, we’ll have to watch to find out the outcome.