The Media Industry is Long Overdue for a Sports Solution

Sports are at the root of some of the media industry’s longest-standing and most intractable problems. High content costs, passed on to consumers as high bills, are what kicked off the cord-cutting revolution. Now that sports are beginning their own transition to streaming, the old unsolved problems that stem from sports could be exacerbated, hitting consumers, the media companies, and even the sports leagues themselves.
The shift to steaming has changed the landscape for television programmers, and while sports are in many ways a different beast from scripted studio content, it’s foolish to believe that they are immune to the disruption that has upended so much of the media industry.

Sports Have Long Driven High Content Costs

America is addicted to big league ball games, and this has long made sports a must-have. Or, put another way, a potent weapon for whoever is wielding them in the many media industry negotiations that all flow into what a consumer pays for TV.

The major sports leagues know they can demand any price for TV rights, and they’ve not been shy about doing just that. Historically, the TV networks have always paid up, and then they pass those costs on to the TV providers and their customers, by raising carriage/re-trans fees and bundling numerous less popular channels with those carrying the must-have sports games. The TV providers have to those costs on to consumers in the form of skyrocketing TV bills.
At every step in the process, a “must have” has been used squeeze higher and higher prices out of the next party, ultimately the consumer is the one stuck with the tab.

While it might not seem obvious at first, the fate of sports and the fate of streaming are intertwined. One could argue that cord-cutting and the move to OTT as the primary delivery mechanism for television is a direct result of the high cost of pay-TV, of which sports are the biggest driving factor. Sports have also long been one of the only things keeping many consumers subscribed to cable or satellite. In more recent years, the fates of virtual pay-TV packages have hinged on sports as well. And now, with sports increasingly going over-the-top themselves, and particularly with the upcoming launch of Venu, the streaming paradigm could face further disruption with sports at the core yet again.

Venu isn’t the only industry-altering disruption lurking out there. Charter’s recent hard bargain with Disney heralded a new era too. Disney, already on the hook for ESPN’s sports deals, couldn’t afford to lose the nation’s second largest cable company. Where ESPN once allowed Disney to dictate terms, Charter had them boxed into a corner. This new dynamic means those pricy sports rights could now be a hot potato rather than a king-maker. This has also contributed to the crisis among regional sports networks (RSNs).

Byzantine Sports Rights Becoming a Big Mess

The widespread shift from traditional TV to streaming is complicating matters on the sports front. The game of passing off astronomical costs only worked because every TV consumer expected everything. Sure, different networks could vie for the most desired leagues and games, but these were simply different channels within a single product from the consumer perspective: their cable subscription. It didn’t matter what network had the rights to a game, all a consumer had to do was change the channel.

But as sports have begun the transition to streaming, this is no longer the case. A game on another cable channel is easy to get to, but a game that’s on another streaming service requires paying another monthly subscription—a significant added expense and complication to the viewing process.

Venu, the upcoming joint venture between Warner Bros Discover, Disney, and Fox, is expected to create a sports-based “super app.” While media execs are confident this will make Venu a must-have, it’s a new must have on top of whatever a consumer today is already subscribed to.

Even if a user subscribes to Venu, some games will remain exclusive to cable channels, while others remain scattered about various streaming services from Amazon Prime Video, Paramount Plus, Peacock, and others.

For consumers, getting all the sports one wants to watch is becoming a cumbersome and unaffordable. It’s only a matter of time before these problems begin to roll back up hill. With a dozen different apps trying to serve sports, none of the big media companies will be able to keep enough consumers subscribed for those hefty sports contracts to be profitable. Eventually that new problem flows back to bite the sports leagues themselves. If these multi-billion dollar TV deals can’t be easily monetized as they were in the past, there will no longer be blank checks for sports.

A “Pick and Pay” Solution is Needed

While Venu will certainly have some impact on the sports and streaming landscapes, it’s not a solution to this coming catastrophe. But as a company focused on industry-wide streaming solutions, FreeCast sees parallels between sports and other types of content. Namely: duplicated costs and a degraded consumer experience, as multiple apps are now trying to compete to do what was once done via a single service (old pay TV).

Getting to a real solution requires thinking from the consumer perspective. Consumers can be grouped into two buckets, albeit with some overlap between them. The first are team fans—they have their favorite teams, sometimes (but not always) from their local market, and they want to follow all of those teams’ games, whether they’re in a playoff game or a pre-season game against a league standing basement-dweller. The other are fans of a particular sport. They want to see the championship-contending teams, the league’s biggest stars, the hot matchups, the playoffs, and other high-profile games.

Consumers must be able to “pick and pay”. Either pick their favorite teams, or their favorite leagues, and pay for a package that gives them most, if not all, of those games they’re interested in. This is a genuine industry need, and it’s just not possible in the current environment with sports rights for even a single league spread across multiple different media empires.

Not solving this problem could risk viewers’ engagement with their favorite sports, shaking the foundations not just of the media industry, but an American institution. In the more immediate term, the flow of dollars from individual consumers to those big sports leagues could be disrupted. Sure, the networks that paid up for sports rights might get left holding the bag at first, but the more that happens, the harder it will be for those massive TV contracts to remain viable as they are now. Both long-term and short-term, there’s potential for major value destruction if the streaming of sports isn’t managed in an organized and accessible way. And the current free-for-all approach of awarding rights to dozens of different networks and platforms is just not it.