xudash
09-24-2016, 02:27 PM
Very interesting - - from UCONN's CR board Re monetizing sports media down the road:
Affiliate fees are just what cable networks collect from the cable carriers for their subscriber base.
So as we move away from TV and into streaming. Who can generate enough revenue to pay a league or conference 9 or 10 figures annually without have the cable base of 70-90 million passive subscribers.
Here is the rub:
Let's say ESPN creates ESPN Now and you can stream all the networks for 19.99 a month.
They can't do this without renegotiating their contact language with every cable carrier in the country.
If you are TWC or Comcast - if ESPN is going direct why are you going to risk your subscriber base by passing along $8-$9 a month for the ESPN family of stations?
It's an extremely tricky model:
1. The capacity needed to deliver live HD broadcasts to a big audience is really expensive.
2. You now need an entire customer service model to handle billing and things like that - or you have to pay for it.
3. Obviously sports ebbs and flows - people are going to drop in and out constantly based on what they are fans of.
And the really difficult part: How can you possibly price it where you can generate the revenue you get now?
19.99/24.99 a month? Doesn't get you anywhere near the revenue you need. 39.99? You can't get anywhere near the amount of subs that you need.
Sports contracts are based on the revenue generated by 50-60 million cable subs who never watch sports. I really don't see anyway they can be sustained without someone figuring out a way to monetize non-viewers the same way they are today - and I have no idea how that would even be possible.
Who know maybe VR technology is amazing 10 years ago and people
are willing to pay thousands to see the game from inside Tom Brady's helmet. I get how fast techonology moves - but I also think there is som risk that a lot of leagues and teams think they are sitting on future revenue that is never going to materialize because networks are going to go belly up.
If 30 million cable subs disappear in the next 5 years and the carriers tell stations like YES to go pound sand how do they make the rights payments?
Separate issue but I don't get the impression that people under 30 have as much passion for sports as people over 30 and as the boomers die off it's going to be even harder to monetize people. Throw in that the sports landscape is getting even more fractured outside of the NBA and NFL.... I certainly wouldn't bet on the television contracts in say 2021 being higher than today.
Affiliate fees are just what cable networks collect from the cable carriers for their subscriber base.
So as we move away from TV and into streaming. Who can generate enough revenue to pay a league or conference 9 or 10 figures annually without have the cable base of 70-90 million passive subscribers.
Here is the rub:
Let's say ESPN creates ESPN Now and you can stream all the networks for 19.99 a month.
They can't do this without renegotiating their contact language with every cable carrier in the country.
If you are TWC or Comcast - if ESPN is going direct why are you going to risk your subscriber base by passing along $8-$9 a month for the ESPN family of stations?
It's an extremely tricky model:
1. The capacity needed to deliver live HD broadcasts to a big audience is really expensive.
2. You now need an entire customer service model to handle billing and things like that - or you have to pay for it.
3. Obviously sports ebbs and flows - people are going to drop in and out constantly based on what they are fans of.
And the really difficult part: How can you possibly price it where you can generate the revenue you get now?
19.99/24.99 a month? Doesn't get you anywhere near the revenue you need. 39.99? You can't get anywhere near the amount of subs that you need.
Sports contracts are based on the revenue generated by 50-60 million cable subs who never watch sports. I really don't see anyway they can be sustained without someone figuring out a way to monetize non-viewers the same way they are today - and I have no idea how that would even be possible.
Who know maybe VR technology is amazing 10 years ago and people
are willing to pay thousands to see the game from inside Tom Brady's helmet. I get how fast techonology moves - but I also think there is som risk that a lot of leagues and teams think they are sitting on future revenue that is never going to materialize because networks are going to go belly up.
If 30 million cable subs disappear in the next 5 years and the carriers tell stations like YES to go pound sand how do they make the rights payments?
Separate issue but I don't get the impression that people under 30 have as much passion for sports as people over 30 and as the boomers die off it's going to be even harder to monetize people. Throw in that the sports landscape is getting even more fractured outside of the NBA and NFL.... I certainly wouldn't bet on the television contracts in say 2021 being higher than today.