The Rise and Fall of ESPN’s Leverage | Hacker News Reader

The Rise and Fall of ESPN’s Leverage

stratechery.com

46 pointsweird_science27 comments

One upstream factoid the article is missing: We are beginning to see sports team bypass networks like ESPN entirely. In the wake of Bally Sports breaking contracts with various teams, MLB started some distribution on its own.

I doubt this will go unnoticed by other sports leagues. These are interesting times.

I had not heard of that dispute. But I did notice that MLB.tv has recently added blackout-free subscriptions only for two teams: the San Diego Padres and Arizona Diamondbacks. Is that what this is about?

> Policy regarding local live game blackouts does not apply to purchasers that select MLB.TV Single Team Yearly or MLB.TV Single Team Monthly who select the San Diego Padres or Arizona Diamondbacks as their club.

When Bally’s imploded the Padres touted how going with mlb.tv expanded their reach from cable subscribers to the whole regional fan base

Of course those fans have to sign up for yet another service vs cable tv that would just pay a fraction per subscriber

As a padres fan it was fantastic. I could finally legally watch padres games without dealing with blackouts.

With the dropoff of local networks and cable-cutters,the sports leagues are going to start direct-streaming the games themselves and capture advertiser and viewer revenue directly. MLB.tv is a primary example. They already have the technology and the brand reach.

All they have to do is add color commentary (post-game shows, direct interviews with players and coaches) and the value of local TV sports networks and intermediaries like ESPN will drop off to zero.

Only thing ESPN will have going for it is cross-sports content, like SportsCenter. Not sure that's enough to keep them going.

Once the cable and local network deals expire, the league streamers would be smart to do away with local blackouts, and then there would be no reason for fans to just buy the league streaming service directly.

The math is still dire, without forced subsidies from non-viewers the pie is shrinking fast. You can cut ESPN out all you want, but there aren’t enough sports fans to make up the revenue gap.

> sports leagues are going to start direct-streaming the games themselves and capture advertiser and viewer revenue directly

The NFL has been doing this since NFL Sunday Ticket launched in 1994, along with NFL Network. The flip side of this is that they also do it without advertisements because it's a pay service (they show a "Game is in Commercial" message instead of the advertisements that would be shown in their place).

There's no need to appeal to advertisers when your fan base is so fanatical about the content that they'll pay hundreds of dollars a season to watch the games they want to watch.

> In Phase 4, though, a churned TV customer is still a broadband customer, because the Internet is a precondition for watching the vMVPD! Sure, a customer could be so incensed that they also change their Internet provider, but that is completely unnecessary and, given the inconvenience involved, highly unlikely.

95% of the US only having access to wired broadband via coaxial cable is more than just an inconvenience to switching ISPs. Charter and other coaxial cable ISPs know their broadband customers have nowhere to go.

"Nowhere to go but up." -Starlink, probably

> 95% of the US only having access to wired broadband via coaxial cable is more than just an inconvenience to switching ISPs.

This 95% figure is clearly disingenuous handwaving.

Briefly looking at California >= 250/25 residential service for cable[1] and fiber[2] shows substantial overlap.

...and Florida cable[3] v. fiber[4].

...and New York cable[5] v. fiber[6].

[1] https://broadbandmap.fcc.gov/area-summary/fixed?version=dec2...

[2] https://broadbandmap.fcc.gov/area-summary/fixed?version=dec2...

[3] https://broadbandmap.fcc.gov/area-summary/fixed?version=dec2...

[4] https://broadbandmap.fcc.gov/area-summary/fixed?version=dec2...

[5] https://broadbandmap.fcc.gov/area-summary/fixed?version=dec2...

[6] https://broadbandmap.fcc.gov/area-summary/fixed?version=dec2...

That broadband map is garbage, I frequently see regions where it says there is fiber, but in reality there is none. Maybe it is some other very high percentage and not 95%, but I have spent a lot of time searching for houses and looking up specific addresses on fiber ISP websites, and they pretty much only exist in 2 cases.

One is if the housing development is ~2010 or newer, and they installed fiber in the underground utilities during initial build. The other is super old neighborhoods with overheard wires that maybe get wired up.

Otherwise, any area with underground utilities built before 2010 is very, very unlikely to have fiber to the home.

Interesting; that map is pretty good for my area when you zoom all the way in.

I can see that it would be very hard to bring fiber to places with underground utilities that don't already have it.

Indeed, I've found it to be quite accurate in my city when zoomed in enough to where the hex grid transitions to green/red dots on individual properties.

In my neighborhood and adjacent communities within a roughly 5-mile radius, utilities are all underground, but the pattern that emerges in these parts when attempting to predict whether a community will have fiber to the home or not appears to be some combination of existing easements/city right-of-way, relative community affluence, and housing density.

For example, AT&T brought fiber to my neighborhood likely because they could easily bury it along the city's right-of-way where not even HOA radicals can stop them. The more affordable townhome community to the immediate west didn't get the same infra though, despite there being comparable townhome communities less than a mile away surrounding a regional park that did. Similarly, the expensive homes within a gated golf country club to the immediate north of us doesn't get fiber despite the affluence living in that community, but the deed restricted community outside the gates to the immediate west which shares the same name did, while the mixed single- and multi-family community to the south of that community didn't. The homes in this area are anywhere between mid-80s to late-90s construction.

Nice article but there is something strange at how important he things vMVPDs are and unimportant other streaming services are.

That is, I had a fight with my RSS reader over whether or not soccer was interesting and my RSS reader won, which got me (1) reading about Premier League Football, (2) watching free games on OTA TV, (3) getting a Peacock subscription (my first streaming subscription), and (4) wondering about getting an Apple TV subscription to get Major League Soccer.

Peacock is cheap and it's not hard to justify to catch an extra game every weekend, but no way am I going to get a Fubo.TV subscription that costs 10x and I'd feel like a fool if I was paying big money to get a stream of my local network affiliates I can get for free OTA and also funding CNN, Fox News, and other channels I think are toxic.

I don’t understand the appeal of bundling for non-sports content. With video on demand, most people just binge watch stuff, and most streaming services have more than one thing a given subscriber would like to watch.

So, if the price of the bundle is significantly greater than the price of one streaming service, why not just hop from one streaming service to another, one at a time?

Even during peak cable, the number one request from customers was to unbundle channels. I guess they could establish consolidated monopolies that only offer expensive bundles, but BitTorrent still exists, and sufficiently expensive bundles of large amounts of unwanted content will just push people back to piracy.

> So, if the price of the bundle is significantly greater than the price of one streaming service, why not just hop from one streaming service to another, one at a time?

Because content is time-sensitive in the world. Watching Game of Thrones 4 weeks later is considerably worse when you miss out on the experience with friends and family. And there’s the high probability of spoilers online.

Mostly because this is a hell of a hassle to save $70 a month that becomes not worth it once you're older than 25, married with a kid or two, and you're spending that much money on food every 3 days anyway. If you're really that cost-conscious, you can only buy used cars and live in cheaper neighborhoods and save more money all at once than you'd save by cutting streaming subscriptions in 20 lifetimes. At some point, sanity and convenience become preferable to spending hours every weekend digging through the newspaper to cut coupons.

The Midwesterner in me really wants to argue that cutting coupons still makes sense, but I can understand if you've got a lot going on that might not be the case.

The sort of infuriating thing is that Time Warner Cable, now part of Charter, as recently as a few years ago applied broadly the same leverage to LA sports fans. They bought the local rights to the Dodgers and Lakers in 2013, and charged high enough fees on the networks carrying those games that TWC / Spectrum was the only carrier of consequence. So, if one wanted to watch the Dodgers (and to a less extent the Lakers), TWC / Spectrum was the basically the only option for TV. This situation prevailed until 2020 (!) or so.

And now they’re “indifferent” to the video business?

I wonder why he hadn't analyzed and mentioned Messi landing in US and how it is impacting Apple TV and MLS subscriptions.

This is could be a game changer because the leverage is on the player brand more than in the specific sport or team.

Here’s another perspective

https://www.outkick.com/espn-charter-cable-bundle-sports/

The lede: "ESPN doesn’t actually produce anything of value, it just rents the games from the leagues."

The author is lamenting the decline of ESPN which will make everything worse, and half the ads on the page are for Fubo. Such sweet irony.

The thing is, I’m one of those people who never watched ESPN, yet paid for years for it in a cable package. Now I have some streaming packages I may not watch in a month, but at least I’m not paying $10/month for something I never watch.

The era of monopoly subsidized sports is coming to an end. Perhaps athlete salaries will come back down to Earth as well. They were only so high because the product was sold to so many people who didn’t want to buy it.

It’s the end of a golden era for some, but the end of a rent for me, and hurrah for that. I assume most sports leagues will adjust, rather than price themselves out of business. Or take Saudi money. Either way.

> For the record, I’m not great at math. The only math class I ever took in college was – and I’m not making this up – something called, “Mathematical Concepts,” It was me and every sorority girl at George Washington University.

> So it was the greatest class of my life.

I like sports writing so much better than sports. It’s a good article even if I’m not on the author’s side.

> Perhaps athlete salaries will come back down to Earth as well

Ehhh you lost me there with that anti-player talking point parroted by the billionaire owners of the league. The players are part of a union, and their CBA says they get 48.8% of league revenue, while the owners get 51.2%.

But somehow people just latch onto “players salaries are too high”

https://en.m.wikipedia.org/wiki/NFL_collective_bargaining_ag...

I’m okay with owners salaries coming down as well. And stadiums getting zero public funding. I’m just more realistic about players being the first to get shafted.

I think its meant that all revenue for the sports will go down, so also player salary bargaining positions

> Perhaps athlete salaries will come back down to Earth as well.

Athlete salaries were historically artificially low in the NFL and MLB because free agency did not exist until the mid seventies or early eighties. Top-tier athlete salaries in those two leagues will not decline so long as free agency is still in place.

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