Expansion of Sports and Leagues like Soccer, Basketball, and Hockey
Cable TV Struggles Amid Streaming Market Domination
‘The God of Soccer,’ Argentine footballer Lionel Messi, drew attention when he officially announced his move to the United States last June. The focus was on his transfer deal. Along with an annual salary reaching $60 million including bonuses, he agreed to share the revenue from Apple TV+’s exclusive 10-year streaming rights for Major League Soccer (MLS) matches. This was a kind of ‘bet’ that MLS’s growth would lead to increased revenue from over-the-top (OTT) streaming services.
Messi’s judgment proved correct. According to The Wall Street Journal (WSJ), on July 21, when Messi played his first match, Apple TV+ saw an increase of 110,000 subscribers for the MLS 2023 season. Considering that only about 6,000 season tickets had been sold just a day before, this was interpreted as the ‘Messi effect’ driving subscription growth. With Messi’s arrival, not only did season ticket sales surge, but ticket prices for some matches he played in skyrocketed, and uniform sales also increased significantly.
Competition among global streaming companies over sports broadcasting is intensifying. The variety of sports and leagues available for streaming is also expanding. Streaming providers are pouring massive investments into securing popular sports and leagues.
According to reports from The New York Times (NYT) and others on the 1st (local time), Warner Bros. Discovery will start live sports broadcasts on its streaming app Max from this month. As a result, games from the National Basketball Association (NBA) and the National Hockey League (NHL) will be available for streaming.
Paramount plans to broadcast soccer matches through its streaming service Paramount+, and Comcast’s streaming service Peacock will air NFL playoff games early next year that have not been available on cable or broadcast TV. Amazon is also broadcasting NFL games through Prime Video’s ‘Thursday Night Football.’
The NYT noted, “Media companies are exploring and competing to combine cash-intensive streaming services with sports broadcasts,” and predicted that the value of sports broadcasting rights will continue to rise.
Sports broadcasting rights have also emerged as a key factor determining the revenue of streaming companies.
Disney expanded its streaming business in 2019 by acquiring 21st Century Fox, which included Star India. At the time, Star India was considered highly valuable for holding the broadcasting rights to the Indian Premier League (IPL), India’s cricket league. However, after failing to secure the rights this year, reports emerged in July that Disney was considering selling Star India.
As competition over live sports streaming intensifies, cable TV providers, which have traditionally broadcast live sports, are facing the greatest challenges. Regional cable TV companies have held broadcasting rights for local sports events and generated revenue based on them, but streaming services can broadcast live without geographical restrictions, putting cable TV providers at a competitive disadvantage.
Michael Pachter, an analyst at Wedbush Securities in the U.S., predicted, “If streaming companies add sports as key content, more people will cut the cord (cancel cable TV subscriptions).”
In fact, Disney, the parent company of ESPN?which owns both cable networks and streaming services?has sent a message that at some point, ESPN should be able to acquire customers through streaming alone without cable subscriptions.
There are also concerns that viewers are overwhelmed by the number of streaming subscriptions. Even for the same sport like soccer or baseball, different leagues are broadcast on different platforms, forcing fans to subscribe to all of them to watch. Foreign media report that viewers are adjusting by subscribing temporarily to streaming services only when desired matches are available, then canceling and subscribing to other services for different games.
The WSJ reported that an American Yankees fan subscribes to multiple platforms including ESPN+, Fox Sports, Apple TV+, and Amazon Prime Video, saying, “Sports fans feel that managing many streaming platforms efficiently has become incredibly complicated, and watching sports itself has turned into a sport.”
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