The NBA announced a new deal with TV networks today that gives us a glimpse into what one aspect of the future of TV might be like.
The deal, which kicks in two years from now, gives TNT, ABC and ESPN the rights to broadcast professional basketball games through 2025, and one part of that deal will allow ESPN to stream some games online to customers regardless of whether they have a pay-television subscription, allowing the channel to have a much more direct relationship with viewers.
But don’t rush to cut that cable cord just yet. ESPN’s move is a baby step, and we don’t really know yet in what direction.
“What ESPN doesn’t want to do is compete with itself,” says Peter Kafka, a senior editor for Re/Code who covers media and technology. Kafka says ESPN is likely only going to offer live streams to basketball games that are not going to be broadcast on one of its channels.
“What you’re not going to be able to do is watch a full suite of NBA games without getting ESPN,” says Kafka.
That’s because ESPN’s cable channels are its cash cow. The network gets about $6 per pay-TV customer, more than any other channel.
At a Re/Code conference last month, ESPN’s CEO John Skipper signaled this latest move is a part of the company’s future, but would not replace its present business model, which relies on pay-TV subscriptions.
“We have two big revenue streams: payments from distributors, advertising. We think about, are there sports events we can offer that the consumer will pay us directly?” Skipper said, adding that the live-streaming services he envisions would be a third revenue stream, but would offer content that’s different than what’s on the TV channels.
“It is incumbent on the NBA and on ESPN to reach audiences that are attractive to advertisers,” says Rebecca Lieb, a media analyst at Altimeter Group.
Lieb says among the most attractive and hard-to-reach audience for advertisers is the 18-to-33-year-old male demographic, which is increasingly cutting the cable cord. And yet, if this audience tries to live stream a sports game today, it would have to have a cable TV plan.
“What I see in this deal is the beginning of a kind of uncoupling of that,” Lieb says, predicting that other pay TV networks, such as HBO and Showtime, may also take steps away from a cable-only approach.
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