The Santa Clara
November 9, 2017
Last year, Americans spent 31 billion hours watching sports on TV—a 40 percent increase from 10 years ago. In fact, sports viewership worldwide has steadily increased decade after decade.
People watch football, soccer, basketball, hockey, NASCAR, horse riding, volleyball and more. This comes at a steep cost for TV providers, who pay for the rights to air sports games.
In the last two decades, the cost of broadcaster’s rights to air the English Premier League has increased 25 times over, as media companies have grown to depend on sports subscriptions to avoid losing customers to online streaming services like Netflix and Hulu.
With so much on the table, tech giants are poised to become big players in this game. Last year, Twitter paid $10 million for the rights to nonexclusively livestream 10 NFL Thursday night games. This year, Amazon one-upped Twitter by offering $50 million for the same rights. Facebook has made moves in the sports streaming industry as well.
Last year, they bought the rights to stream one major league baseball game per week and this year they offered $600 million for the digital rights to cricket in India.
However, they were outbid by Star India Private Ltd., who paid $2.5 billion for the privilege. Facebook is now considering live streaming matches from the English Premier League. Head of global sports partnerships Dan Reed said, “We can drive great benefit to broadcasters, leagues, rights holders, and teams because they can access this huge fan base.” It makes sense that Facebook wants to buy live streaming rights, but it won’t come cheap.
In 2015, the Sky plc and BT Group agreed to pay a combined 1.2 billion euros a year to live stream games— over 695 million dollars more than in 2012. Sky reported a 6.2 percent decrease in operating profit this year as a result of the EPL streaming rights. ESPN had to cut jobs and move a lot of its content online as a result of NFL streaming costs. The extreme costs of live streaming sports these days has put TV providers in a sticky situation, as they can’t simply choose to stop streaming sports. Sports streaming is one of the main reasons people still buy TV packages.
While online services such as Netflix, Hulu and Amazon offer most movies and TV shows, they do little in the way of sports. Live sports is the main service holding TV companies together, but if costs continue to go up at the rate that they are, the future of pay-TV is at serious risk. Pay-TV peaked in 2009, resulting in losses of over 8 million subscribers for basic channels like ESPN, Discovery and TNT.
The eventual fallout from the rising cost of live streaming sports could completely change the industry from big TV providers signing multiyear deals to tech giants buying smaller bundles to stream a few games at a time. Only time will tell if this is better or worse for the consumer.
Jay Mehta is a sophomore economics major.