Sports have a unique place as business rocket fuel at least in the offline world. NFL football helped establish Fox as a legitimate fourth network. Various league packages, in part, have helped satellite radio (along with Howard Stern) establish itself. The Sunday Ticket package in the US and various soccer packages outside the US have been important for satellite TV. Sports is the only reliable content that people will pay a premium to watch in real-time, despite the fact that it is easy to get almost immediate news coverage across many mediums as well as video highlights. This is remarkable.
The FT has a nice piece on the always increasing costs for broadcast rights of sporting events. One sports executive describes everything in the broadcast business as a “very shaky swamp” with sports rights as the “one rock on which you can build an edifice.” The FT sees three factors as sustaining the inflation in these rights: networks accepting sports as a loss leader, advertisers willing to pay a premium for sports audiences, and cable and satellite subscribers accepting the continual increases in their bills.
The question I have is whether we have seen sports launch any online business models similar to in the offline world. You have derivative things such as sports news sites and fantasy sports, but has there been anything bigger or is there a potential for anything bigger? It does appear in the US that the leagues and the constituent teams have kept the online broadcast rights for themselves, e.g., MLB has long been praised for its online strategies. Perhaps that is the reason. But it has struck me as curious how important sports content has been in the offline world as a driving force to business models and the contrast with online. Perhaps, I am missing examples in the US or there are better examples internationally?
I also wanted to comment in a later post on cable and satellite subscribers and their tolerance for increased rates and what that means for Netflix and online content models.