Key Takeaways

• According to a 2021 article by The Wall Street Journal, sports leagues across the board are witnessing a decrease in viewership, especially from younger audiences. This decline, the article asserts, is due to the growing preference for digital content procured through social media, streaming, and video games.
• Variety Insights Platform, or VIP, reports that younger fans are demanding newer content formats. According to its study on major sports leagues’ fans, younger audiences prefer video highlights, clip-based content, as well as “highlights, epic rivalries, feuds, plays and moments”.  
• Variety reports that in July 2022, the NFL launched NFL+, its subscription-based streaming service “that offers as much professional football as possible without tripping over the boundaries already established by the league’s big-ticket contracts with Disney, Fox, Paramount Global, NBCUniversal, and Amazon.”
• NBC Sports reports that the NBA expects to cut a broadcast rights package deal worth over $70 billion in the next deal-brokering season in 2024.

Introduction

Changes in Viewership

• According to a 2021 article by The Wall Street Journal, sports leagues across the board are witnessing a decrease in viewership, especially from younger audiences. This decline, the article asserts, is due to the growing preference for digital content procured through social media, streaming, and video games. Variety’s Insights Platform adds that younger audiences are also “decreasing the importance placed on watching games live.” 

• The San Diego Union Tribune highlights Major League Baseball, stating that it is one of the most adversely affected by this shift. It notes the efforts of The New York Mets’ new owner, who hopes to leverage technology to update the ballpark and use sponsorships to build the brand’s “cool factor” on social media.

• Fluent Pulse, a provider of consumer insights, notes that sports fans are increasingly cutting the cord to traditional cable, opting for new streaming services. Its study on the same revealed that 39% of sports fans are exclusively streaming sports, compared to 47% who watch sports on Cable TV. As per Pulse's findings, Gen Z sports fans are leading the charge and are the most likely to stream content, followed by Millennials at 43%.

 

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• Ampere, a consumer research firm, also suggests that sports fans in the US make up almost 40% of internet users in the country. Furthermore, they also show a greater propensity towards subscription services, with Ampere asserting that they “over-index” the average US household for the same (see image below). The article also asserts, “Over 20 percent have household incomes of more than US$100,000 per year, making them a particularly attractive target for subscription services.”

 

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Influence of Viewership Changes on TV Programming

• Variety Insights Platform, or VIP, reports that younger fans are demanding newer content formats. According to its study on major sports leagues’ fans, younger audiences prefer video highlights, and clip-based content, as well as “highlights, epic rivalries, feuds, plays and moments”.  

• Jamie Moraga of IntelliSolutions agrees, asserting that catering to these new formats may be a way for major sports leagues to reverse the prevailing decline in viewership. In his words, “If anyone has the means to reverse the trend, it’s professional sports leagues. They have the motivation, and the capital, and can hire the talent to target younger viewers. Fans are seeking highlights, quick snippets of information, or close game notifications through apps or paid subscriptions. By getting more creative and interactive and utilizing technology, social media, branding, and live experiences, professional leagues may be able to re-engage younger generations of fans.” (San Diego)

• VIP also adds that in adapting to the move to digital, some sports that used to be shown on cable TV have been moved to direct-to-consumer streaming platforms like ESPN+ and Paramount+. While increasing fees for the leagues, this has led to a “restricted total audience.” 

• CBS Sports reports that based on NFL’s “monstrous TV deal” cinched in 2021, Amazon will be the exclusive home of NFL’s “Thursday Night Football” from 2023. This right previously belonged to Fox. Additionally, ESPN+ will exclusively air one international NFL game. Paramount+ and NBC’s streaming service Peacock also landed exclusive deals too.

• Bloomberg reports that the NBA is close to signing a deal to air its games on Sinclair Broadcast Group’s new streaming service expected to be launched in 2022.

Major Sports Organizations Reacting to Shift

• Fierce Video, the self-described “pay-TV industry's daily monitor”, reports that in 2020, the NBA announced a partnership with tech giant Microsoft to create a new streaming service. This would add to NBA League Pass, another streaming option provided by the league.

• Commenting on the future streaming service, NBA Commissioner, Adam Silver says, "This partnership with Microsoft will help us redefine the way our fans experience NBA basketball. Our goal, working with Microsoft, is to create customized content that allows fans — whether they are in an NBA arena or watching from anywhere around the world — to immerse themselves in all aspects of the game and engage directly with our teams and players."

• Variety reports that in July 2022, the NFL launched NFL+, its subscription-based streaming service “that offers as much professional football as possible without tripping over the boundaries already established by the league’s big-ticket contracts with Disney, Fox, Paramount Global, NBCUniversal, and Amazon.” NFL+ offers exclusive access to live regular games, postseason games (on phone and tablet only), as well as “live local and national audio for every game."

Changes in Broadcasting Deals

• Forbes anticipates that new contracts between television networks and major sports leagues are expected to be higher than previous contracts. For the NFL, Forbes’ Brad Adgate believes that 3 major networks, namely Fox, NBC, and CBS, could pay up to $2 billion for annual TV rights. ESPN, on the other hand, could fork out close to $3 billion. The article also believes that the same could be true for the National Hockey League.

• NBC Sports reports that the NBA expects to cut a broadcast rights package deal worth over $70 billion in the next deal-brokering season in 2024. The article adds, “ While it may seem counterintuitive that broadcast fee rights would spike as traditional NBA viewership numbers are declining, it speaks to the draw of major live sports and, more importantly, how streaming services want that draw to lure in fans. Increased legalized gambling plays into those numbers, as does the fact the NBA is much better at reaching Gen Z and younger fans than other major sports.”

Research Strategy

Key Takeaways

• Arizona Daily Independent News Network reports that in Arizona and across the US, thousands of sports fans who switched to streaming services have not been able to watch some of their local sports. Jake Weinhold, a resident of Arizona, laments that he has been unable to watch broadcasts of his favorite team, the Phoenix Suns, as his family subscribes to YouTube TV, which does not carry local broadcasts.
• Next TV reports that ESPN has lost close to 10% of its subscribers because of cord-cutting. FS1, the Golf Channel, and Fox Sports have witnessed 5%-12% drops in viewership as well.
• Quoting findings from a study by TiVo, a digital video recorder manufacturer, 29% of people who opted for streaming are now "cord-reviving", or coming back to traditional TV, which they regard as “the best way to watch live sports”. Half of these cord-revivers are said to be Millennials and Gen Zers.

Introduction

Disruptions in Availability of Specific Local Sports on Streaming Channels

• Arizona Daily Independent News Network reports that in Arizona and across the US, thousands of sports fans who switched to streaming services have not been able to watch some of their local sports. Jake Weinhold, a resident of Arizona, laments that he has been unable to watch broadcasts of his favorite team, the Phoenix Suns, as his family subscribes to YouTube TV, which does not carry local broadcasts.

• Arizona Daily asserts that the main reason for this disruption was the inability of streaming services to enter into favorable deals with local and regional broadcasting networks. Jason Gurwin, the co-founder of the streaming news website, The Streamable, states “Ultimately, it comes down to cost. Local sports rights have continued to increase more and more over the last couple of years.”

• Fierce Video’s Matthew Keys adds, "Getting access to regional sports channels can also be a tough proposition for cord-cutters: The channels are widely available on cable providers, but can be difficult to find on streaming services. Some streamers, like Sling TV, initially offered certain regional sports networks only to drop them later on, citing higher programming costs associated with carrying the networks and low overall viewership among its subscribers."
• Arizona Daily notes that other streaming services like Hulu were unable to carry out their plans to host Bally Sports, a regional sports network. A Twitter message illustrating the same can be seen below.

 

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Loss of Younger Audiences

• Next TV contends that viewership of cable sports is declining among young audiences due to traditional TV cord-cutting.  

• The website reports that ESPN has lost close to 10% of its subscribers because of the same. FS1, the Golf Channel, and Fox Sports have witnessed 5%-12% drops in viewership as well.

• However, Fierce Videos reports that the shift to streaming and other digital venues appears not to be permanent. Quoting findings from a study by TiVo, a digital video recorder manufacturer, 29% of people who opted for streaming are now “cord-reviving”, or coming back to traditional TV, which they regard as “the best way to watch live sports”. Half of these cord-revivers are said to be Millennials and Gen Zers.
• The same survey found that people are especially dissatisfied with local sports content. 84% of respondents would like to watch local programming and sports via streaming services but they are not available.

• Fierce Media highlights DirecTV Stream as a streaming site that offers access to live local sports content.

Additional Findings

• According to The Motley Fool, the emergence and growth of sports streaming may have a more significant impact on cable bundles than on local sports channels, as the latter can eventually simply move to the streaming platforms. It calls live sports "the cornerstone of pay TV." Therefore, with new streaming offerings in the space, such as Sinclair's streaming platform for its regional sports networks, pay TV may become irrelevant.
• For context, Sinclair owns 21 regional sports networks. It expects that the new offering will convert 1.3 million pay-TV subscribers into cord-cutters, but The Motley Fool believes the figure may turn out to be much higher, especially given the rising costs of cable bundles. The trend may eventually lead standalone pay-TV providers into financial trouble.

Research Strategy