Despite Progress, Sports Remain a Streaming Pain Point

For years, even as streaming television options proliferated and cable bills skyrocketed, live sports were one of few things that kept millions of unhappy cable customers locked into traditional pay-TV. Steaming, at the time, just didn’t have a good answer for that, or at least not a convenient and legal one for consumers.

Now, as even the big media companies that control the sports networks are looking for life boats from cable TV’s sinking ship, sports are making their way over-the-top. But unfortunately, that’s not yet cause for consumers to cancel their cable subscriptions and celebrate.

Now, sports have become emblematic of the problem that has emerged as big media moves into the streaming-first future: too many apps and out of control costs.

A Challenge for Streaming

Sports represent some of the most popular entertainment in America. The major sports leagues, the NFL, NBA, MLB, and NHL are each power-houses on their own, while other sports like Tennis, Golf, Major League Soccer, and others also have huge fanbases. College sports are a universe unto themselves, with major athletic conferences commanding almost as much influence as the big pro leagues.

Where sports are unique is that they’re best enjoyed live, which has long been in conflict with streaming services that are synonymous with video on-demand. As little as 12 hours after a game ends, the suspense associated with it as gone, as the outcome is spoiled everywhere from news programs to water-cooler conversation.

Even highlights and commentary from games have short half-lives. Sports newscasts and the many analysis programs that bookend actual games are popular, but have virtually no re-run value a week later. That is in contrast to scripted content where an episode of a classic like I Love Lucy can still reel in viewers more than 70 years later. The pace of media environment around sports is simply much faster; games every day means yesterday’s content gets moved on from in favor of today’s, and tomorrow’s just as quickly.

Together all this means plugging sports into pre-existing systems designed for on-demand content, like Netflix and the other big streaming services, was itself a challenge in need of both a conceptual solution and a technical implementation of it.

Early attempts to stream live sports on a per-event basis have been fraught affairs. Major events like the Super Bowl have been prone to glitches and performance issues. In games where the action is high-speed and seconds make a difference, video that stutters, buffers, or pixelates can lead to big moments being missed entirely by viewers. This is even more of a risk to streamers that seek to offer pay-per-view sports, as is typical for top tier boxing and other combat sports.

The Financial Picture

Further complicating matters is the financial picture. While this has long been a contentious matter in the world of TV sports rights, it’s only grown more so as the various streaming services hemorrhage money. Sports hold the promise of being must-have content that could catapult a streaming service’s popularity, but the massive price tag associated with them could just as easily balloon their losses, leaving a black eye on the balance sheet of even a multi-billion dollar media empire.

Media companies have long been strained by high content costs, and developing original content for streaming services has been a costly undertaking. All the risk associated with developing first-party content is magnified with sports. Streaming rights can cost billions, but unlike shows and movies that can be re-watched years later, sports games lose their replay value in a matter of days, limiting the ability of sports to generate a return on investment in the long term.

This was less of a problem for traditional TV, where cable networks could pay any price, knowing they could easily pass costs on to millions of subscribers. This is a big reason for the rapidly skyrocketing cost of sports deals; sports leagues took full advantage. Even in the realm of cable and satellite TV, these days may be over, as Charter recently drew a hard line with ESPN-owner Disney in recent carriage negotiations. As cable providers confront their own post-cable future, reigning in the costs for sports networks or breaking them out of basic bundles may on the table for the first time.

While sports present unique challenges, they are also in many ways a microcosm of the challenges surrounding the transition from to streaming. Much like scripted content and the companies that create and deliver television shows, the sports ecosystem needs to find its own lifeboats before the ship sinks. While ESPN and other nation-wide media companies are already working on this, regional sports networks (RSNs) are already struggling, pinched by sky-high content costs and a dwindling cable subscriber base. These networks are canaries in the coal mine, as the problems they face today could be the same ones that hit the national sports networks down the road.

But for streaming service operators, passing on sports costs is much more difficult. Unlike cable TV deals, where a subscriber fee is guaranteed even when a household doesn’t watch one minute of ESPN, each subscriber to a direct-to-consumer offering must be acquired individually, and currently, at high cost. For streaming services, taking a chance on a major sports deal is effectively a loss-leader strategy. You’re counting on the popularity of sports to get people in the door and hoping you can recoup that over the life of the customer. This is currently a risky gamble, as consumers are rapidly churning out of these new subscriptions.

The Consumer Conundrum

Looking to consumer behavior, we find more challenges. As streaming services have proliferated and the market has fragmented, consumers have responded and adapted. Rather than pay as much as a cable bill to stay subscribed to so many streaming services, they’ve begun to “binge and bounce,” supercharging the churn rates of these services.

But with sports, this strategy doesn’t work. Sports seasons can last for many months, with games worth seeing almost every day. And as pointed out earlier, games are best watched in real-time, and lose most of their watchability shortly after they air. Nobody binges an entire season’s worth of their favorite team’s games the way they might binge a season of a sitcom. Few streaming services that offer sports at all feature old games on-demand even if that were an attractive option.

So for sports fans, who may want to watch games from multiple teams or multiple leagues, the options are few and expensive: subscribe to multiple streaming services long-term and likely pay as much as a cable bill in the process, or simply pay for cable TV and watch on the traditional cable and regional sports networks.

Neither of these options are affordable or convenient, and are unlikely to be embraced by consumers. This will remain an obstacle in the transition from cable and satellite to streaming, even as that transition is already underway. The need for a fix is urgent, before consumers adopt more challenging behaviors or turn to illegal options.

With many cable companies seemingly prepared to give up on offering traditional TV at all, even the money-machines traditional cable sports networks have always been face an existential threat. If the traditional pay-TV ecosystem faces further erosion, it will have a negative domino effect on the entire economics of sports without a solution to this problem. Various sports and individual games spread across dozens of streaming services with widespread confusion over where to access what will not work. It’s been bad enough for regular shows and movies, but it would be a disaster of a higher magnitude for sports.

Arguably, there has never been greater need of an aggregated, one-stop-shop solution. For sports viewing, it will be absolutely essential. FreeCast has the opportunity to be just that. It’s a neutral, agnostic platform that is already set up to both serve ads and collect subscription and pay-per-view payments. It would be easy for sports rights-holders to plug-in to and provides a variety of simple monetization options that would streamline the experience for consumers, while critically, controlling their cost as well.

The time to think about these problems and plan for them is now. An optimal solution will never be reached by waiting for a crisis and scrambling to react. We can see what’s happening with cable and satellite TV: they are on the way out. We see what’s happening with the shift to streaming: consumers are frustrated and it’s costing everybody money. We can also clearly see the fate of sports on streaming: they risk being an expensive boondoggle for companies that are already struggling with massive losses on direct-to-consumer video products. If the industry cannot fully embrace an alternative, and do so quickly, it will be a blow to entire industries.