Almost gone are the days of cable TV, a staple in the sports and entertainment community and a time friends and family gather to catch their favorite shows and games. In our tech-savvy world, the invention of digital streaming has given us the luxury of watching whatever we want, whenever we want. As big media companies have seen opportunities over the years to buy media rights to movies and TV shows on-demand, they’re steadily adopting the direct-to-consumer approach to sports. The streaming world has made its mark in the sports industry and given big tech companies the opportunity to channel an untapped market and create unique partnerships. Cable TV is still showing signs of life, as the Super Bowl and March Madness — both provided through linear networks — accounted for over 95% of the most watched programs in 2022. Nevertheless, a new era of sports consumption has enticed millions of consumers to cut the cord, sparking a cable vs. streaming duel in tech and media.
The Big Tech Battle for Exclusivity Rights
The power and market share of big tech companies has certainly kept traditional media organizations up at night. Streaming is slowly becoming the majority TV consumption outlet, as Nielsen data reported broadcast and cable TV falling under 50% of net U.S. TV consumption in July of 2023. On the flip side, streaming services peaked at an all-time high of 38.7% usage. Tech names with newfound streaming services such as Apple TV+, Amazon Prime, YouTubeTV, among others have offered lucrative deals to obtain the media rights of major professional sports leagues. Streaming also offers exclusive highlights, post-game content, and even in-game data for avid sports fans to consume. Cable subscribers are given less variety as they’re left waiting for shows like ESPN’s “First Take” or “SportsCenter with Scott Van Pelt'' to broadcast at the top of the hour.
Because some of these tech companies are commercial brands with products to sell as alternative streams of revenue, the investment in streaming and media deals is slowly driving out the bargaining power of cable. Traditional media generates their main source of revenue from ads and promotions on their services. Without sports year-round, it’s hard to turn a profit. Media companies feel the mounting need to keep leagues such as the NBA and NFL around to fill up slots for the year. As the NBA’s contract with Disney and Warner Bros. comes to a close in 2025 which includes ESPN, ABC, and Turner Sports, their media rights will almost certainly be scooped up by one of the big players in the tech industry. The streaming industry expects to see Google, Apple, Amazon, and Comcast make a run for the league, which has expressed desire to obtain a $75B deal.
Alternatively, tech companies know that creating exclusivity among popular sports can drive up sales for streaming service subscriptions. Lionel Messi and his transfer to Inter Miami this past summer is the epitome of this scheme, as Apple TV+ became the official streaming provider of the MLS. Consequently, having arguably the greatest soccer player of all time essentially blocked by a paywall forces consumers to pay top dollar to watch him play. This has not been an issue for The MLS League Pass, Apple’s streaming platform, which saw a 1,690% increase in sign-ups after the announcement of Messi’s transfer. Apple TV+ also debuted Friday Night Baseball in 2022 which was originally free for the first year, but now requires an Apple TV+ subscription. Similarly, Prime Video, the home of NFL’s Thursday Night Football since last season, saw the largest number of Amazon Prime subscriptions in a three-hour period in its entire existence during its inaugural game.
Good for Business, Bad for Fans?
Big tech isn’t the only winner of the streaming revolution. Streaming allows for external businesses to more precisely tailor advertisements and place them in areas that have the most compatible consumers. Using precision targeting, advertisers can deploy their advertising during an appropriate game or show where their preferred audience is watching. Whereas businesses do not have the same level of data from the slots purchased on cable TV, streaming allows for the collection of user habits to tailor where an ad received the most attention. Through their analytics-heavy advertising service, Amazon Ads reports a 44% increase in post-ad brand consideration rather than using demographics data alone.
If there is one blind drawback lost in the transition from cable to streaming, it's that it's not going to be cheap. S&P Global reports that U.S. consumers are estimated to spend $25.57B dollars by year's end, a number that could reach up to $30B by 2025. Though cable itself isn’t cheap in its own right, media exclusivity also means that consumers may have to spend money for multiple streaming services just to watch their favorite sports. Out-of-market fans will soon find themselves spending top dollar in order to tune in. The government’s project on crackdown of illegal streams isn’t good news for those hunting for free entertainment, as the culprits of the piracy, which include the NBA, NFL, and UFC, have estimated a loss of around $28B in additional revenue.
Finding Common Ground
Not all hope is lost for media companies who have taken a hybrid approach to incorporating both streaming and cable. Peacock and Paramount+, owned by NBC and CBS parent companies respectively, have purchased exclusive streaming rights for the NFL and Premier League while maintaining a linear TV presence to reach maximum audiences. Disney and Charter Communications, the parent company of Spectrum TV, recently settled a dispute that shows us how media and tech companies can operate in unison. After resolving a carriage dispute which resulted in the blackout of Disney-owned media, Spectrum TV users have been granted free access to Disney+, ESPN+, and rights to receive ESPN’s standalone streaming service in the near future. This monumental deal suggests that when it comes to cable vs. streaming, the two could possibly coexist. But as cable TV tries to stay afloat, streaming looks to be the new, dynamic reality of how we consume sports which offers opportunities to tune in from anywhere in the world.