Will streaming save the sport or kill it?

Sports and television thrive together. Our entertainment future will be shaped by whether streaming and sports can replicate this mostly happy partnership.

My colleagues reported recently that Amazon, Apple and Google’s 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 technology streaming services.

For decades, broadcasters – including CBS and ESPN in the United States and Sky in the UK – have paid sports leagues loads of money to be the only place people can watch games. Television money has made sports rich and influential in entertainment and culture. Sports broadcasting also made television rich and powerful.

Today’s newsletter examines three questions that would be relevant if tech companies were to follow the old-school TV playbook and move more broadly into online sports broadcasting.

1) Why do tech companies want 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 bosses. First, no one has yet proven that a bunch of people will sign up and stick with a streaming service to watch six months of baseball games or top tier European soccer matches. (To be fair, so far few popular sports are available to watch online only.)

A related unknown is whether the big tech companies will find it logical to pay sports leagues stupid amounts of money like old-school TV does.

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

Streaming subscription fees don’t have the same effect. The largest streaming company, Netflix, has nearly the same annual revenue as a relatively small TV company, Paramount Global, which owns the CBS and Comedy Central television networks and the Paramount+ streaming service. Streaming is great in many ways, but it may not be lucrative enough to support the sports industrial complex.

Counterpoint: Apple, Google and Amazon have endless dollars and can afford to lose money to see if the sport brings in a bunch of new subscribers. But they also won’t hesitate to drop sports webcast contracts if they no longer meet corporate goals.

2) Why do sports leagues want streaming?

Major sports leagues have two sometimes conflicting missions. They want as much money as possible and they want huge viewership for the games. Tech companies can offer the former, but not necessarily the latter.

For now, sports on television have far more viewers than sports on the Internet. It’s actually puzzling. 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 many times greater. During the Super Bowl, about 90 percent of viewers watch on boring old television, not online.

This is a dilemma for sports executives. They are excited that Apple, Amazon and Google might give them money to broadcast sports. They also worry that streaming services could reduce viewership of the sport, which could make their leagues, teams and players much less valuable.

Chances are, the sports leagues will take the big bucks from the tech companies — assuming the money is there. Or they’ll hedge their bets and keep the hottest stuff on TV and sell the lower-profile games to streaming companies.

3) What does this mean for us?

Probably higher streaming bills.

Anyone who pays for television — whether you watch sports or not — picks up 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 turned sports into a double-edged sword in entertainment. The games are the most popular television program ever, and they’re a big reason why Americans continue to pay for cable or satellite television. But the rising cost of sports is also persuading people to ditch TV services.

Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahahahaha. If programming costs a lot more, 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 marriage of mutual benefit with sports, as conventional television has done for decades. This can also be great for fans, team owners and players.

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

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


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