Sports and television thrived together. Our future of entertainment will depend on whether streaming and sports can replicate this mostly happy partnership.
My colleagues recently reported that Amazon, Apple and YouTube may be willing to pay billions of dollars for popular sports like the National Football League and the National Basketball Association to move their games from television to tech streaming services.
For decades, broadcasters, including CBS and ESPN in the United States and Sky in Britain, have paid sports leagues a lot of money to be the only place people can watch games. Television money has made sports rich and influential in entertainment and culture. Sports broadcasts also made television rich and powerful.
Today’s newsletter looks at three questions that would be relevant if tech companies stuck with traditional televised games and moved more into streaming sports online.
1) Why do tech companies want to do sports?
It’s an obvious answer: companies want to attract subscribers to their video streaming services, and a lot of people love sports.
There are two unknowns for Silicon Valley executives. First, no one has yet proven that a bunch of people will subscribe to a streaming service to watch six-month baseball games or top-flight European soccer matches. (To be fair, only a few popular sports are currently available to watch online.)
Relatedly, it’s unclear whether the big tech companies will find it logical to pay sports leagues stupid money like old-school television does.
The math may not work out so well for streaming companies. Disney collects billions of dollars a year from cable companies to include television channels like ESPN in its programming, plus more from advertising. That’s a lot of money to pay for NBA games, squash or whatever.
Streaming subscription fees are not the same. The largest streaming company, Netflix, has about the same annual revenue as the relatively small television company Paramount Global, which owns the CBS and Comedy Central television networks and the Paramount+ streaming service. Streaming is amazing in many ways, but it may not be profitable enough to support the sports-industrial complex.
Counterpoint: Apple, Google, and Amazon have endless dollars and can afford to lose money to see if sports attract a bunch of new subscribers. But they also won’t hesitate to drop sports broadcasting contracts if they no longer serve corporate purposes.
2) Why do sports leagues want to broadcast?
Major sports leagues have two sometimes conflicting missions. They want as much money as possible and a huge audience for the games. Tech companies may offer the former, but not necessarily the latter.
Currently, sports on television have far more viewers than sports on the Internet. It’s actually surprising. 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 the Amazon Prime streaming service, Fox’s viewership is multiplied. During the Super Bowl, about 90 percent of viewers watch on a boring old TV, not on the Internet.
This is a dilemma for sports managers. They are thrilled that Apple, Amazon and Google can pour money out of them to broadcast sports. They also worry that streaming services could reduce viewership for sports, which could make their leagues, teams and players much smaller.
There’s a chance that sports leagues will take big money from tech companies — if the money is there. Or they will hedge their bets and keep the hottest stuff on TV and sell the lower profile games to the streaming companies.
3) What does this mean for us?
Probably higher streaming bills.
Anyone who pays for television — whether you watch sports or not — covers the cost when ESPN or CBS pay for the rights to broadcast college football games or March Madness basketball. These sports expenses have only increased over time.
This has made sports a double-edged sword in entertainment. The games are the most popular programs on television, and it’s a big reason why Americans continue to pay for cable or satellite television. But the rising cost of sports is also persuading people to turn away from television services.
Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahaha. If the software costs a lot more, the streaming subscription prices probably will too.
I don’t know what will happen next. I can sketch a scenario where streaming services have a long mutually beneficial marriage with sports, just like regular TV has for decades. It can also be great for fans, team owners and players.
I can also imagine a sports and streaming death spiral. If people get tired of the big bills to broadcast sports, then the leagues have less money and less fans.
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Before we go…
Mark Zuckerberg is eager (or desperate) to quickly turn his company around: My colleague Mike Isaac takes us inside Zuckerberg’s project to walk Meta through a difficult phase.
Related: Kylie Jenner Dislikes New Instagram: She is one of the biggest celebrities on the app complained about Instagram’s TikTok-like redesign with posts appearing based on a computerized assessment of what people might like. This could be a bad sign for Instagram. But people complain about app changes and then get used to them.
Apple AirTag against the chaos of air travel: You have to respect the ingenuity of people using Apple tracking devices to track down their lost luggage, as Bloomberg News explained. But AirTag won’t actually help you get your bags back. (Subscription may be required.)
The President of the United States has a better Zoom setup than you do: The Verge has analyzed President Biden’s “West Wing” technological equipment.
Hugs to that
Yo-Yo Ma plays the cello in the forest. This is the four minutes of beauty you deserve.
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