OT - The Future of Televising Live Sports
Mates,
I came across this article tonight and it appears very relevant to the recurring discussions that we have about cord-cutting, as well as the love-hate relationship many have with ESPN and what the future might be for ESPN.
Of note would a few takes, some more obvious than others:
1. The money in the TV contracts has peaked
2. ESPN did not anticipate the steady stream of subscribers leaving
3. Despite numerous mistakes the main protagonist says ESPN has made, he also says they will be financially fine. In fact, he had this quote: I think the issue for them is that their cable deals are so good that there’s no way they will ever replicate that. Everybody in here five years ago was paying $7, $6 for ESPN whether they watched it or not. And now people have flipped the equation. They’re like ‘I’m going to pay for Netflix, I don’t want cable.'” He’s right there that they’ll never get revenue from everyone who’s abandoned cable, but it’s worth pointing out that ESPN has said their digital deals are just as lucrative for them, so if you sign up for a streaming service that includes ESPN, you’re providing the company just as much revenue as you would as a cable subscriber.
4. He makes the prediction that the tech companies will be the ones to own sports broadcasts just like they have taken the market in some other areas of TV.
Anyway, full article at this link: http://awfulannouncing.com/espn/bill-simmons-criticizes-espn-john-skipp…
XM
Good stuff. You might want to edit point # one though.
PEAK
mt. mckinley as exhibit 1.
C'mon, XtraMelanin. McKinley is so 20th century. Denali is our highest peak!
going again next month, and have a few pictures of it in my office. it is 'mckinley' for us old-timers. nobody consulted me on the name change and i didn't sign off on it. it is therefore invalid and i refuse to recognize this 'denali' thing. that is the name of a GMC pickup, nothing more...
And, it's Constantinople, people! Siam and Ceylon too. Get it right.
but I can't find it on the map. Little help please!
First find Peking, it is south and west of that.
you've gone too far.
Long live Burma!
is that you?
eat the sweet peas. (allegedly).
ESPN gets, at least per the article, is portrayed as a one-to-one replacement or something like it.
But ite subscriber base will be so much lower than the numbers they used to justify paying billions for the rights. They will end up backwards if the change happens quickly enough. And ad revenues on digital are lower than on TV.
"ad revenues on digital are lower than on TV"
For now. Give it 5 years or so and that might change. You'll likely never see Super Bowl add rates for digital like you do on TV, but as more and more content goes streaming and digital shows become a bigger thing, advertising and higher ad rates will follow the viewers wherever they can reach them just like they always do.
Honestly, I'm surprised it hasn't changed more already. If the same video gets 800k views with high engagement on Instagram, 40k views with little to no engagement on a website, and seen as a part of a show with an audience of 200k viewers on TV, which platform do you think advertisers would throw their money behind? Right now, they go heavy on TV, then web, and hardly anything on social even though social far and away has the better audience and the more desirable audience. I work in the industry and see this all the time, and it makes no goddamn sense.
Advertisers always stick to what they know works, and are VERY slow to change and adapt. But they eventually will.
When I had Dish Network, DirectTV, Charter, etc. I was usually on some form of contract that more or less guaranteed my revenue stream. I now only plan to subscribe to PS Vue from September to February, particularly since the Tigers are tanking. Their per subscriber revenue may be stable, but their overall revenues will still fall significantly.
ESPN is getting the same per subscriber amount from people that get them via cable as they do via Vue or YouTube or whatever.
They'll lose out on the people that drop cable that don't want ESPN, but they'll still have subscribers. And then as we get closer to a more a la carte option, they'll just charge more for the people subscribing. I know people love the idea of a la carte, but its almost always more expensive unless you truly just want like one thing. TV is moving from a Costco bundle to a Whole Foods style bundle -- a lot for a little, to a little for a lot.
But ESPN is on the Vue too right? ESPN is getting the same $7/mo per sub from things like Vue and YouTube that they are from cable. So ESPN is still getting your $7/mo they are just getting it from different sources now.
A lot of these companies like Sony and Google are willing to give cable channels the same sub feed they get from cable and will still sell bundles of channels at a net loss just to build a base and come out as one of the dominant providers in this changing landscape.
So while things like Vue are a lot for a little now, they won't be for long because its not part of their longterm business plans. They'll either fold or raise rates to start turning a profit. And then continue to raise rates like cable did.
Yes. They are getting my $7/month ONLY for the months which I subscribe, which I am not currently doing but which I plan on doing from September to February (or maybe just through January and then catch the SB OTA). Previously, the past 11+ years when I alternated between Dish, DirectTV and Charter, I was subscribing year-round. They were getting $84/yr from me. Now they will get $35/yr from me. A significant REVENUE drop.
And I don't doubt that Vue will raise rates at some point, but the forces that drive people to services like these are largely related to the cost of traditional cable plans. It's not like we're just going to just sit there and put up with multiple yearly price increases like we did when we were on contracts.
I think their business model is similar to the business model of prepaid phone vendors. There are still people who for whom cell phone plans are desirable (as a prepaid early adapter, I really don't understand why), and so they still exist. But there is also a huge market of people who don't want to have the latest and greatest equipment, and so we have the prepaid plans (I use Verizon). I pay less per month now for an unlimited plan with data than I did in 2004 for a severely limited plan with no data. Granted, I paid for my moto G4 upfront ($52 on Amazon), but I am still coming out way ahead.
This is how I see the market for Vue (and Sling and YouTube TV., etc.) THey will offer a stripped down low cost option that will continue to attract people away from cable. It may not eveolve into a true a la carte service, but they are already coming close.
But my point is that ESPN won't get their money regardless. They too will see significant absolute declines in revenue, despite not seeing a drop in revenue per subscriber. They will instead see drops in subscribers.
Is a big reason for this because of the "skip" nature of ads on social media? I for one have no idea what ads are taking place during videos I watch on social media because I just simply watch the countdown until I can skip it. I am not sure if that is something social media is keen to change from, as the forced ads are something that could possibly hurt their market share. It all adds up to an interesting dilemma.
I think the "ESPN is dying" drama has been a bit overplayed. Have they signed some over the top TV deals and do they need to become more lean and efficient? Of course. But they went on an incredible 20+ year growth phase and now the television landscape has changed and the business model and programming has to be adjusted.
Corporations restructure all the time, the difference here is the common sports fan knows the talent being laid off, so it hits home more. If "John Doe" from accounts payable gets laid off at Ford the general public doesn't have any idea who that is. When John Clayton a long time ESPN employee get laid off, people recognize it.
ESPN will never be as popular as they were in the 90s, Sportscenter will never be the "must watch program" is once was, with up to the minute highlights on social media. But people still watch live sports and remember, what is the only DVR proof television programming for advertisers? Live sports.
are like this, since they have to fill 24 hours of programming. ESPN needs to fill their non-live sports time with this drivel because of the current model.
But their future is exactly the opposite of ceding live sports. They'll have to become a PPV platform for live sports (which is probably the only way sports will be consumed in 10-20 years) or die and I'm sure they'll be smart enough to make that transition. They won't be a cable channel, because cable won't even be a thing, so they won't have any of these stupid filler shows.
But there's a reason all of that evolution takes place. The old Sportscenter died for the same reasons the old MTV died: they were bleeding viewers under the old format, tried some new things, more people watched the new things, and so they did more of that.
Both MTV and ESPN stopped showing highlights because there's no reason to sit there and watch a TV show waiting for a highlight/video when you can just go to YouTube and watch it immediately. If you would prefer to do that, then you're a dinosaur and the rest of the TV watching world has moved on without you and you just don't realize it yet.
Oh, and ESPN will NEVER cede live sports. Ever. The day they do that, is the day they die. Live content is the only thing people care about these days. And that's why rights for it keep skyrocketing.
but I appreciate that new way of thinking. I would say this though...if you're a musical artist, and after 20 years you change your style from heavy metal to soft rock...you may still garner interest, but you lose your core. So I guess ESPN has to decide whether or not to try and reel in the younger generations or do it's best to keep in the older folks. In my 20's when I woke up in the morning, Sportscenter was non-negotiable. And I would watch part of the 6 pm as well. Now? I only watch during football season, and even then I prefer BTN because there is more Michigan specific chatter.
and it's the reason many incumbent companies of all kinds choose to die a slow, slow death rather than try to innovate - and it may even be the right choice in some cases (Although, instead of death, I would argue for innovation through acquisition so as not to disrupt your core business). If you start seeing a decline in business because some people are moving to other providers/services/brands, and you try to pivot to compete with those new providers, you risk losing your existing core AND you risk losing out to the new cool providers that people are flocking to anyway.
New Coke is sort of an example, JC Penney is an example, even Dave Brandon at Michigan is an example of marketing/product trying some new-fangled thing that ends up alienating existing customers/fans and doing a lot more harm than good. Just because a company "innovates" or tries something new doesn't mean it was a smart evolution. I do think in the case of MTV and ESPN, they did have to move away from music videos and highlights because those things are so easily available in demand.
The media landscape has changed such that you can consume what you want, when you want it. That's why you're here or on BTN instead of Sportscenter where you're not going to get much of what you want.
Yeah, its a tricky dance. Generally I think ESPN is doing as good of a job as anyone at navigating the changing media landscape. They have to try and push forward by getting themselves on skinny bundles and streaming options, pushing with new digital content, while also trying to hold on to their cash cow that is cable TV. People like to hate on the new 6p SC, but that's been holding steady with ratings and viewers which is something they previous version wasn't. So while it might not be for viewers that liked the old one, its connecting with a new set of viewers.
In general, it just feels like they are doing bad because they keep laying off people and cutting talent. But, that's all part of the dance and change. You need to be lean these days and employ people that can fill multiple roles. Its not good enough to just be a good writer anymore. You also need to be good at being on TV, maybe a little feature work, have a good social media prescence, and be able to contribute to things like podcasts.
When will the first TV contract in any sport be less than the previous contract? That will be an interesting moment in time.
ESPN is basically going to be 5 people working there but they still are constantly bidding up contracts.
As said above, live sports is the one thing keeping many from cutting the cord.
Paying to stream the event is beneficial because Amazon, for instance, doesn't have to take the burden (re: the financial cost) to broadcast or produce the content.
I don't have cable anymore (why pay $200 when you can pay $20) but if I did I would look into buying one of those things coming out that ignores commercials. You can set it up with either some of your favorite music, funny short clips, etc and then when the commercials are over with it cuts back to the live feed. I wised up and realized all you're doing is paying to watch commercials. If Netflix and Hulu ever start forcing commercials down my throat I'll cancel with them, too. Whenever I'm in the car I'm always sure to bring my ipod along because the radio seems to never have music on anymore. Again, commercials have ruined everything for me.
Everyone i know with cable just DVRs everything and fast forwards commercials
Everyone i know without it just pilfers what they want and tabs out if it's a live event at commercial
An ESPN quirk that mystifies me a little (not a lot):
At what point in history did they start to *not* edit out the short communication delays during the interviews that the Sports Center people do with remote reporters? Why not do the editing and fill the collective space with a "5 HOUR ENERGY(!)" ad? It had to be a conscious decision to keep the delays, and I'm guessing that they felt the delays would dazzle their idiot core audience and make them believe that every interview was "live."
about a decade ago and b/c of that we can go month-to-month. we only have TV during college football season. stays off and no bills to pay the other 8+ months of the year. and no cable out here in the boonies, only satellite, so that might make a difference.
I don't miss it a bit and save $130/mo. I use Sling for $25/mo and netlfix and have pretty much all the content I want minus BTN, and occasionally I miss ESPN. I've bounced between the blue and orange packages a bit because the cheaper packages make you pick between Fox Sports Detroit (regional) with the Orange Package & ESPN/ESPN2 with the Blue package. For around $40/mo you get them both, but there are only a handful of days per year I watch ESPN so not worth it to me.
but with Comcast, I actually enjoy our X1. And I watch Premium series and sports mostly. If I could continue to get all teh premium channels, with on Demand options, and the ability to watch ALL Michigan games, I would be content. Thing is, after paying for Internet, and home security, the cable actually isnt that much more...ends up being about $80 before taxes/fees. $20 for home security, $10 for phone, and $80 for internet.
Cut the cord (to satellite) 3 years ago. Was tired of the sticker shock of my monthly Directv bill suddenly being more than my car insurance ($120 vs. around $79 when I had initially signed up). Really don't miss it much. Catch the big Michigan football games at a bar or friend's house; enjoy outdoor activities during the non-premier games. The only things I truly miss are the ESPN networks or BTN for Michigan basketball games during the dog days of winter and Root Sports for Rockies games. I can live without both.
The cutbacks and layoffs make me wonder if this is a panicky move? Or perhaps it is a shrewd move. Are they over reacting to what appears to be a drop in revenue or does it suggest the powers that be at ESPN don't have any response to this drop and so are going the cut back route.
I wonder because it struck me that in a manner, ESPN are similar to the retail business. Like department stores, they don't actually "create" their biggest products, the various leagues do, and so they try to make up some of their margin with their own "store products" - the various talking heads, yelling heads, and laughing heads shows.
And like retail - some of the product manufacturers thanks to the Internet can sell directly to the customer (NFL network).
I thought it was panicky at first, but the more I think about it, I think its more shrewd and measured response. Like Deadspin pointed out, the cuts don't really save them much money overall. In general, the last couple of cuts have been about trimming the fat from the operation and empowering people that can fill multiple roles.
In the last two rounds of layoffs, they've cut a bunch of middle managers who were all making six-figures and who had been there 10-20 years, been promoted, and were just filling management jobs because they've been promoted over the years. And cutting them allowed ESPN to actually promote younger more into tune with the current landscape employees into those management roles.
For the talent and reporter cuts, it was mostly a lot of people that did just one thing and didn't offer much else beyond that one thing. For on-air roles, you just fill the holes by asking more out of your current talent. And on the reporting side, you don't miss a whole lot because frankly, people don't read much reporting anymore. As sad as that is.
So they are all cuts aimed at making the larger operation more nimble and flexible. Because if you want to be a reporter these days, you better also have a good social media presence, be good on TV or a podcast, and have something else to bring to the table. Really no different than football recruiting and why Harbaugh targets guys that can do multiple things or played multiple sports.
I used to really like Simmons, but the more I read and listen to him, the more he sounds petulant and a bit ill-informed. The Ringer isn't making money by all accounts (certainly their traffic numbers don't portend a place that is generating profit given how much they are spending on talent and infrastructure), is basically propped up by HBO, and his half-hour show was cancelled largely because of terrible ratings and a lack of zeitgesity-ness (I think the most notable moment from that show was Affleck saying 'fuck' a bunch about Deflate-gate). He is very quick to point out the failings of others, but he resisted advanced statistics for years, didn't have a great mobile strategy (Grantland had a turrible mobile experience when it launched), and while he clearly had an eye for talent at Grantland, he also started off relying heavily on "names" people like Klosterman, Gladwell, etc. to generate traffic and was basically forced to fall back on some cheaper guys when traffic stalled.
And the idea that everything should be run as an SV start-up is insane. I work in tech, and just because Amazon or Facebook did well doesn't mean (a) that's a business model that works anywhere else, and (b) it ignores the thousands of flame-outs. You want to run your company like Uber, which posted 3/4 of a billion dollars in losses last quarter and could well crater in a year? Or Theranos, which basically lied about its results and stole millions from investors before the federal government shut them down?
ESPN is suffering from a change in consumption and bad management decisions. That happens EVERYWHERE to EVERY INDUSTRY, and saying something pedantic like "they are a tech company, not a media company" in 2017 is just lazy. Ford is a tech company. Bank of America is a tech company. Exxon is a tech company. Everyone uses technology. ESPN is doing what they can to monetize streaming traffic and other forms of revenue. And that's why when I hear about cord-cutting as a means to save oodles of money, it cracks me up. The leagues and their partners are going to get their money because, well, you can't replace their content. So if you aren't going to pay for cable, then you'll pay $20 for PS Vue, which will creep up to $25, then $30, as that becomes a viable revenue stream. And your ISP will raise its rates for internet to compensate for the drop in cable subscriptions, because Comcast ain't leaving money on the table.
I agree that ESPN is at a crossroads, but hearing a guy spout of incomplete and, at times, contradictory statements about their eminent demise while offering no real insights is such a waste.