Will streaming save the sport or kill it?

Will streaming save the sport or kill it?

Sports and TV thrived together. Our future of entertainment will be shaped by whether streaming and sports can repeat that mostly happy 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 TV to tech streaming services.

For decades, television companies – including CBS and ESPN in the US and Sky in the UK – have been paying big bucks to sports leagues to be the only place people could watch games. TV money has made sports rich and influential in entertainment and culture. The airing of sports has also made TV rich and powerful.

Today’s newsletter examines three questions that would be relevant if tech companies followed the old-school television playbook and put more emphasis on airing sports online.

1) Why do tech companies want sport?

This is 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 to a streaming service to watch six months of top-tier European baseball or football matches. (To be fair, so far, few popular sports are available for online-only viewing.)

The related unknown is whether the big tech companies will find it logical to pay stupid sums of money to sports leagues, like old-school TV did.

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

The streaming subscription fees don’t have the same oomph. The largest streaming company, Netflix, has roughly the same annual revenue as a relatively small television 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 profitable enough to support the sports industrial complex.

A counterpoint: Apple, Google and Amazon have infinite dollars and can afford to lose money to see if the sport attracts a lot of new subscribers. But they won’t hesitate to abandon sports webcast contracts if they no longer meet corporate goals.

2) Why do sports leagues want streaming?

The great sports leagues have two sometimes conflicting missions. They want as much money as possible and they want a huge number of spectators for the games. Tech companies may offer the former but not necessarily the latter.

For now, sports on TV have far more viewers than sports on the internet. It is disconcerting, actually. Kevin Draper, a sports reporter for the New York Times, told me that when the same NFL game airs simultaneously on the Fox television network and the Amazon Prime streaming service, the audience on Fox is many times greater. During the Super Bowl, about 90 percent of viewers watch on boring old TV rather than online.

This is a dilemma for sports executives. They are thrilled that Apple, Amazon and Google can pour money on them for sports streaming. They are also anxious that streaming services can cut down on sports audiences, which could make their leagues, teams and players worth a lot less.

Chances are sports leagues will get a lot of money from tech companies, assuming the money is there. Or they’ll cover their bets and keep the most popular stuff on TV and sell the low-profile games to streaming companies.

3) What does this mean for us?

Probably higher streaming bills.

Anyone who pays for TV, regardless of whether they watch sports or not, pays the costs when ESPN or CBS pays royalties for college football games or March Madness basketball. Those sporting costs have only increased over time.

This has made sport a double-edged sword in entertainment. Games are by far the most popular TV programming and are a big reason Americans continue to pay for cable or satellite TV. But the rising cost of sport is also convincing people to leave the television service.

Apple, YouTube, and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But ahahahahahah. If programming costs a lot more, streaming subscription prices probably will too.

I don’t know what will happen next. I can sketch out a scenario where streaming services have a long mutually beneficial marriage to sports, as conventional TV has for decades. This could also be great for fans, team owners and players.

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

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

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