NESN is testing whether sports fans pay $30/month to stream their team

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sports fans to like their teams – why else would my everyday mental health be so infuriatingly tied to the performance of “my” teams? But is this love worth $30 a month? Boston Red Sox and Boston Bruins – coincidentally, my lifelong teams – are about to test this proposition with the launch of the first direct-to-consumer streaming app for live regional sports. How this plays out could resonate widely in the lucrative sports media market.

The inextricable link between the sports industry and the television industry has never been closer. In 2021, according to the Sports Business Journal, 95 of the top 100 rated television programs were live sports. Sports is not just the business engine of ESPN, but of all major media companies with broadcast and cable networks. NBCU has NFL Sunday Night Football and the Olympics, CBS and Fox have longstanding ties to the NFL, and the most recent initial pitches have shown the importance of NBA basketball, hockey of NHL and Major League Ball for Turner’s networks under Warner Bros. Discovery. Properties like football with the World Cup and the UK premier are of lesser importance, but are increasingly appealing to young people
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League.

Despite or perhaps because overall sports media consumption remains strong, NESN and its NESN 360 app are diving into uncharted streaming territory, especially with its $30 per month price tag. Sure, the service can boast big-name year-round sports programming with baseball and hockey in a rabid fan market, but there are only a few hours a day maximum of live events. live, with hours of studio programming, talk radio simulcasts, bass fishing and food guides.

NESN 360 asks many consumers to browse through a basket of still-new streaming services from every major media company, and you’re charging double the price of HBO Max (the ad-free tier) and 50% more than the price the highest you can pay for Netflix
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. On the other hand, given that the average Red Sox game ticket in 2020 is $136 (which doesn’t include beer, hot dogs, or parking), maybe $30 for a month for a flood of matches doesn’t seem so crazy to some people. Anyway, I have a few questions.

Who are the sports fans of tomorrow and what is the business model to reach them?

Despite the overall magnitude of sports audiences, viewership for live televised sports, especially MLB, is clearly older than the population as a whole. It’s partly a product of who still subscribes to traditional multi-channel video plans. But the “one-size-fits-all” packaging also appeals not only to breadwinners, but also to younger family members. Virtually the last bastion of large-scale live television, this scale is essential for advertisers. The accelerating cord-cutting of the traditional package, aided not coincidentally by the array of enticing streaming options, undermines the hallowed double revenue stream of monthly subscription fees as well as potential audiences to generate ratings and ratings. advertising dollars.

But is resorting to a high-priced streaming service the long-term answer? I’m going to look to see not just the raw numbers, but also the demographics of NESN 360 buyers. On cable, the price of NESN is embedded. Will young families who don’t have cable make the separate and expensive decision to add this service? Will those who subscribe be a wealthy demographic that might be attractive to advertisers but excludes a large portion of the population? And for the inevitable large number of young singles and families who don’t sign up, where does professional sports find and nurture the next generation of fans? I don’t think the answer will be to have young children play with their own Draft Kings accounts.

How many more blows can the regional sports network (RSN) company take?

Beginning with the Madison Square Garden (MSG) network in the 1980s, most avid sports fans watched their local teams on RSNs. High monthly fees for wholesale contractors and strong local ratings drove this business for a generation. But it’s getting harder and harder, in large part because of the broader cord-cutting phenomenon, which has seen RSNs lose 20% of their domestic subscribers over the past decade. But the lure of streaming outlets also further undermines RSN’s golden goose.

Fox owned a slew of regional sports networks which they sold to Disney, which in turn sold most of them to Sinclair. Almost as soon as Sinclair took over what they renamed Bally’s Sports Networks, they seemed to grasp the challenges they faced. They focused on creating new direct-to-consumer streaming apps to stream the live sports that were hitherto exclusively available on RSNs.

In fact, everywhere you look, games are moving from RSNs to streaming. Amazon
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Prime now has a list of exclusive MLB games, as does AppleTV+. Even Peacock launched an exclusive national broadcast of live baseball on Sunday mornings (I attended one of them in 48-degree weather in Boston). The Yankees YES Network will only broadcast 128 of the team’s 162 games This year. And of course, the most popular and watched sports programming, the playoffs, rarely appears on RSNs, but is usually broadcast exclusively on national cable networks. It’s no surprise that RSN operators, team owners, and leagues are looking for new business model strategies, but there’s a bit of eating of its own seed corn here.

Is this a unique case or a trend?

The trend parts of the equation here are clear. A continued decline in multi-channel video subscribers, sub-fees and advertising dollars in linear television. There is no doubt that streaming will play a central role in watching live sports over time. But what about the existence of media intermediaries such as RSNs and their media company owners? Boston and New England form an unusual, if not unique, sports market, but NESN is not the only RSN owned by the teams themselves. Are team owners increasingly taking their own destiny into their own hands? Will other teams not only follow NESN’s strategy, but also their pricing approach? Much like the live games themselves, we’ll have to watch to find out the outcome.


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