1. Fox, WBD, Disney And The Stealth Sports Bundle

On Tuesday, the Wall Street Journal broke the news that three of the largest traditional media companies were going to join forces to launch a new sports streaming app.

The three have a whole lot of sports between them— Fox has NFL, MLB and NCAA football and basketball, WBD has NBA games on TNT and Disney’s ESPN is, well, ESPN.

The move seemingly is in response to the growing frustration sports fans feel that they are the only ones the streaming revolution has not worked out for—that rather than make it easy for them to watch everything in one place, streaming makes it exponentially harder, as evidenced by the need to sign up for Peacock to watch certain NFL playoff games.

Only I’m not sure this is actually going to help them to ameliorate the situation. 

Why It Matters

Let’s start off by saying that there is a whole lot about this new app that we don’t know.

And that by all accounts, the announcement seems to have taken the leagues by surprise. And that they are seriously unhappy about that.

So let’s start with the obvious things we don’t know:

• How much will the app cost?

• Will it be a monthly or yearly subscription?

• Will Max or Disney+ subscribers get it for free, at a discount or will they need to pay full price?

• Will there be games that are exclusively available on the app?

• Will it be available on every device and OS?

• How easy will account sharing be?

• Will the new app just be a rebundler of the three services where the UX is divided into Fox, ESPN and TNT, or will it attempt to have some sort of unique identity and the UX will be divided into Football, Basketball and Baseball?

• How will ad sales work—will each company sell its own inventory or will there be a way to actually buy across the app?

• Will any of the leagues or Fubo decide to take the media companies to court over this?

Before we address this list, let’s look at the things we do know:

• Paramount (CBS) and Comcast (Peacock and NBC) are not part of the stealth app consortium.

• Both networks still have rights to a lot of games fans want to see, like those NFL Playoff games on Peacock.

• While there are many fans who watch sports all year round, there are also many who only care about a particular sport, or, to be fair, only care enough about a particular sport to bother subscribing to a pricey app when that sport is in season.

There’s a lot to unpack there and I’ll try and make it relatively painless.

What Problems Is The App Solving? The stated goal is to provide access for fans who no longer have a pay-TV subscription. But how many of those fans already subscribe to Disney+ and Max? Granted, the Fox Sports piece is great, but, depending on the price, it may feel like a lot to pay just to watch those Fox Sports games (especially if you are someone who traditionally gains access to Fox by using your brother’s Spectrum log-in. Not that we’d ever endorse that sort of behavior, mind you.)

If the app is expensive—and I suspect it will be over $10/month, though perhaps not at first—it may feel punitive, like yet another tax on sports fans. This is especially true given that fans will still need to access CBS and NBC for many games, not to mention Amazon and Apple.

The Two Types Of Fans.  I’ve laid out this theory before, but it is essentially that sports fans can, on a very macro level, be broken down into Fans Of A Particular Team and Fans Of A Particular Sport. (With huge amounts of overlap, but bear with me.)

Fans Of A Particular Team are RSN fans. They will watch any basketball game, so long as the Celtics are in it. Otherwise they don’t care.

Fans Of A Particular Sport are ESPN fans. They just like football or basketball or baseball (often all three) and are happy to watch any game so long as it is a good matchup.

This app seems designed for the latter, but chances are high that those fans are already subscribing to some sort of pay TV service, virtual or otherwise, that gives them access to ESPN and all its many channels. They may even already have ESPN+ to watch soccer, hockey, golf and the like.  So not sure what this adds for them other than maybe the ease of streaming everything from a single app.

And, of course, a green light to go ahead and cut the cord, but for many the ease of having all their sports in one place is going to be a big reason to stick with cable.

Younger Viewers And Sports.  Much has been made of the fact that average viewership for three of the big four (NFL, NHL, MLB) is well over 50, with the NBA not all that far behind. At some level this is an issue, because younger viewers may still be fans, but, having grown up online, know that they can follow most games in real time or see highlight clips later that day, something they view as preferable to spending three hours on the couch. 

There’s the counterargument though, that younger people have busier lives and that people in their 50s and 60s have the time to actually watch and enjoy a full game, and that today’s Zoomers and Millennials will eventually age into couch potato style fandom.

I think both points have some validity but I think the pull of the former is much greater and that younger fans are just not going to be coming back to live sports in replacement-level numbers as they age.

So there’s that.

Advertisers And Sports.  One huge advantage of the app is that it is an advertiser’s wet dream. Live sports by nature are ad supported and so it creates an opportunity to reach often unreachable fans against the sort of high quality premium programming big budget advertisers crave. 

Not only that, but those “unreachable” fans are often unreachable because they subscribe to the ad-free versions of all their other apps, have ad blockers on their browsers and the like. These fans tend to be more affluent and better educated to boot, so the ability to reach them will be a big plus for advertisers.

Rights Negotiations. NBA rights are up for renewal this year. The NCAA is all over the place, what with shifting conferences and all. But most importantly, the tech companies are circling and the way this deal was handled means the leagues are not particularly happy about any of the three participants. This could have long term impact as the leagues decide they can better control the likes of Amazon and Apple, possibly even Netflix. And if not control, exactly, then at least come to more mutually beneficial pacts with companies whose profit margins are not continually under attack and who are unlikely to merge or be merged in the coming years.

There’s also Fubo and all of the MVPDs and vMVPDs, none of whom are going to be happy about an app that seems designed to convince people who’ve been hanging on to a pay TV subscription in order to be able to watch things like Fox Sports and ESPN, to finally cut the cord.

So there’s that too.

What You Need To Do About It

If you are Fox, WBD and Disney you need to immediately start making nice to the leagues—WBD and the NBA in particular. (Those rights are up this year and WBD will likely want to renew them.)

You have a world of things to figure out about the app, from the interface to the ad sales to the marketing to the pricing. And that’s even before you get to ironing out distribution with all of the various device OEMs.

If you’re an advertiser, especially an advertiser that wants to reach upscale, educated consumers against premium original or live content, this app’s for you. Your goal will be to figure out how many people will actually be watching versus whatever juiced-up CPM the app is likely to be charging.

If you are Fubo or one of the other MVPDs and vMVPDs, this could be a very bad thing for you, so you need to push back on the leagues and continue talking to legal counsel.

If you are Amazon and Apple, you have a real opportunity to steal many of these rights away, given the leagues’ unhappiness with the way the deal went down. Carpe diem.

 2. YouTube TV Has Over 8 Million Subs

YouTube CEO Neal Mohan revealed this week that the company’s vMVPD. YouTube TV. now has over 8 million subscribers, making it the fourth largest pay TV provider in the US.

YouTube thus sits just behind newly minted champion Charter (14.122 million), former lead Comcast (14.106 million) and DirecTV (11.85 million).

The number is mostly surprising because recent estimates from MoffettNathanson Research had them at 6.9 million, so the new number is a pretty big jump.

It’s a testament to the growing appeal of vMVPDs, services we have previously described as being a sort of nicotine patch for viewers who are looking to cut the cord.

But that number—randomly tossed into a blog post—wasn’t the only notable bomb Mohan threw out.

The subhead of the section in question was called “YouTube’s next frontier is the living room and subscriptions.”

Gauntlet thrown.

Why It Matters

The fact that YouTube sees itself as a living room player is not exactly news. 

They’ve been saying it for some time now.

And bitching too, that while Nielsen’s The Gauge shows that YouTube is the most watched streaming service on actual TV sets, the rest of the industry acts as if that first line on the chart is invisible. 

I have discussed this all before, the question of whether YouTube is actually “TV” is a complicated one for many reasons, a prime one being that while there are still plenty of “cat videos” on the service, there are also plenty of actual network TV shows and a whole slew of web series that feature broadcast-level production quality.

So that’s likely why Mohan was throwing out numbers.

The size of that number is impressive, however and leaves us wondering where that leaves Hulu LiveTV, whose numbers, just released this week, remain flat at just 4.6 million. Given YouTube TV’s impressive growth and the impending merger of Disney+ and Hulu into a single app, I would not be surprised to see Disney pushing their vMVPD service a whole lot harder.

Especially given how well YouTube TV has been doing.

That would make the two big vMVPDs, along with their smaller cousins Fubo, Sling and DirecTV Stream, a force to be reckoned with.

The appeal of vMVPDs to many consumers is pretty clear.

It feels a lot like cord cutting—no more set top boxes and monthly contracts—while still allowing the subscriber to watch their favorite broadcast and cable channels, particularly valuable for live events.

The question is, of course, how much longer will that last?

It was not that long ago that you could only watch the Super Bowl with a cable subscription. Now it’s available on Paramount+. (Well, this year, anyway, but you get the point.)

So my fear is that the vMVPDs may be enjoying a short-lived heyday right now, but that changes to sports rights and live events like the Oscars may make it easier and cheaper for consumers to just cut the cord.

Which, given how rapidly the prices of vMVPDs have risen as of late, may seem like an even more attractive option.

What You Need To Do About It

If you are YouTube TV or one of the other vMVPDs, make hay while the sun shines. You have a window here before people figure out they can watch all the sports they want on streaming for a lot less than what they are paying you, and that their local broadcast stations have all taken up with the FASTs.

Time to diversify and to see whether you can strike more deals with smaller MVPDs and fixed 5G to the home vendors.

If you are YouTube, realize it is going to be a very uphill struggle to get the rest of the industry to accept that you are TV. But that’s not a reason to stop trying. Everything in this industry is a very uphill struggle. Just keep at it and maybe think about making channels with more TV-friendly (e.g. longer form) content on them to further encourage that behavior.

I get that there is all sorts of internal weirdness around this, about not wanting to cut into the Creator business and all, but if you want to be a TV player, you have to play.

So maybe some Creator FAST channels that live on YouTube TV and Google TV? 

That’s all I got. Any other big ideas you’ll have to pay for. 

You’re welcome.