Sports fans increasingly sigh in frustration when asking, “Where’s the game on?” Where once all fans needed was access to pay-TV to catch their favorite teams and biggest sporting events in one convenient location, now multiple streaming subscriptions are required to cover your bases (pun very much intended). To watch every single NFL game, for example, you likely need some combination of: CBS/Paramount+, Fox, NBC/Peacock, ESPN/ABC/ESPN+, Amazon Prime Video, NFL Sunday Ticket and now Netflix. In total, it would cost around $2,500. Starting next season, the NBA will be strewn across NBA League Pass, ABC/ESPN, NBC/Peacock and Amazon. Even The Roku Channel has an exclusive package of MLB games, and you can barely watch the MLS without going through Apple (AAPL).
Streaming platforms’ competition for splashy sports rights has transformed not only viewing habits but the sports ecosystem itself. According to Parrot Analytics, where I work as Senior Entertainment Industry Strategist, demand and supply for streaming sports content continues to grow in recent years. Mass market streamers can drive large-scale growth but run the risk of disrupting the special alchemy of fan creation. Fandom drives viewership, and viewership, after all, is a product of shaping behavior that drives overall engagement. But developing dedicated fans requires a nuanced approach.
“Fans are socialized into fandom and engagement; it’s not a lightbulb moment where you flip a switch and just become a fan. It’s a learned behavior that requires repetition over time,” Ben Valenta, senior VP of strategy at Fox Sports, told Observer. “In the long-term, I would be concerned that if we are removing easy access points from people, we necessarily inhibit the accumulation of those repeated events. The more friction you add, the harder it becomes.”
Perhaps there’s already evidence of this. Prime Video’s Thursday Night Football (TNF) averaged 13.2 million viewers this past season, up 13 percent year-over-year but down from the 16.2 million viewers TNF averaged across linear TV channels (Fox and the NFL Network) in 2021. Netflix’s two Christmas NFL games—the Baltimore Ravens vs. Houston Texans (24.3 million viewers) and the Kansas City Chiefs vs the Pittsburgh Steelers (24.1 million)—both performed well in the U.S., but were down from the three-game linear average of last season (28.68 million), per Nielsen.
As consumers become more adept at navigating this fragmented landscape and settle into more of a routine, we will likely see this normalize. But as more and more sports rights migrate to streaming, year-over-year ratings declines can be expected in the near-term.
“Friction is bad,” warns Katherine Cartwright, co-founder of Criterion Global, a media agency for global brands such as LIV Golf. “Look at the success Netflix had in eliminating friction—they single handedly created a binge-watching culture with a simple convention, autoplay, that eliminates friction and locks viewers in. When there’s fan friction, there’s a certain portion of the viewership that will give up.”
Viewer attrition is certainly a risk during this transitional moment. But this is not a one-size-fits-all issue. Changes will depend on many factors, including the individual sport, team, star, region and competition. Shohei Ohtani helps make the Los Angeles Dodgers a consistent draw; women’s sports has exploded in popularity in the last year despite continued fragmentation. Ultimately, the largest streamers vying for sports rights must align their services with viewer motivation and convenience.
“While fragmentation of sports broadcasts across multiple platforms may be annoying for some, I don’t think it is annoying enough to deter many of [the fans] from watching sports,” Vassillis Dalakas, a sports marketing professor at San Diego State University, told Observer. “Especially because many of the additional platforms that now carry live sports like Netflix and Prime are subscriptions that most of the viewers already have.”
Can streaming and traditional TV compliment each other?
Culturally, we congregate around sports as they inspire social connections. For years, any American could flip on their TVs and be exposed to national sports broadcasts as well as their local teams. This is one way a viewer can start to become a fan of Michael Jordan’s other-worldly domination, Derek Jeter’s professional consistency or Victor Wembanyama’s freakish physical gifts. But with the decline of Regional Sports Networks (RSNs) and the shift to streaming, how can leagues develop fans without the shared communal experience that traditional TV provided?
“For leagues like the NBA, traditional TV remains critical for cultivating local fan bases, driving consistent viewership, and fostering community connection in ways that streaming environments, at least for now, struggles to match,” Dave Solomon, director of sports partnerships at the advertising agency Ampersand, told Observer. “The future lies in creating a complementary ecosystem where traditional and streaming amplify each other, rather than one replacing the other.”
Streaming is a tool to increase global reach while attracting new and younger audiences who prioritize flexibility and on-demand content. Yet, major streamers have national and international focuses with very little emphasis on locality. Small market teams that rely on regional tune-in may be lost in the shuffle. Meanwhile, the NBA’s recent media deal—which kicks off next season—with ESPN and NBC underscore how the broad reach of linear still provides domestic value.
“It’s become much harder to watch baseball and basketball in-market night to night, which certainly is how loyal fans can be acquired,” Ryan Schreiber, founder and CEO of the content discovery app Streamline, told Observer. “Digital content and league-wide streaming deals, however, cater to the younger, more player-oriented fan over team.”
Leagues face difficult decisions to balance reach and revenue
As live sports discovery and access evolve, leagues also face a crucial question without easy answers. More bidders for an asset typically drives up the total revenue pool. But league executives must decide for themselves how to weigh risk vs. reward. For instance, insiders are still split on whether the MLS’s exclusive 10-year, $2.5 billion agreement with Apple will help or hurt the league.
“Rights holders have a vested interest in maximizing revenue, but also growing the viewership pie,” Criterion Global’s Cartwright said. “Sweetheart deals that lock up rights on obscure platforms risk limiting the cultural relevance and growth of viewership long-term.” December’s MLS Cup Final, which was aired on linear TV after a regular season mostly broadcast via Apple’s MLS Season Pass streamer, saw a 47 percent drop in ratings from the year prior.
The Premier League recently provided more games for broadcast in the U.K. in order to maintain fee levels, while notable European soccer/football leagues such as France’s Ligue 1 and Italy’s Series A are mulling direct-to-consumer distribution options after failing to land lucrative linear broadcast deals. Both represent the challenges and caveats of a rapidly shifting market.
More importantly, these examples highlight a key misunderstanding about reach versus revenue: a distribution method is not a business model. Streaming, broadcast or cable are not what these sports providers are selling.
“You cannot just take one and forsake the other,” Fox Sports’ Valenta said. “We all recognize this is a business and there are profit motives here and that’s all well and good. But fandom is not a bottomless resource. It’s something you have to protect and cultivate. Maximizing revenue while balancing reach is what allows us to continue forever.”
Of course, there are benefits to this strange new normal we’ve entered. Seasonal sports help streamers cut down on churn, fans have greater opportunity to watch out-of-market teams than ever before, streaming technology can offer new and innovative viewing experiences, and increased media fees result in more money trickling down to pro athletes. But the industry still finds itself in the infancy of this digital era, with problems and pitfalls rising just as rapidly as profit.
