Silicon Valley is moving aggressively into the professional and major college sports business, posing a severe threat to the nation’s biggest broadcast networks and media companies.
Leading tech players including Netflix, Amazon and Apple are steadily expanding their offerings in sports, giving more competition to broadcast networks — which risk eventually being outbid for rights to show games across the NFL, NBA and MLB.
The trend has been building for years, with a growing number of observers and analysts warning legacy media brands are quickly losing leverage to compete with Big Tech for the most reliable driver of audience year after year.
Netflix this year inked a multibillion-dollar deal with the NFL to show games on Christmas Day.
Amazon has already taken a piece of the league’s Thursday night football showcase and this summer scored a significant win when it entered into an agreement with the NBA to secure a major portion of the next round of the league’s broadcast rights.
Apple does not own Major League Soccer, but it has a 10-year deal to present its games amid a growing attachment to Lionel Messi.
More is almost certainly coming.
Experts and observers say the trend creates an unnerving outlook for some of the biggest brands in the media, many of which are already taking major markdowns on linear broadcast assets.
Broadcast networks for years have used live sports to bring big audiences in and market their other unscripted entertainment offerings.
They today face a landscape where companies with even deeper pockets that have already taken a big bite of the entertainment pie are going after the advertiser-coveted world of live sporting events.
“Sports has been a cash cow that legacy media could count on, and this push by streamers into sports is a real threat,” said Nicole Kraft, a professor of sports media at Ohio State University. “Once you have this kaleidoscope effect of sports coverage, that’s going to start to impact advertising dollars for them in a meaningful way unless they are able to stem this tide.”
There is no question sports rights are among the most profitable assets for legacy media, with NFL games accounting for more than 90 of the top 100 television broadcasts in 2023, according to Nielsen Media data.
This year, the bidding war over a new NBA contract was a closely watched battleground between the two sides.
Amazon offered more than $1 billion a year to broadcast the NBA’s marquee games, while the incumbent Warner Bros. Discovery, which owns TNT and TBS, lost its grip on a years-long partnership with a league that enjoys wild popularity overseas.
Other major legacy brands like Comcast, which also secured a portion of the next round of NBA rights, have similarly made streaming a major part of its pitch for NBA games.
“For as long as I’ve covered this beat, broadcast television is where everybody wants to be because that’s had the largest reach,” John Ourand, a longtime sports business reporter, commented during a recent podcast for Sports Illustrated.
But increasingly, experts like Ourand say linear broadcast channels are not as desirable for leagues and advertisers, given widespread cord-cutting by fans in the U.S. and a growing market overseas as they expand their direct-to-consumer streamed sports.
“The NBA is looking at [a company like] Netflix and it has a reach that goes beyond our shores,” Ourand said. “Something like Amazon is able to reach more people and a different demographic of people than traditional TV is used to.”
With more consumers ditching cable each year in favor of options like YouTube TV and Hulu, live sports are increasingly seen by many inside the business as the foundation keeping traditional cable and broadcast networks afloat.
If legacy media companies want to compete in the world of live sports, these people say, they need to offer an easier-to-use product for consumers that makes more games available while keeping costs for subscriptions affordable.
For most legacy media companies, that is proving to be a challenge.
Disney has pushed back the rollout of its first-ever direct to consumer streamed sports service, which was set to debut this spring using its crown jewel, ESPN, to offer college football, NHL and NBA games to fans.
And while the company in August reported a less than $50 million profit on streaming for the first time ever, Disney is facing intensifying questions on how to best leverage ESPN amid a further push from linear to streaming.
Paramount, meanwhile, currently offers coverage of live games through CBS Sports on its subscriber-based streaming service Paramount+, while Warner Bros. Discovery makes featured NBA and MLB games available through its Max paid subscriber service.
Part of the reason streaming services offered by legacy media companies have struggled to gain the popularity of options like Netlfix and Hulu, observers say, is the overwhelming menu of apps, the widespread trend of password sharing and resistance to new technology by older demographics of fans.
“Some of the anxiety from a consumer standpoint is there are so many options, that’s part of the reason it can, in some cases, be more expensive than traditional cable,” said Guy Harrison, a professor of sports media at the University of Tennessee. “There’s no doubt that live sports are the golden goose of live television … it’s also far more expensive than any other type of content to provide your audience.”
It’s only getting more expensive for large media companies, and now tech giants, to broadcast live sports content.
Bloomberg this spring estimated pro sports leagues rake in about $20 billion in media rights each year, noting CBS, as one example, took in half a billion in Super Bowl advertising dollars alone in return.
Silicon Valley behemoths like Amazon and Apple, which have highly profitable businesses outside the media sector, are showing an increased willingness to make such a pricey investment on live sports as they build brand loyalty around streaming.
Amazon, Apple and Netflix have thrown billions at sports leagues to show games, hire top talent away from broadcast networks and build subscriber bases around sports-obsessed fans.
Their presence has forced increasingly sharp questions about how long the legacy players can stay in the fight.
“On the scripted and entertainment content and entertainment side, there’s a pretty compelling argument that streaming is a better experience, but that’s not necessarily true with sports,” one top executive at a leading legacy media company told The Hill early this summer. “The highest compliment you can give about a Thursday Night Football broadcast on Amazon is that it looks just like a Sunday Night Football broadcast. They’re not improving, they’re just replicating the experience that you already get from traditional brands.”
In an attempt to fend off the tech blitz, some legacy media brands are banding together to protect their top content asset.
In January, Disney, Fox and Warner Bros. Discovery announced they had partnered on a first-of-its-kind joint sports streaming venture, dubbed Venu, that would offer live games directly to consumers.
The companies this summer announced a subscription to Venu would cost more than $40 monthly and were targeting a launch this fall, pending regulatory approval.
The live sports joint venture immediately faced legal scrutiny, with live TV streaming platform Fubo filing a lawsuit just days after plans for the project were announced, alleging anticompetitive practices.
A group of congressional Democrats this summer wrote to the Department of Justice and Federal Communications Commission urging them to “closely scrutinize” the joint venture, which the lawmakers said would enable the companies to “discriminate against competitors and increase prices for consumers.”
A judge in New York this month ruled in favor of Fubo, halting the roll out of Venu and dealing another major blow to legacy broadcasters that are still reeling from major Wall Street markdowns on their linear assets just weeks prior.
The cost of most major streaming services has risen by an average of 40 percent since it was launched, according to a recent analysis conducted by Axios of the cheapest tier of services.
And with leagues partnering more frequently with tech platforms and adding more games to their schedules each year, some across the industry have suggested the government should consider tightening regulations on future mergers and acquisitions, though how they would do so remains unclear.
“The migration of big sporting events to streaming exclusively I think is an issue that is something that governmentally and societally we should be looking at,” Chris Ripley, the CEO of Sinclair Broadcast Group said during a recent speech at The Media Institute. “I think a lot of what’s going on right now is experimental, stunting, things like that. But if you are a sports rights holder, you’re actually hurting your brand. You’re hurting your long-term viability if you paywall yourself exclusively on one platform.”
One big winner from the ongoing battles are the sports leagues themselves, and particularly the NFL.
The NFL remains the most popular and profitable professional sports league, evidenced by a Super Bowl earlier this spring that brought in more than 120 million viewers on CBS, including a record number on streaming.
The NFL’s recent deal with Netflix underscores the streamers’ growing prominence in the sports media space and comes as the starkest warning sign yet for legacy media brands.
“The entrance of the Amazons and Apples is an incredible boom for the leagues,” Mark Hyman, the director of the University of Maryland’s Shirley Povich Center for Sports Journalism, told The Hill. “These are companies with ginormous valuations, and a league like the NFL wants to have every television in the United States and beyond tuned into their games.”
More partnerships like the one between Netflix and the NFL, a growing number of insiders say, signals that a migration in sports toward tech is only just beginning.
“I think one could make the case that the three largest television companies today are Netflix, YouTube and Amazon Prime,” said Eric Schmitt, an analyst at media consulting firm Gartner. “They know how to monetize every click, every interaction with their platform, so they’re a near term existential threat in terms of limiting the growth of those other [legacy] business, who at this point are in a very difficult spot.”