Week In Review: Amazon Bids for Fox RSNs, Apple Might Be Thinking About A Lower Priced Dongle

1. Amazon Bids for Fox RSNs

As part of their deal with Disney, Fox has just 90 days to get rid of their 22 RSNs (Regional Sports Networks, the ones that carry every Mets or Nets or Red Sox game) and bidders were announced this week. The fact that Amazon was one of the bidders seemed to send the internet into a frenzy, with all sort of uninformed opinions about what this means and how Jeff Bezos would soon own everything.

Why It Matters

While RSNs and sports rights are indeed a big deal, the first thing to look at here are who the other bidders are: three investment companies (KKR, Apollo Global and Blackstone Group) and two station group owners (Sinclair and TEGNA.)

Let’s look at that first group though. Why would an investment firm buy the RSNs? Not to launch their own network, but to sell them off, piecemeal, to various networks or even to groups that might launch them as their own freestanding apps. (They may also just decide to lease the rights rather than sell the RSN outright.)

That’s because they’ve realized that RSNs are valuable AF. It’s the whole “a small-but-passionate audience is far more valuable than a large-but-meh audience” theory you’ve likely gotten sick of hearing us espouse here.

For those not familiar with sports (or U.S. sports), ESPN’s audience is comprised of sports fans, people who like watching college basketball or the NFL, have a favorite team or two but who might not be rabid fans, especially if their team is having a bad year.

RSNs, OTOH, are for rabid fans. People who love the Brooklyn Nets, the Boston Red Sox, the Seattle Mariners, et al., people who try not to miss a single game. These fans, as per Mike Shields, will make their pay-TV provider decisions based on the availability of their team’s RSN, and are also likely to buy lots of that team’s merchandise, making them an excellent marketing vehicle.

So Amazon is likely to be thinking along those lines, which leads them to their Channel Store, where viewers can choose from a growing number of OTT options and have them all wind up on a single bill in a single easy-to-manage location. It’s worked for HBO and Showtime, so why not RSNs?

Well, for starters, there are likely all manner of legal reasons why not, plus the teams' and leagues' fear of bad PR if their games are suddenly only available as a $15/month OTT add-on. That’s a strong negative, but it may be offset by the ability to market ticket packages, coffee mugs and jerseys directly to the people most likely to buy them, whose email addresses, IP addresses, device IDs, credit card numbers and Amazon home pages the various teams and leagues would now have access to.

What You Need To Do About It

Keep calm and keep your eyes open. If Amazon does win out—whether for all 22 RSNs or even just one or two—there will be a lot to look for. A few of the top questions:

• Will the deal require them to also sell rights to a local MVPD so that fans without OTT access can watch too?
• Will Amazon try and market the RSN via an app that’s available as an add on? And will that app be free with Prime membership and not-free for others? (Yet another reason to get Prime.)  Will there be a version of the RSN app for multiple devices or only Fire TV?
• Will Whole Foods start carrying logo merchandise for the local RSNs teams?

All these questions will be worth watching and should likely be answered within the next 90 days.

2. Apple Might Be Thinking About A Lower Priced Dongle

There was as story in a Silicon Valley publication this week that there have been discussions at Apple about creating a lower priced dongle-style streaming TV device to compete with Roku and Amazon.

Why It Matters

Given that the Apple TV is $179, and Roku and Fire TV are often on sale for $25, this would only be surprising had Apple not considered it.

It’s unclear whether the discussions were a prelude to actually putting a device into production or someone merely stating the obvious at a meeting, but those of you who regularly read TVREV know that we’ve often marveled at Apple’s obliviousness in this matter as (a) their market share is much, much lower than Roku’s and Fire TV’s, and (b) that matters A LOT because they are apparently basing their multibillion dollar TV business on the fact that they will provide free programming via Apple TV devices.

What’s even more baffling is that Apple has done something very similar in the past—the iPod Nano was introduced because not everyone could afford an iPod. Why they would not do the same thing for TV is the stuff Harvard Business School case studies are made of. Especially because the current Apple TV—even the 4K one—is in no way superior to its much lower priced Roku and Amazon competitors.

What You Need To Do About It

Not much to do here other than sit back and watch what develops. We still know so little about Apple’s plan for TV—the latest scuttlebutt is that they are going to release all their TV shows for free on an app that attempts to recreate the Amazon Channel Store experience but only works on Apple devices.

That sounds good on paper, until you consider that something like 80% to 90% of TV programing is watched on an actual TV set rather than a smartphone or tablet, and that Apple TV has such a small piece of that market and that nothing on Apple TV is going to be compelling enough to make viewers go out and buy a $179 box.

Which is why a $29 dongle would be the smartest TV-related move they’ve made to date.