The road from pay TV bundles to streaming live sports is, and will be, bumpy
The YES Network broadcasts the majority of Yankees games each season. Credit: E.H. Wallop
Feeling confusion and consternation about the state of sports television? Join the club. Sports and media executives are right there with you.
No one really knows how this is going to play out over the next five or 10 years, short of a time traveler visiting from 2030.
(If it’s Biff Tannen, tell him to bring me an extra copy of Grays Sports Almanac.)
But we do know one thing for certain: The sports media business as people under age 50 or so have known it for their entire TV-watching lives is not an option.
The evidence is all around us.
Fans got a taste last baseball season, when trying to figure out where to watch the Yankees was like a game of “Where’s Oswaldo Cabrera?”
Then came news this week that MSG Networks will debut a direct-to-consumer service this summer, at last providing a detour past the traditional pay TV bundle.
The YES Network is expected to announce a similar plan soon, and eventually so will everyone else in the business.
It is just one part of the tectonic shifts roiling the industry.
This topic is best addressed by business school professors and trade publications, but let’s attempt a superficial, oversimplified primer here:
For the past 40 years or so, the “dual revenue stream” that allowed national and local outlets to both charge and sell advertising for content was a gold mine.
The price distributors paid for live sports rose over those decades, but the cost to sports fans was mitigated by non-sports fans also paying for expensive sports channels.
Call it TV socialism.
In effect, we subsidized their ability to watch HGTV for a reasonable price, and they did the same for us with ESPN – which is vastly more expensive.
The system worked well, and still does, for multi-person families with diverse interests. Not so much for single folks whose taste in Judges runs more toward Judy than Aaron.
Many – you can’t see me, but I’m raising my hand – called for a fairer and more rational system with more a la carte options, but that mostly was a non-starter.
Things began to change over the past decade with the rapid growth of streaming options that require only an internet connection, not a cable box or satellite dish.
Finally armed with the technology to do so, non-sports fans began to drift from pay TV bundles, and younger consumers never adopted bundles in the first place.
Some distributors have pushed back against even carrying certain costly regional sports networks (as the likes of YES, SNY and MSG are known in the business), figuring that those who don’t care outnumber those who are upset enough to bolt.
The net result is a crisis in the RSN business, with Sinclair’s many Bally channels near bankruptcy and Warner Brothers Discovery set to ditch RSNs altogether.
There is still too much money to be made in bundles to abandon them yet, so for most avid sports fans – especially in New York – the status quo mostly will hold for a while.
But sports leagues and media companies are scrambling to adapt to a new reality and hunt down viewers (and their wallets) where they actually live.
In the short term, this is causing a massive disruption, and is costing fans money, as in the Yankees’ new YES/Fox/ESPN/Apple TV/Amazon Prime/Peacock world.
To put a kind spin on it, this is an unavoidable transition period that will require everyone’s patience. To put it more realistically, it’s a mess!
MSG’s $29.99 per month asking price for its streaming service – the same NESN charges for the Boston Red Sox and Bruins – is intentionally aggressive.
Remember, this stuff still is mostly experimental, including the pricing.
And if direct-to-consumer costs are set too low, it could undermine the pay TV bundle, which for years has been kept afloat largely by its exclusive sports content.
Fans in cities with struggling RSNs need not worry about games going away.
Leagues, notably Major League Baseball, cannot and will not allow that to happen. So MLB figures to step in in places such as Pittsburgh, regain digital streaming rights for itself, and figure out the economics later.
But those economics are a key point. While it is true that sports fans now must pay their own way after losing non-sports fans’ involuntary contributions, they still have the power to say no.
For those who slept through ECON 101, if no one pays the going rate for this stuff, prices eventually will come down.
And if prices eventually come down, owners and players eventually will extract less money from your pocket to be deposited into theirs.
By 2030, we will have a far better sense of the winners and losers in this high-stakes game. But from here to there, it will be a rocky, unsettling road.
It already is.
Neil Best first worked at Newsday in 1982, returned in 1985 after a detour to Alaska and has been here since, specializing in high schools, college basketball, the NFL and most recently sports media and business.
