The landscape of regional sports networks (RSNs) is undergoing significant changes, especially in the NBA and MLB. As cable-based RSNs struggle, leagues are increasingly eyeing streaming options to replace them. Major streaming platforms like Prime Video or YouTube may provide the financial support necessary to launch these new services.
Significant Changes with DAZN
This season, five NBA teams entered into exclusive streaming agreements with DAZN, transferring all local broadcasts to the platform, aside from a handful of games also shown on local networks. However, this bold decision faced backlash almost immediately. Just days into the regular season, these teams opted to form distribution agreements with DirecTV, demonstrating that the initial plan may not have been as viable as expected.
The Financial Dynamics of Streaming
DAZN's exclusive contracts came with premium rights fees, making them attractive to the streaming service. The hope was that their exclusivity could draw in significant viewership, thereby increasing revenues for both teams and the league. Unfortunately, the execution of this strategy exposed several flaws.
For instance, exclusive DAZN offerings made watching all Cleveland Cavaliers games cumbersome and pricey. Fans needed multiple subscriptions, including packages from Peacock and Prime Video, along with cable to access ESPN games. While services like YouTube TV offer some simplification by bundling various channels, fans still had to contend with additional costs for accessing all games.
Concerns About Future Streaming Models
As teams weigh the prospect of a dedicated streaming RSN, they might encounter similar challenges. The NBA primarily benefits from national television revenue, which remains outside the scope of a streaming RSN. Fans will still need to subscribe separately to watch nationally broadcasted games, complicating the affordability of the overall arrangement.
The recent fallout over the DAZN partnerships provides evidence that fans might not be prepared to pay for numerous subscriptions to watch their local teams. If DAZN were seeing success, it likely would not have relinquished its exclusivity so swiftly.
In contrast, teams that partnered with more established platforms like Prime Video have experienced less consumer dissatisfaction. The NHL’s Dallas Stars, for example, managed to secure a similar arrangement with fewer complaints, potentially due to the absence of additional subscription requirements.
Lessons for NBA and MLB
The developments with DAZN raise important questions for both the NBA and MLB regarding the feasibility of their streaming aspirations. A streaming RSN may not automatically translate to better accessibility or increased fan engagement.
Moreover, despite the ongoing trend of cord-cutting, traditional cable offers advantages that streaming services still struggle to match in profitability. Teams like those in MLB continue to adopt hybrid models, combining local games on cable with streaming options. This model creates a balance that may be more appealing until a more feasible solution emerges.
To navigate these turbulent waters, leagues might consider innovative approaches, blending free access for some games with subscription requirements for others. However, this could lead to lower valuations from streaming partners, especially for MLB, where local revenue is paramount.
Ultimately, both the NBA and MLB need to proceed with caution as they explore the possibility of streaming RSNs. Achieving a successful model may prove to be a more complex challenge than initially anticipated.