Basketball Local Streaming Launches, Still Missing Key Target

Earlier this year the NBA became the first league to officially hand over local digital rights to its teams and local media providers, contrary to the tight control that MLBAM has kept over local rights. After no movement last season, and a trial run by the Yankees and Padres during baseball, the Sixers and Blazers both went to market with local streaming offers at the start of this season.

The Blazers plan to charge a la carte or flat rate for the full package of 15 games, but thats where the problem starts – 15 games. Portland plans to stream the 15 games scheduled for over-the-air broadcasts, none of the remaining games to which Comcast Northwest hold the rights. Portland is one of the markets with carriage problems preventing fans from watching the team. CSN Northwest does not have carriage deals with Charter, Dish, or DirecTV.

This is where live streaming is most valuable, the fans who can’t receive the broadcast on television. Those fans likely have a higher willingness to pay for live streaming, a higher likelihood of using advanced online features and becoming the type of engaged user that advertisers covet. Yet, Comcast excludes them, just as the Yankees and Padres did during the season.

We understand offering it to subscribers that also receive the cable network to prevent cannibalization and prevent free riding from undermining the cable business. But its still hard to convince those customers to pay incremental fees to watch on a laptop the same game they can watch in HD on the big screen, though the number of people interested continues to grow.

However, fans that are not cable subscribers – or not subscribers to a provider with carriage of the local rights holder – arguably have more overall value. If CSN has a functional authentication process in place, it could still offer the package for non-subscribers, possibly using price discrimination and charging a higher fee since they don’t technically pay affiliate fees for your cable channel. The team benefits by extending its digital marketing platform and adding value to the advertising inventory, the right holder benefits by luring in valuable new customers. Customers from Comcast competitors, and customers from the same MSO’s that CSN is negotiating carriage deals with. And everyone earns additional revenue.

Why would CSN not want to make money off customers from the same companies that won’t carry its channel. It could help provide leverage in the carriage negotiations. If not, at the very least, it increases revenue and may help add a premium price component to the product if they can charge non-subscribers a higher rate.

The team and rights owner both maintain control and it’s paid content, so I’m not sure why none of the local streaming deals has gone this route yet. It’s possible the authentication schemes are not as advanced as providers would lead us to believe, its possible they want to take baby steps for now, but for streaming to move the needle it needs to be accessible to the entire local market using a well-thought, profitable pricing scheme.

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4 Responses

  1. I said this about the Yankees streaming over the summer.

    In terms of dollars, subscribers that are not fans are more valuable that fans that are not subscribers. 10% of the average cable bill goes to sports programming, but as popular as sports are, there are many who can care less about them, but are forced to pay if they want cable.

    If EVERY Blazers fan paid a la carte for all the teams games, whether on tv or digitally, the revenue would be significantly less than what the team is receiving now from its limited cable coverage.

    By making digital rights available to all fans, it would kill the cash cow of non-sports fans subsidizing those very sports leagues and teams that actual fans don’t get to watch…

  2. But those who are not fans still pay the cable bill and will NOT pay for the streaming, so I don’t believe your logic would apply, or possibly I’m missing the point. This is not to replace cable, but to supplement. All revenue is incremental, but they can earn additional incremental revenue from non-customers by offering wider.

  3. If fans can get the games outside of the cable systems, those cable systems will not listen to the demands of the teams and leagues to carry those sports networks on a basic tier. Those systems would actually prefer to carry sports networks on a premium tier, but know the backlash they would get if they didn’t.

    Let’s say that every Yankee game was available online in the NYC market, to anyone who would pay for it. If Cablevision chose not to carry YES, like they did in 2002, then there wouldn’t be much of a fan backlash like their was. Fans would just circumvent the cable company and get the games directly from the team or the league.

    This would not give Cablevision any incentive to carry YES on a basic tier, which would give it the largest possible pay TV audience, and therefore create leverage to charge ad rates. Offering in market streaming to all would be directly competing with the status quo, and, at least in 2009-10, significantly cut into local broadcast revenues.

  4. Valid point, and now I understand your rationale. However, if they leave the rights holder in control they should be able to offer different pricing levels for different customers, possibly high enough to put more pressure on the MSO’s. It’s obviously a more complex scenario that requires more thought, but they can find it way to make it available for substantially more than a monthly customer subscriber, and/or limit access to features for cable subscribers, essentially discriminating service levels.

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