My newest monthly opinion piece for The Information is up, “It’s Not TV, It’s the Customer Experience”.
I wrote about the upcoming releases of the Game of Thrones prequel “The House of Dragon” on HBO Max, “The Lord of the Rings: The Rings of Power” on Amazon Prime Video, and Star Wars prequel series“Andor” on Disney+. The next few weeks will be a key test for Amazon’s, Disney’s and Warner Bros. Discovery’s streaming business models. Only two of them seem poised for long-term success.
I’ve learned not to spend too much time focusing on sports streaming.
Part of that is incentives - I have yet to see a spike in sign-ups after I write about the topic.
Part of that is expertise - there are experts on the sports TV marketplace out there whose work I respect and they tweet more often than they write.
Part of that is transparency - we tend to find out a deal happened or someone won a bidding war after secret negotiations and bidding took place.
Part of that is the inevitability of change - the Regional Sports Networks (RSN) model is most vulnerable to cord-cutting, if not a primary factor behind it, and there is yet to be any promising alternative model to emerge.
But most of all it’s the complexity - streaming has made sports distribution deals highly technical and somewhat convoluted (See: The English Premier League on Peacock).
That said, sports rights are the topic du jour this week.
Paramount spent double its previous deal for the rights to the UEFA Champions League broadcast, beating out Amazon in the process;
Activist investor Dan Loeb has taken a stake in Disney and is pushing for a spin-off of ESPN; and,
The Big Ten conference announced a seven-year rights agreement worth $8B with Fox, CBS, NBC and Peacock which will run from July 1, 2023 through the 2029-30 football season.
I think all the billions behind these sports rights deals are speculative, and up being perverse incentives for legacy media streamers to experiment at a time when they *need* to figure out what audiences will stream at scale.
The Mark Cuban Perspective
A favorite quote of mine from NBA owner Mark Cuban (which I wrote about last in March 2021) is from an interview he gave to SportsTechie in April 2020. It’s worth re-reading whenever a new sports streaming rights deal is announced:
One of the things that’s changed dramatically in terms of making our games available is that we’ve gone from a bandwidth-constrained environment on paid TV to a non-bandwidth-constrained environment. … With the Mavericks, we’re having conversations: Can we have three, four, five streams of the same game that’s going on traditional TV? You might have one where you have Twitch-like announcers; you might have two of your favorite YouTubers that are doing another stream; you might have your traditional broadcasters doing another stream; you might have a players-only doing another stream. We don’t care if there’s four, five, six streams—we care about the aggregate audience. By setting the priority of being an aggregate audience, then we can do things to experiment and try a lot of different things.
Then there’s the element of gambling. You can have a gamblers feed where it’s geared toward the prop bets going on right now. That might be an element for paid TV that’s kind of a salvation. One of the problems with streaming is that you don’t know what’s going to buffer or when, and you don’t know if everybody is getting the feed at the same time. There’s a delta between a satellite feed and a cable feed and even a good stream—and that’s an issue for gambling on some level, maybe 5G changes that with low latency. But there’s a unique opportunity to juice up paid-TV subscriptions and get gamblers in particular say, ‘There’s this unique paid-TV feed that’s geared toward prop bets, gambling, so I know what’s happening.’
Broadly, Cuban is making two points:
Streaming has enabled the concept of "aggregate audience" across "four, five six streams", and that should be a team's priority in broadcast; and,
The growth of sports betting may counterintuitively save the pay-TV business from disruption of streaming.
Slow, Iterative Experiments
Cuban’s point is that demand is fragmented in multiple ways in both linear (sports betting and the casual fan) and in streaming (multiple streams of the same game).
These recent sports rights deals all reflect fragmenting demand across streaming and linear, and they frame this fragmentation as binary: sometimes a deal is exclusively TV (FOX and The Big Ten), sometimes it is exclusively streaming (Amazon Prime and NFL’s Thursday Night Football), and sometimes it is on both (Paramount and the UEFA Champions League).
We have already seen one version of this fragmentation via Turner Networks, which offered alternate live streams of this year's NBA All-Star game across both broadcast (TNT, TBS) and social media (Twitter livestream where fans could vote for the player they want an iso-cam to follow exclusively over the entire second half).
ESPN also has had success with Peyton and Eli Manning-led “Manningcast”, Paramount had success with a Nickelodeon-themed NFL playoff game, and in past seasons Amazon has experimented with alternate audio tracks for Thursday Night Football (TNF). Hosts included Andrea Kremer and Hannah Storm, former NFL scouts, and a variety of Twitch streamers.
For this season, Amazon recently announced the hosts of Dude Perfect, the popular YouTube and social media trick shot personalities, will host an alternate stream of TNF.
Experiments that lead to….?
There are experiments aplenty, but where is it all headed? Cuban’s prediction is “aggregate audience” - a concept where the market values the sum of all parts more than the part it values most (linear). But I think the prediction misses a more important question: are the likes of NBCUniversal, Paramount and even Amazon running the “right” experiments?
Meaning, Mark Cuban is a digital native and his career has been built off A/B tests. So his quote reflects an intuitive ease of understanding of where this may all be headed that isn’t reflected in the slow, iterative evolution of Amazon Prime Video’s, Peacock’s and Paramount+’s user interfaces, to date.
Ultimately these experiments will need to lead to streaming business models that justify the billions of dollars in investment. In other words, these extraordinary billion dollar rights deals have long-term certain outcomes, but are built upon the uncertainty of what consumers will want from sports streaming distribution, what it will ultimately look like, and how it will be monetized.
All these experiments suggest no one has figured out what streaming users will consume at scale instead of linear (only 5MM turned out to watch the Super Bowl on Paramount+ in January).
And this is ultimately why I tend not to write about sports streaming: given that no one has yet to figure out an optimal model for streaming sports, these speculative billion dollar deals may only lead to perverse incentives that avoid the types of failures experiments bring and the lessons they teach. With perverse incentive structures like these, no one will want to experiment with upsetting shareholders.