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No Slam Dunk for Broadcasters as Streamers Bid for Live Sports

As the content industry moves inexorably toward a streaming model, linear broadcast and cable channels are looking increasingly to live sports to gain competitive advantage. In the past, streamers have turned away from live sports programming as incompatible with their on-demand model. Sporting events are shown in real time with limited afterlife. As competition for subscribers heats up, however, streaming services are bidding for major sports packages.

Apple and Amazon are in the bidding wars for rights from the NFL, Major League Baseball, Formula One racing and college conferences. The richest prize on the table right now is NFL Sunday Ticket. This package shows out-of-market Sunday games that aren’t shown on local television. DirecTV currently owns the rights, but the league has opened bidding from competitors. The NFL is looking for $2.5 billion for the rights, which is $1 billion more than the current license fee. Amazon, Apple and YouTube have all submitted bids.

From the streamers’ side, Apple, Amazon and Google (the owner of YouTube) can afford to acquire sports rights as a loss leader to build up their subscriber bases. The pockets of the broadcast and cable networks are not quite so deep. The rights in NFL Sunday Ticket became available because DirecTV declined to renew after losing an estimated $500 million annually on the package.

Legacy broadcasters are not quite out of the game, however. Many of their existing licenses still have many years to run. They have a proven ability to produce live sports events. Linear channels also draw bigger audiences than streaming services, and viewers know how to find the games they want to watch. This contributes to fan engagement—a critical factor to maintain viewership.

Looking ahead, linear broadcasters and streamers alike could face an even greater challenge. Sports leagues could recapture their rights and stream games directly without any intermediation. We are seeing early steps in that direction. For example, the NFL has launched NFL+, a subscription service that streams live local games and some out-of-market games to mobile devices.

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