​So Why Can’t I Stream Live Sports Again?

Joel Anderson  |

Ah, the football postseason! This time of year always gets me excited. The playoff bracket is set, the teams are prepared, there’s a chill in the air…

Okay, in the ten years I’ve lived in Los Angeles I don’t know that one could ever accurately describe the air as having a “chill,” but the rest of that stuff tracks. January has long been a time for the NFL playoffs, when the 12 mightiest teams from the regular season meet on the gridiron to battle for the privilege of playing in one of the biggest sports events of the year: Super Bowl Sunday.

Of course, for those of you who, like me, have cut the cord and abandoned cable television, it’s also problematic. While virtually every other type of content appears to have firmly entered the 21st Century and started offering options to stream online, live sports continues to lag behind. Options in the regular season are spotty and inconsistent, and options in the playoffs come up lacking.

So then...why can I still not stream live sports? Or, perhaps more importantly, when will this industry finally catch up to everything else and start letting us fanswatch online?

Cable Companies Could Take a Cue from Green Bay

Why don’t we start with an NFL metaphor. Companies like ESPN (DIS) or Comcast (CMCSA) are not unlike the Green Bay Packers in 2008. At that point, the team could have allowed the legendary Brett Favre to return from his early retirement to start at quarterback. Brett Favre had served them well for a long time and, while his abilities had clearly diminished with age, he still had a few good years left in him. Why chance making a change when you had a sure thing?

However, the Packers also had Aaron Rodgers, who had been drafted in 2005 and sat the bench behind Favre. Rodgers was clearly the player of the future, but the question was one of timing. Make the change too soon, and the most popular player in franchise history gets sent away for a younger player who struggles to find his footing, angering fans and resulting in a big step back. Make it too late and maybe Rodgers finishes his contract and signs with another team, leaving the Packers without an elite QB in a couple years and handing another franchise years of success at their expense.

Think about the current sports media model as being Brett Favre. A lot of people have made a lot of money with this model for a lot of years. Streaming is Aaron Rodgers. It’s clearly the model for the future, but it’s hard to part ways with something you have such a long and fruitful relationship with. What more, making the move too soon could be disastrous.

Well, the Packers were extremely shrewd back in 2008, taking the PR hit of parting ways with one of the franchise’s all-time greats and boldly backing Rodgers as Favre went to the Jets and then the Vikings. In hindsight, it’s easy to see this as an obvious choice, but it certainly wasn’t clear at the time.

And for sports media, it’s similarly difficult. They clearly have a sense of their model for the future, but there are myriad different approaches that may or may not work. What’s more, there remains some really loyalty by consumers to past models, making any transition potentially difficult.

Leagues go Into Business for Themselves

Some might look at the current landscape and say “Why include the middle man at all?” Companies like Netflix (NFLX), YouTube (GOOG), and Amazon (AMZN) are demonstrating that connecting viewers and content producers directly can make a lot of sense.

Major League Baseball pioneered this process, initially streaming a game in 2002. Today, all of the major leagues have online packages that will allow you to watch games in some capacity or on some device. In each example, a hefty fee paid up front allows you to stream most of the games over the course of the season.

Push comes to shove, the leagues have different incentives from the companies that traditionally delivered their product. As long as people are watching their games and forking over money, either through watching ads or paying directly, it’s all good. Protecting cable subscribers is mostly about protecting revenue streams for cable companies.

However, the reason this hasn’t already happened is because cable companies have more leverage than people tend to realize.

A Problem that’s Bigger than the NFL

The core structures in place that are holding back the explosion of a live-streaming revolution for sports are actually pretty similar to the ones limiting services streaming other content.

Most notably, the rate at which people are cutting the cord is moving to be sure, but it’s moving all too slowly. A large section of any sport’s fan base likely remains attached to their cable box and isn’t so interested in having to change their viewing habits. This, as much as anything else, is what will really prevent a league like the NFL from kicking cable providers to the curb. To take your product off of the primary method of delivery is to lose millions of viewers and fans. If the NFL overestimates its level of cultural influence, it could wind up making a lot less money on its new platform.

Of course, even if the NFL is really important enough to people that they would adjust (and I think it might be), there’s some basic infrastructure issues. Part of the reason other content companies still go through cable companies is simple: infrastructure. Cable companies have a massive organization built to collect subscriber data and payments, one that places them on the front line of dealing with consumers. Not to mention, the television networks are also producing the actual broadcast.

So, if the NFL really decided it wanted to have a direct relationship with its fan base, it would require a massive expansion of the organization. An organization which, it’s worth noting, is simply the central planning office representing the 32 independent owners. So, the NFL isn’t interested in building the base necessary to produce a broadcast for each game and then stream it directly to their consumers while also having to collect subscriber information and payments from over 100 million people.

Cable Companies Just Won’t Die...

So, for the time being, cable companies and television networks aren’t going anywhere. They offer a valuable service to major sports leagues, handling a variety of duties that would require a major capital investment to build out independently.

However, that doesn’t mean that things are simply going to stay the same forever. Like Brett Favre, the cable/television model is aging rapidly and, like Aaron Rodgers, the streaming model is rapidly reaching the point where it will be ready to take the helm.

As such, sticking with Brett Favre to the bitter end will cost a lot of people a lot of money. Just look at ESPN’s recent troubles. Cord cutting has cost them millions of subscribers, savaging their bottom line and forcing the company to look for cuts. What’s more, it’s essential for cable companies and television networks not to overestimate their value. Content producers certainly don’t want to have to take on the responsibilities they’re currently farming out to cable companies, but that doesn’t mean they won’t.

The NFL announced in June its plans to stream a game online only on Yahoo (YHOO), a move that should have network executives shaking in their boots. As society changes around them, it might not be long before the NFL decides to give up on selling their product to television stations and start simply hiring a company like Google to help them take it to their fans directly. It may only take one major player jumping ship (and showing results) to move things in a new direction very rapidly.

I, for one, am waiting for this day with baited breath. But it may be a while yet…

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer



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