Leonsis told me the challenge is figuring out the right level of direct-to-consumer services without disrupting other local media deals.Feiyu Lu / George Washington University
The NBA can point to a lot of legitimate on-court reasons for why its ratings are down double digits so far this season — from star players missing games to poor early-season TV scheduling that featured teams not playing well.
But whenever I’ve heard NBA Commissioner Adam Silver address those ratings this season, he’s been focused on another aspect — one that shows how quickly the media business is changing. In public appearances this season, Silver has brought up the fact that the league’s core fan base — the younger demographics — are disconnecting from pay television in record numbers.
During a recent interview with Monumental Sports & Entertainment’s Zach Leonsis, I asked what he was doing to get the Washington Wizards and Capitals in front of those younger audiences. During a keynote presentation at a Feb. 21 Sports Industry Networking & Career Conference in Washington, D.C., Leonsis brought up Monumental’s social channels, saying he tries “to leverage them as much as we can.”
But like Silver, Leonsis also talked about the promise of direct-to-consumer platforms to get those young fans. The problem is in figuring out how much to use those direct-to-consumer services — the ones untethered to cable and satellite systems.
“It’s a difficult and very delicate dance because the cable bundle and the cable model is still very, very strong,” Leonsis said. “It’s a great value for consumers and a great business for teams and leagues. Rocking the boat on affiliate deals for major providers like Xfinity or DirecTV or Dish Network can backfire.”
When asked about the possibility of teams putting games on a direct-to-consumer service, one RSN executive said it was theoretically possible. But there would be a financial penalty. RSNs would pay a lot less for rights that aren’t exclusive to their channel and their own authenticated services.
Leonsis, who runs Monumental’s direct-to-consumer service, preached a go-slow approach, saying a rush to direct-to-consumer is not in any league’s best interest.
“I worry a little bit about getting ahead of ourselves and thinking that we’re going to go all direct-to-consumer right off the bat,” he said. “We’ll find more of a symbiotic ecosystem between linear and digital.”
He pointed to the launch of Disney+ and ESPN+ as a blueprint for media companies to build a secondary subscriber base as the traditional pay TV system continues to lose subs. The experience is similar to his Monumental Sports Network, a local direct-to-consumer service that launched four years ago and shows Mystics, Capital City GoGo and D.C.-area high school games.
“A direct-to-consumer relationship is far more valuable than a disintermediated one where the network doesn’t have any relationship with their viewers,” Leonsis said. “When viewers churn out, there’s no prospect to retarget them or try to win them back as customers.
“We’ve learned a lot about what keeps a customer engaged, what kind of video people watch, how to acquire users, how people use different apps for web services, how many people watch, how to convert people from social into a paid bundle. We talk about Monumental Sports Network as a petri dish sometimes.”
