December 4, 2023

Sports and TV have thrived together. Our entertainment future will be shaped by whether streaming and sports can repeat that mostly happy partnership.

My colleagues reported recently that Amazon, Apple and Google’s YouTube may be willing to pay billions of dollars for popular sports like the National Football League and the National Basketball Association to move their games from TV to tech streaming services.

For decades, TV companies — including CBS and ESPN in the United States and Sky in Britain — have paid sports leagues a bunch of money to be the only place where people could watch games. The TV money has made sports wealthy and influential in entertainment and culture. Airing sports made TV rich and powerful, too.

Today’s newsletter looks at three questions that would be relevant if tech companies follow the old school TV playbook and go bigger into airing sports online.

1) Why do tech companies want sports?

This is an obvious answer: Companies want to attract subscribers to their video streaming services, and lots of people love sports.

There are two unknowns for Silicon Valley bosses. First, no one has proved yet that a bunch of people will sign up and stick with a streaming service to watch six months of baseball games or top-tier European soccer matches. (To be fair, so far, few popular sports are available to watch only online.)

The related unknown is whether big tech companies will find it logical to pay sports leagues stupid amounts of money, as old-school TV has.

The math may not work as well for streaming companies. Disney collects billions of dollars a year from cable companies to include TV channels like ESPN in their programming lineups, and more from advertising. That’s a huge pile of cash to pay for N.B.A. games, squash or whatever.

Streaming subscription fees don’t have the same oomph. The biggest streaming company, Netflix, has about the same annual revenue as a relatively small TV company, Paramount Global, which owns the CBS and Comedy Central TV networks and streaming service Paramount+. Streaming is awesome in many ways, but it may not be lucrative enough to sustain the sports industrial complex.

A counterpoint: Apple, Google and Amazon have infinite dollars and can afford to lose money to see if sports draw a bunch of new subscribers. But they also won’t hesitate to ditch sports webcast contracts if they no longer fit corporate goals.

2) Why do sports leagues want streaming?

Big-time sports leagues have two sometimes conflicting missions. They want as much money as possible, and they want huge numbers of viewers for games. Tech companies can offer the first one but not necessarily the second.

For now, sports on TV have far more viewers than sports on the internet. It’s puzzling, actually. Kevin Draper, a sports reporter for The New York Times, told me that when the same N.F.L. game airs simultaneously on the Fox television network and on Amazon Prime’s streaming service, the viewership on Fox is many times larger. During the Super Bowl, about 90 percent of viewers watch on boring old TV rather than online.

This is a dilemma for sports executives. They’re thrilled that Apple, Amazon and Google might rain cash on them to stream sports. They’re also anxious that streaming services might reduce sports viewership, which could make their leagues, teams and players worth far less.

Odds are that sports leagues will take the big bucks from the tech companies — assuming the money is there. Or they’ll hedge their bets and keep the most popular stuff on TV and sell streaming companies the lower-profile games.

3) What does this mean for us?

Probably higher streaming bills.

Anyone who pays for TV — whether you watch sports or not — is footing the cost when ESPN or CBS pays for the rights to air college football games or March Madness basketball. Those sports costs have only gone up over time.

That has made sports a double-edged sword in entertainment. Games are the most popular TV programming by far, and they’re a big reason that Americans keep paying for cable or satellite TV. But the increasing cost of sports is also persuading people to ditch TV service.

Apple, YouTube and Amazon can afford to spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahahahaha. If programming costs a lot more, streaming subscription prices likely will, too.

I don’t know what will happen next. I can sketch out a scenario in which streaming services have a long marriage of mutual benefit with sports as conventional TV did for decades. This could be great for fans, team owners and players, too.

I can also imagine a sports and streaming death spiral. If people grow tired of big streaming bills for sports, then leagues have less money and fewer fans.

If you don’t already get this newsletter in your inbox, please sign up here.

  • Mark Zuckerberg is eager (or desperate) to change his company fast: My colleague Mike Isaac takes us inside Zuckerberg’s project to steer Meta through a difficult phase.

    Related: Kylie Jenner doesn’t like the new Instagram: She’s one of the app’s biggest celebrities, and complained about Instagram’s TikTok-like redesign with posts that appear based on computerized assessments of what people might like. This could be a bad sign for Instagram. But people tend to complain about changes to apps and then grow used to them.

  • Apple AirTag versus airline travel chaos: You have to respect the ingenuity of people using the Apple tracking gizmos to follow their lost luggage, as Bloomberg News explained. But the AirTag won’t actually help get your bags back. (A subscription may be required.)

  • The president of the United States has a better Zoom setup than you: The Verge analyzed President Biden’s work-from-the-West Wing technology gear.

Yo-Yo Ma plays cello in a forest. It’s four minutes of beauty that you deserve.

We want to hear from you. Tell us what you think of this newsletter and what else you’d like us to explore. You can reach us at [email protected].

If you don’t already get this newsletter in your inbox, please sign up here. You can also read past On Tech columns.


Leave a Reply

Your email address will not be published. Required fields are marked *