The Great Sports Streaming Reckoning: Are High Prices Striking Out?
For years, regional sports networks (RSNs) operated under a seemingly invincible business model. They were the kings of cable, raking in substantial per-subscriber fees from every household, regardless of whether anyone actually watched the games. This revenue stream, fueled by the bundling of channels, provided a cushion of financial security that allowed them to thrive.
However, the rise of cord-cutting – the increasing trend of consumers ditching traditional cable subscriptions in favor of streaming services – has thrown a wrench into this once-reliable machine. As more and more viewers sever ties with cable, RSNs are facing a harsh reality: their traditional customer base is shrinking, and the future of their business is uncertain.
In response to this challenge, many RSNs have adopted a direct-to-consumer (DTC) streaming strategy, offering standalone subscriptions to their channels. The initial approach was to set prices at a premium, banking on the devotion of die-hard fans to offset the revenue losses from cable. The underlying assumption was that high prices would discourage further cord-cutting while still capturing the wallets of the most dedicated viewers.
But this strategy has largely backfired. The article highlights the struggles of these networks that are failing at the same strategy, and the national sports networks will be next. The standalone subscription services, often priced between $20 and $30 per month, have failed to attract the anticipated number of subscribers. Consumers, it turns out, are unwilling to pay such a high premium for regional sports content, especially when other entertainment options are available at a lower cost or even for free.
The case of FanDuel Sports Network (formerly Bally Sports+) is a prime example. When its streaming service launched in 2022, the company hoped to reach 4.4 million subscribers. However, the actual subscriber count is only around half a million, far short of the initial projections. The channel has also suffered a significant loss of pay TV subscribers, further highlighting the failure of its high-price strategy.
NESN 360, which offers live streams of the Boston Red Sox and Bruins, has recently acknowledged the error of its ways. The network has dropped its annual price from $330 to $240 and even throws in four Red Sox tickets. This price reduction signals a shift in thinking, as NESN president David Wisnia admitted that the initial pricing was too high, especially in the face of inflation and a saturated DTC market.
Main Street Sports Group, which operates regional FanDuel Sports Network channels, has also hinted at lower prices, indicating a growing recognition that the high-price strategy is unsustainable. Some teams are even experimenting with alternative models, such as offering free over-the-air broadcasts or streaming individual games for a small fee, prioritizing long-term reach over short-term subscription revenue.
The struggles of RSNs have implications for the broader sports streaming landscape. ESPN and Fox are planning to launch their own standalone streaming services later this year, and there is a growing concern that they may repeat the mistakes of the RSNs. ESPN is rumored to cost between $25 and $30 per month. Fox CEO Lachlan Murdoch has stated that it will intentionally charge a high price, so as not to cannibalize its pay TV business.
The author argues that this approach is misguided. If sports fans are already balking at paying $30 per month for regional sports, they are unlikely to pay similar prices for a smattering of nationally televised games. Moreover, the author questions the logic of offering a service whose price is intentionally unappealing.
The fundamental problem is that sports streamers are facing astronomical costs for live sports rights, and these costs are unlikely to decrease anytime soon. This makes it difficult to offer affordable streaming options without sacrificing profitability.
The author suggests that the solution may lie in more attractive and flexible bundling. Disney and Max have already found success bundling their non-sports streaming services together at a discount, and Disney could pursue something similar for ESPN with Fox’s streaming service. They could also offer regional sports add-ons at lower-than-standalone rates. By putting lots of sports in one place, and offering fairer pricing they can reach a larger audience.
The author concludes that sports networks have spent far too long trying to prop up traditional TV packages with little to show for it. To remain competitive in the evolving media landscape, they must embrace new strategies that prioritize affordability, flexibility, and accessibility. Instead of clinging to outdated models, they need to focus on building something better to replace them.
