I’m a skeptic when it comes to local broadband streaming of live games. Consumers aren’t clamoring for it, and regional sports networks can’t figure out how to make money off of it.
The early returns have been so low, you have to wonder why RSNs are investing as much as they have for such a small payout. The technology works. Authentication has not proved to be a problem. It’s the consumers that are showing little interest.
The latest numbers come from the 76ers and Comcast SportsNet Philadelphia, which launched a local streaming service in December. It’s hard to pin down an exact figure, but the RSN has not even come close to signing up 1,000 paying subscribers.
One reason for the lack of demand has to be attributed to the 76ers’ performance this year. The team has suffered through a miserable season and is certain to miss the playoffs.
What makes these numbers so surprising, however, is that CSN Philadelphia’s offer was enticing. It gave away two game tickets (with a value of at least $108) for each $76 online subscription it sold. Consumers would have benefited financially from buying a subscription, but they still passed on it.
It will be interesting to see whether the results from Comcast SportsNet’s streaming service in Chicago, which begins this week, will be any different. I expect it will pull better numbers than the Philly streaming service. The Bulls are having a better season. And the streamed games will be free to the consumer.
Were low numbers for the 76ers streaming
package due solely to their losing season?
But I’d still bet that the numbers won’t be high.
Look at the numbers from YES Network’s streaming of Yankees games, for example. In a World Series-winning year, the Yankees said just 6,000 subscribers in the New York market paid for the service.
Nobody expected initial streaming numbers to be high. These early returns aren’t stopping other RSNs and teams from launching their local streaming businesses. I’m hearing that several more RSNs will stream games live this baseball season and the NHL should have several markets up and running next season.
Don’t expect any to be remotely popular, at least not this season.
That’s the main problem. Broadband video is wildly popular right now. It’s the fastest-growing business on the Internet. But live local sports, which are seeing TV ratings increases across the board, have been an online dud. So far, broadband has proved to be the mirror opposite of television — a place where entertainment programs are far more popular than sports.
Live sports has found success online, but with a different business model than the ones being explored by the RSNs, where games are available simultaneously on television.
It’s no secret that live video works best with games that can’t be seen on TV. March Madness On Demand is most popular on the NCAA tournament’s opening Thursday and Friday afternoons, when people are at work and not near TVs. ESPN360 has found success with events that can’t be seen on television.
But what’s the market for people who would pay extra for online access to local games that typically are on during prime-time hours?
It’s not big.
Why, then, are leagues and RSNs continuing to invest in local streaming?
Leagues love the idea of live local streaming, seeing it as a potentially big revenue stream. They are not ready to give up on the revenue potential that exists in the broadband arena. Major League Baseball Advanced Media picks up half of the in-market streaming revenue, with RSNs, the teams and the distributors splitting the other 50 percent. The NBA charges $3,000 a game for RSNs that want to stream games live locally.
RSNs also are proving to be willing participants. By entering into these deals, they will be positioned to profit should demand for these games on broadband skyrocket.
But unless RSNs develop exclusive content around their local streams — the type of content consumers will pay for — I don’t see the market growing too much. In fact, I expect in the next couple of years that games streamed to mobile devices will become much more popular than the RSNs’ broadband efforts.
It makes sense for leagues and RSNs to experiment with broadband applications. But they also should be realistic about how big that market is.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ.
