Did a hip family member gift you a streaming video service subscription for Christmas last week? If you’re a sports fan, having access to the likes of Amazon Prime, YouTube TV, and DAZN has become increasingly useful recently. The online services have begun adding rights to live games and other sports programming to their lineups. For the most part, they have nibbled around the edges of the major sports leagues, picking up packages of a few games here and there, as Facebook did with its 25-game Major League Baseball package, or out-of-country circuits, like DAZN’s right to stream some European soccer into Canada.
As online entertainment of all kinds eats into traditional broadcast and cable television outlets’ market share, speculation naturally arises about how much sports viewership will swing to streaming services. Understanding such patterns becomes crucial for leagues and teams in negotiating prices with both traditional and online-only carriers.
We’re about to see a big development in this area as as Major League Baseball has discussed the next evolution of its streaming rights. One scenario might involve allowing individual teams to sell their own streaming video rights the same way they currently sell the rights to show games on local broadcast or cable stations.
Regional cable sports networks (Fox Sports Southwest in the North Texas area) have bought most of the latter set of rights. 22 of those networks will shift ownership in 2019 as governmental authorities compel Disney to sell them after acquiring the nets from Fox as part of a larger transaction. If you had a cable subscription, you may have watched your local teams on an app like Fox Sports Go. The RSNs’ current streaming rights came via a centrally negotiated deal with MLB, but under the proposed policy, teams would control them.
Such rights would likely be geofenced, with non-local subscribers unable to access the feeds. The geofencing is standard procedure, and similar to the longtime system whereby MLB assigned each franchise a “home team territory,” inside of which they could sell rights to local broadcasts of their games and have limited overlap with other teams. A handful of games a week had a national audience courtesy of league-wide broadcast deals with the likes of ESPN.
Streaming, however, is a disruptive technology in the sports rights space. It is possible MLB should rethink its traditional way of doing things.
Having said that, the status quo isn’t bad. The teams get a lot of money from their RSN partners, and letting them retain streaming rights at a below-market cost in the short term could go a long way toward preserving those relationships and helping ensure those entities don’t go out of business as viewing habits change. My experience with Fox Sports Southwest is that they truly embrace not only game broadcasts, but everything related to the entities they cover. Team initiatives in areas like community relations and special events benefit. That would especially work out if MLB buys the existing Fox regionals, as they have apparently been considering.
But . . . the point of the preceding paragraph is that teams need to consider the big picture, and the same goes for leagues. While you maybe want to be careful not to undercut your RSN, you’ve also got to look at how to maximize short- and long-term revenue in every way. MLB has an up-and-down history here, and I base that conclusion on personal experience. In the early 2000s, Major League Baseball consolidated all its team/league websites and revenue into a single entity, MLB Advanced Media. The upside was that revenue sharing helped the finances of small-market teams and the centralization of technical resources led to significant advances in streaming video technology. The downside came when, because of the league’s tight control over internet usage, teams couldn’t maximize online resources in marketing themselves. For instance, when I worked there, the Texas Rangers couldn’t use video that included their own game highlights on third party platforms, including YouTube and Facebook. Might we have sold more tickets if we could have used our best content on the most popular online platforms? I sure thought so, but MLBAM was slow to authorize such activity – teams didn’t even get their own YouTube channels until August of 2015. In addition, because individual teams made a fraction of the revenue from online inventory, they had reduced incentive to sell sponsors more than the traditional inventory of outfield wall signs and program ads.
So my advice to MLB as they return rights to the clubs is to remember they need to empower and incentivize those franchises as much as possible. Let them sell not only full game broadcasts in as many languages as is feasible, but also get creative with allowing use of footage for media outlet and sponsor needs. Geofencing can help ensure such uses don’t undercut the efforts of other franchises, but I’d encourage the league to be as flexible as possible with that, too. Soccer teams from the world’s biggest leagues have more rights to market themselves outside of their home countries than most American sports circuits allow their members. The result is that the likes of Manchester United and Barcelona have created fans across the globe. Except in isolated cases involving a transcendent player like Yao Ming or Ichiro Suzuki, American sports leagues generally only have one entity marketing their product overseas – the league itself. I’d love to see what would happen if 30 teams could have the tools available to spread the gospel of baseball into other continents. Baseball more than any other sport lends itself to multiple streaming packages because of the number of games. When a viewer’s favorite team is defined by what it does over 162 games, plus spring training and postseason, having a “MLB Game of the Week” model limits the creation of die-hard fans.
Here’s a what-if scenario of how allowing teams to make international streaming revenue could help MLB grow interest in the game beyond what it can do itself. Tuesday night games don’t draw well. Tuesday day games draw even worse, but for a middle-of-the pack team, maybe not that much worse. What if a team could make enough money off streaming deals throughout Europe and Africa to make it worth their while to move some Tuesday games into an afternoon slot locally that would be prime-time viewing for those on, say, Central European Daylight Time? They’d never do that just because MLB asked them to if it would cost them money. MLB would only realize that game-growing effect by letting individual franchises profit from it.
There are plenty of reasons such a thing might not work. They’d need to make some accommodation to respect existing international broadcast contracts and do some cost-benefit analysis and how it might affect the viability of MLB.tv’s subscription model that allows access to every MLB game broadcast. But if you want to be disruptive, you’ve got think of new ways of doing things. And 30 teams worth of brains thinking of new approaches, plus all the streaming services some of you subscribed to this week, might be better than one league office.