Are Sports Next for Netflix?

Earlier this month, Netflix CEO Reed Hastings caused a bit of a stir by declaring that sports networks are heading on-demand. The statement was couched in a broader prediction that all TV will be available on-demand and online within the next ten to 20 years, but it's hard not to wonder if Hastings was alluding to a nearer-term opportunity for Netflix.

"What's happening now is sports networks will go to on demand. You'll be able to watch any game. You'll be able to watch it on any device," said Hastings on the CNBC show Mad Money with Jim Cramer.

Let's unpack some of the layers there. Hastings' statement assumes three things:

  1. Viewers want to watch more sports online.
  2. Sports networks and franchises will be willing to experiment with new online business models.
  3. The traditional cable bundle will continue to break down, with sports programming starting to slip the reins of traditional pay-TV subscription services.

Starting with the first assumption, that's a pretty easy statement to support. Most recently, Frank N. Magid Associates conducted a study for ONE World Sports to find out how sports fans are viewing content. While nine out of ten fans reported watching sports on TV sets, 37% also said they often stream sports online, and 57% said they watch sports online at least some of the time.

It makes sense. If you're a sports fan, you want to watch your favorite sports whenever and wherever they're available, not just when you're sitting on the couch in front of the living-room screen.

Moving to the second assumption, we're already seeing significant if still early experimentation by sports networks looking to expand access to their content online. MLB.com was a trailblazer with its streaming service for out-of-market baseball games, but it's hardly the only example out there now. Earlier this year we learned that the Tennis Channel has been remarkably successful with both its ad-driven TV Everywhere offering and its newer subscription Tennis Channel Plus service. By month 14, Tennis Channel Plus was already hitting revenue targets projected for year four. (See OTT & the Net New Effect.)

Meanwhile, the National Basketball Association has said it's offering single-team packages as part of its NBA League Pass streaming service this year, and that it will even sell access to individual out-of-market games for $6.99 each. This proves there's the potential for new revenue online, and sports franchises are willing to chase it.

Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.

Finally, there's the issue of the cable bundle. ESPN Internet Ventures broke the seal earlier this year when it allowed its content to be part of Dish Network's Sling TV, a skinny bundle available online for only $20 per month. (See Sling TV – Like Pay-TV, but Skinnier.)

Then there's NFL Mobile. Verizon Wireless customers can stream many live National Football League games for free on mobile devices, and unlike some other "free" broadcast content, there's no pay-TV authentication required for multiscreen viewing. (See ABC Makes TV Less Free.)

There will be some financial heartache as both sports franchises and programming distributors navigate to new online services. For example, Walt Disney Co. (NYSE: DIS), which owns ESPN, said in August that it's lost some subscribers, and that's likely a result of viewers migrating away from big pay-TV bundles.

However, there's no putting the genie back in the bottle. Consumers have gotten a taste of TV choice and flexibility, and they're not going to give it up.

Which brings us back to Netflix Inc. (Nasdaq: NFLX). If Hastings's statement on the future of sports programming was delivered with nonchalance, it was also born of massive data collection and analysis. And if Netflix thinks the market is headed in a particular direction, then there's no reason to believe the company won't try to capitalize on that trend.

Netflix bet on the future of video streaming. It bet on the success of original programming. Why not bet on sports? Sports are moving online, and Netflix could turn the sports programming market into a whole new ballgame.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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KBode 9/29/2015 | 10:57:38 AM
Re: Sports gets bundled Getting access to past games is just about the only type of deal I see Netflix striking, unless we're talking minor league stuff. Most companies (Verizon, AT&T) have stuff like the NFL pretty well locked up at this point.
Nitin Narang 9/28/2015 | 10:04:51 PM
Sports gets bundled Does it looks like a distant possibility that Netflix get rights for past games form ESPN etc. and has it as part of its content library? 
cnwedit 9/28/2015 | 5:59:23 PM
Re: Price Point This is very cool and gets me thinking we should run a series of articles on great ideas that were ahead of their time or unfeasible for some reason. 
jabailo 9/28/2015 | 5:33:23 PM
Re: Price Point I was a part of a couple of these pre-web interactive efforts.  One in particular absorbed a bit of my time back in 1993-94 and was called Action America.   Here's an article that refers to the founder and an acquaintence of mine, Gordon Bizar:


How To Start Your Own TV Network



It was a bold schme to unite TV, cable, and other interactive media into a AOL format.   So the idea is people would be able to participate in everything from electoral politics to sharing vacation experiences via interactive, computer mediated TV. 

It was a bit Facebook a bit AOL, a bit Howard Dean and largely before the Web appeared.  The idea was to unite current computer tech with existing TV/cable infrastructure.  So you could have TV shows that were more like talk radio and so on.  Then you would be able to create your own video opinions (YouTube...right) and upload them to the channels.

In the end, as a total idea it was great, but a bit too much for one organization to handle (and get enough funding for).   But like many great big ideas, it found its applications in bits and pieces.  

Still, I don't think we've yet achieved its ultimate goal which was a true participator democracy, run through interactive technology!

cnwedit 9/28/2015 | 5:16:42 PM
Re: Price Point Exactly, which is how they protect the billions they are paid for content. 

I ran up against this last March. I was attending a retreat at a Wisconsin lake resort and wanted to stream the Blackhawks game, which was airing on Comcast SportsNet. Comcast refused, saying I was outside the CSN Chicago coverage area and so couldn't stream it live. 

So I tried to use my NHL GameCenter subscription but they claimed I was still within the CSN Chicago blackout area. 

Luckily for me, the NHL GameCenter customer service desk is manned by very nice young Canadian men and I was able to talk one of them into manually giving me access, possibly by not being totally truthful as to my exact physical location and then playing dumb about IP addresses. 
brooks7 9/28/2015 | 5:04:12 PM
Re: Price Point All the Major Sports Leagues have streaming but restrict you to out of market games.

WheelerWerks 9/28/2015 | 4:05:42 PM
Re: Well, maybe I'm sure the league's don't see this as a threat. Any new outlet for distribution is a new source of revenue. As the OP noted, items they're already offering their own services. And Netflix is hinting at on-demand, their core business, not necessarily live programming. There's no way they'll consider live sports production costs palatable. Episodic tv costs a fraction of what a sports season requires. But if they cut deals with the leagues, and and by association the networks, for VOD then everybody wins.
cnwedit 9/28/2015 | 3:52:05 PM
Re: Price Point Way back before there was even a robust Internet as we know it know, the folks who were trying to push fiber to the home talked about Interactive TV as a driving application. The idea was that you would be able to get, via the fiber connection into your home, your own personalized cable service with whatever teams, etc., that you wanted, from a big menu. 

You would pay for what you chose but you would no longer be dependent on what teams and games your cable provider offered you. 

I thought it was brilliant - it also never game to pass. I can get a lot of games from my pay TV provider - at a price - but I can't create my own personalized lineup. 
jabailo 9/28/2015 | 3:18:56 PM
Re: Price Point  

On that account you are correct...like in many technology areas, the "Portals" are fighting tooth and nail to be the single source, or else add various tolls to what ostensibly should be free network travel over the Internet.

Funny, but when it comes full circle, the business model will seem more like 1950s TV -- live and free, paid for by advertising!    Well, except that now you can watch Cincinnati TV stations in Tacoma!


cnwedit 9/28/2015 | 3:13:36 PM
Re: Price Point Right, but NFL controls that and takes the revenue and makes sure it doesn't interfere with their existing massive pile of TV money. 

Every major sport is online in some form, with one biz model or another. I don't know of CBS still live streams every NCAA March Madness game for free but they used to and it was great. Lots of commercials but still...
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