For the major American sports leagues, changing viewing habits and lucrative TV deals give way to a happy dilemma: Do they forge a direct relationship with fans? Or are they leaning on their media partners to help them win the streaming wars? Increasingly, the answer seems to be both.
The latest attempt to split the difference began on July 25, when the Roger Goodell-run NFL launched its own streaming service: NFL+. The live games it featured weren’t necessarily new (it took some preseason games and live audio from its former NFL Game Pass product and combined with in-market mobile rights it had previously sold to Verizon), but the nevertheless marked a big gamble on direct-to-consumer from the notably conservative league, one that just signed new long-term rights deals with TV partners totaling more than $110 billion.
David Jurenka, senior VP of NFL Media, says the league views the service as a “tool of innovation,” a vehicle that will evolve over time. The NFL’s efforts to try and pull the needle (i.e. keep TV partners happy but build a DTC product that fans will love) exemplifies the situation all major leagues find themselves in, with Major League Baseball , the National Hockey League, the National Basketball Association, and Major League Soccer are pursuing slightly different solutions to that challenge.
On the one hand, you have MLB and the NBA, both of which offer their own out-of-market streaming packages, as well as various linear and streaming rights deals. There’s also the NFL, which put together pieces of its distribution puzzle in NFL+ – hoping to fill a void for football fans along the way – while looking for a partner to take over its out-of-market Sunday Ticket package. There’s MLS, which in June chose to sign an exclusive global deal with Apple, counting on the tech giant to help grow the competition. The NHL, meanwhile, moved US out-of-market DTC service NHL.tv to Disney’s ESPN+ platform, betting that Disney’s reach will offset the severing of that direct relationship.
A major reason why leagues want that direct relationship is access to the fans and the ability to understand their consumption habits and what they are looking for. The leagues have millions of people watching TV, but “really had no idea who those people are,” said Pete Giorgio, a leader in sports consulting at Deloitte. “What they’re discovering is that in the world we live in today, it’s no longer okay for people to just look at your content; you have to build a relationship with those people.” Jurenka, NFL director, adds, “Fan behavior or customer behavior is shifting to the direct-to-consumer model, so we’re trying to meet fans where they are.”
And leagues are trying to be strategic about those efforts, crafting games that won’t interfere with those lucrative TV rights. Hence the focus on out-of-market games or the NFL’s bet on mobile video and audio (aimed at consumers who probably won’t be home to watch TV anyway).
“No medium goes away, right? Radio didn’t disappear when TV came along, and TV won’t disappear because you can stream on the Internet,” said MLB CEO Noah Garden. “At some level it becomes complementary and people choose which group they want to be in.”
But that does not mean that difficult trade-offs should not be made. One of the biggest is around dates. Owning that DTC platform could mean a goldmine of data for leagues, while outsourcing could mean missing out on that treasure.” It’s something MLB knows well, having streamed its first game in 2002 and launched its MLB.tv streaming service in 2003, years before YouTube even existed. “The more information you have about your fans, the more things you can do with it,” says Garden.
Most importantly, though, leagues find they can still get some of that data even if they give up some control. The NHL’s deal with Disney and ESPN is a perfect example. Back in the day, hockey fans would subscribe to the league’s own service. Now it’s included in ESPN+, and many games will also be streamed on Hulu, with the league getting some data from Disney.
“We balanced those two priorities of direct-to-consumer information against reach and access to a wider universe of sports fans,” said Stephen McArdle, executive vp of digital media and strategic planning at the NHL. “And we felt that the reach and power that ESPN+ brought with it was hugely important to us.”
David Proper, NHL executive vp media strategy and distribution, added: “The big problem for us is making sure we can get as much data as possible. That’s probably the most important thing we lose in closing a deal — not having the direct relationship with the consumer — something that we’ve made a very central part of the conversations we have with ESPN, about making sure we have the ability to cross-market to consumers, so at least we have an idea of who our fans are.”
The marketing and production power of media partners can be a compelling pitch in its own right, and, as was the case with the NHL, one powerful enough to change the league’s DTC strategies. It was also a key point for MLS in its decision to sell all of its rights to Apple. “In the discussions we’ve had with Apple, with their integration, marketing, branding, technology and engineering teams, the amount of innovation and the ability for us to build a fan base is what the primary goal of this partnership is, really huge,” MLS Commissioner Don Garber told reporters at a press conference on June 14.
And of course, having a partner can also help on the technical side of the business. “From an operational perspective, it’s clear that being part of the ESPN+ infrastructure relieves some of the burden on our side,” says McArdle, pointing out that the NHL still operates its own streaming service globally.
The huge range of media deals and DTC offers is not without risk. A report from Deloitte on July 21 noted that 62 percent of sports fans surveyed were frustrated with difficulty finding content, and more than half had missed an event they wanted to watch because they didn’t know where to watch it. But with MLB firmly anchored in streaming, MLS’s big new Apple deal, the NHL pursuing deep partnerships with Disney and Turner Sports (games will eventually come to HBO Max), and the NFL targeting mobile rights and a partner for its out-of-market Sunday Ticket package, all eyes are on the NBA, which is beginning to negotiate its next rights package (it currently has deals with Disney and Turner), which ends after the 2024-season. 25.
The league is said to be pursuing linear packages that will have a total value second only to the NFL (a whopping $75 billion total), but the approach required for streaming will be the most closely watched. . Is the NBA taking advantage of its partners’ reach with League Pass like the NHL does? Or will it come up with something new for itself to sell like the NFL does? The status quo is not expected to be maintained. “Whether it’s entertainment or sports, fans are accessing their games in a way that’s different than maybe five years ago. That will become even more dramatic in the coming years,” says Garber.
The question for leagues is whether it would be best for them to go direct themselves or continue to maintain solid partnerships with rights holders. At least for the foreseeable future, the partnerships will remain supreme. “Although the media has changed, I think the strategy will remain the same, and that’s broad distribution,” Garden said, noting that the definition of “broad” may evolve as consumers change their viewing preferences. “Back in the day that meant getting on NBC, ABC, Turner, Fox. In the streaming era, it could be Peacock or Apple.”
In the past, streaming may have been a niche, but in a world of cord-nevers and cord-cutters, YouTube, Hulu, ESPN+ or Apple could be the next broadcast partner. Or if NFL+ is a harbinger of things to come, it could even be the league itself.
This story appeared in the July 20 issue of News Kidda magazine. Click here to subscribe.