Will streaming save sports or kill it?

Sports and television thrived together. The future of our entertainment will be shaped by whether streaming and sports can replicate this largely happy partnership.

My colleagues recently reported 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, broadcasters — including CBS and ESPN in the United States and Sky in Britain — have paid sports leagues a lot of money to be the only place people can watch games. Television money has made sports rich and influential in entertainment and culture. Broadcasting of sports made television rich and powerful.

Today’s newsletter examines three questions that will be relevant if tech companies follow the old-school TV playbook and expand into streaming sports online.

1) Why do tech companies want sports?

It’s an obvious answer: companies want to attract subscribers to their video streaming services, and many people love sports.

Two unknowns for Silicon Valley bosses. First, no one has yet proven that large numbers of people will sign up and stay with a streaming service to watch six-month baseball games or top-flight European soccer matches. (To be fair, some popular sports are only available online so far.)

Relatedly, it’s unclear whether it makes sense for big tech companies to pay sports leagues stupid amounts of money like old-school television has.

The math may not work for streaming companies. Disney collects billions of dollars each year from cable companies to include television channels such as ESPN in their programming and more from advertising. That’s a huge pile of cash to pay for NBA games, squash or whatever.

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

Counterpoint: Apple, Google and Amazon have infinite dollars and can afford to lose money to see if sports attract new subscribers. But they also won’t hesitate to drop 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 a large number of spectators for the games. Tech companies can offer the former, but not necessarily the latter.

At the moment, sports on TV have far more viewers than sports on the Internet. In fact, it is puzzling. Kevin Draper, a sports reporter for The New York Times, told me that when the same NFL game airs simultaneously on the Fox television network and the Amazon Prime streaming service, Fox has many times the viewership. During the Super Bowl, about 90 percent of viewers are watching on boring old TV, not online.

This is a dilemma for sports leaders. They’re excited that Apple, Amazon and Google might spend money on them to stream sports. They are also concerned that streaming services could reduce sports viewership, which could make their leagues, teams and players less valuable.

Chances are, sports leagues will take a lot of money from tech companies — assuming the money is there. Or they’ll hedge their bets and keep the most popular stuff on TV and sell low-end games to streaming companies.

3) What does this mean for us?

Probably higher streaming fees.

Anyone who pays for TV — whether you watch sports or not — gets the cost when ESPN or CBS pay for the rights to college football games or March Madness basketball. These sports expenses have only increased over time.

This has made sports a double-edged sword in entertainment. The games are still the most popular television program, and it’s a big reason why Americans continue to pay for cable or satellite television. But the rising cost of sports is also persuading people to ditch the TV service.

Apple, YouTube and Amazon can spend billions of dollars on sports without raising subscription prices for their streaming services. But hahahahaha. If programming costs much more, streaming subscription prices are likely to as well.

I don’t know what will happen next. I can envision a scenario in which streaming services have a long-term marriage to sports, as conventional television has done for decades. This can be great for fans, team owners and players alike.

I also envision a sports and flow death spiral. If people are tired of the big sports fees, then the leagues have less money and less fans.

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