The week of August 16, 2015

The future of sports is streaming

By Ferguson Mitchell

A growing subset of NFL fans want an easy and accessible way to stream Sunday’s action. But good luck getting a la carte sports options online.

When the NFL announced its international streaming service, Game Pass, would finally be available in the U.S. last month, cord-cutting football fans were initially ecstatic. In the past, American fans who hoped to bypass cable were largely stuck with Game Rewind. True to its name, that service only let you watch the big game on an hours-long delay, which was completely unacceptable to the sports fans who demanded live viewing.

Then the full details were announced. The “new” Game Pass was basically just the old Game Rewind with a few minor changes. The only notable improvement was that preseason games were viewable live online—but regular and postseason games were still delayed. Rewind cost only $69.99 last year, but Game Pass is now charging $99.99.

With the noted exception of the NCAA’s Final Four tournament, there aren’t any good online streaming options for fans of sports. Most leagues are governed by archaic out-of-market and blackout rules, which were created decades ago to protect new stadiums and networks, often shutting out fans from the games they want to watch most. These deals with cable companies can be incredibly lucrative, but in the past they’ve either cut out online streaming or limited it to people who already have a cable subscription, as seen with WatchESPN and its competitors from Fox Sports and NBC.

Sports need to be available to the biggest possible audience. Even casual fans who don’t watch often will tune in for playoffs or other notable games. That basic principle of luring viewers on special occasions has worked for more than 50 years now, regardless of what contact sport was most in fashion. And today, that means streaming.

Esports have grown up online. Streaming is a central function to its very social fabric.

We’ve already seen this transition happening in other parts of the entertainment industry. Netflix is dominating when it comes to streaming television and movies, and HBO has finally given up its ties to cable subscriptions.

Sports appear to be the last remaining pawn in the clutches of the cable industry, but cracks are starting to appear. NBC’s SNF All Access, for example, allows free streaming of its Sunday Night Football games. MLB offers a $109.99 subscription for livestreaming all out-of-market games—no strings attached. These kinds of promotional streams and simple subscription models will only increase as fans demand more similarity between the sporting products and the other streaming entertainment products they’ve grown to love.

But there’s one industry that’s long been paving the way forward, merging the streaming that cord-cutters love with sporting—esports.

Esports have grown up online. Streaming is a central function to its very social fabric, and that’s made them extraordinarily successful. Some studies suggest that esports could be making close to $500 million in revenue in just a few short years. While that estimate pales in comparison to typical NFL and MLB revenues, which each annually earn in the range of billions, the key to the success of esports, in part, lies in who’s watching: the vaunted 18-34 male demographic, a problematic market for traditional media despite being one of the most historically sought-after.

Largely decentralized and absent the shackles of television rights, esports adopted one of the most open entertainment standards ever seen. Right now, you can go to the streaming website Twitch and choose any of hundreds of streamers to watch or play a video game for free. Similarly, almost every league is absolutely free to watch, are the on-demand videos of matches that follow.

Largely decentralized and absent the shackles of television rights, esports adopted one of the most open entertainment standards ever seen.

This completely open system has played a huge role in the explosive growth esports. Rahul Sood, owner of esports betting platform Unikrn, thinks esports as a whole will be as big as the NFL by 2017. Sponsorship money is sure to follow. And esports already has its equivalent of the television deal: Streaming companies are bidding big money to keep their biggest viewer draws from moving to their rivals. Those numbers may be measly compared to TV contracts for sports, but as esports grows, so too will exclusivity deals.

There are other ways esports make money, too. Dota 2’s The International 5 had its prize pool boosted by more than $16 million through sales of a compendium that included in-game add-ons and tournament-related features. The game’s developer, Valve, pocketed 75 percent of those sales, with 25 percent going to the prize pool, which means it netted more than $50 million simply from promotional items for that one tournament. That’s in addition to the game’s normal revenue earned from the game, which is quite significant in its own right (roughly $18 million a month).

Of course, with every passing year, there’s hope on the horizon for streaming devotees who love their sports. This year, it’s a deal between Yahoo and the NFL that grants global streaming rights to a single NFL game: the Buffalo Bills–Jacksonville Jaguars matchup in October. It’ll mark the first time that the only thing you need to watch an NFL game is an Internet connection. And it’s key that the NFL picked Yahoo, a free streaming outlet for anyone with access to the Web, and not, say, one of the two pay-per-view providers who threw money at the league.

“The NFL has always been committed to being at the forefront of media innovation,” NFL commissioner Roger Goodell said in June. “Through this partnership with Yahoo—one of the world’s most recognizable digital brands—we are taking another important step in that direction as we continue to closely monitor the rapidly evolving digital media landscape.”

In another statement on the deal, the NFL said it’s “leveraging Yahoo’s global audience, digital advertising capabilities, and delivery platforms, which span desktop, mobile, tablet, connected TVs, and set-top boxes to ensure that the Bills-Jaguars game is accessible on every screen globally.”

Of course, for esports, that’s been the case all along.

Illustration by J. Longo