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For many sports fans, it’s unthinkable. But young people have stopped watching the games live. They would rather watch them when it’s convenient. And that, pardon the pun, is a game-changer.
Last week, several news agencies reported that ESPN, the largest sports network in the U.S., lost 550,000 subscribers in November. That seems like a stunner, but TV ratings analysts at Nielsen say sports viewership has been waning for a while.
Live sports have been the strength of legacy broadcast media, and they paid handsomely to maintain that advantage. Now they’re vulnerable, and it could not come at a worse time. Technology companies with deep pockets want to take cord-cutting mainstream with on-demand programming.
This monumental change in the media environment is reminiscent of changes in the information landscape of the Gilded Age from around 1880 to 1920.
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| The thrill of victory and the agony of defeat … can all wait on my convenience, say Millennials. |
Back then, legendary traders like Jesse Livermore and James Keene were killing it on Wall Street by finding ways to manipulate public opinion through favorable newspaper coverage.
Those were the days when more than a dozen newspapers covered the stock market with multiple editions per day. And operators like Livermore learned how to play them to his advantage — not too unlike a certain real estate magnate who is now the president-elect.
ESPN, a division of Disney (DIS), has been coy about its losses in public statements. In early October, ESPN’s vice president of global research, Artie Bulgrin, told SportsBusiness Daily: “Outside of the fact that we’re in this very strange year, I’m not seeing anything unusual. In fact, it’s probably remarkable that sports is holding up as well as it is.”
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That’s the sunniest possible interpretation. Another is: Viewers are moving away from live sports and toward sports on-demand. While ESPN lost more than 1 million cable subscribers during the past two months, its own numbers show that its digital platform has been setting records. In the past 12 months, it had an average of 109 million monthly viewers who watched a total of 5 billion digital videos.
And that’s where it gets tricky. ESPN will shell out $7.3 billion in 2017 to broadcast live sports. Yet it holds no exclusive rights to the highlight footage that shows up quickly on YouTube. In fact, that high-definition, on-demand content posted by official NFL, NBA and MLB channels puts Sports Center to shame.
As a further affront, recently Variety reported Apple (AAPL), Alphabet (GOOGL), Verizon (VZ), and Amazon (AMZN) want to stream future NFL games.
This desire for digital sports only reflects the overall growing trend toward digital on-demand fare. Netflix (NFLX) will spend $6 billion on original programming in 2017. Amazon’s Prime will spend $3.2 billion. They deliver that content on demand everywhere to smart phones, tablets, computers, video-game consoles and TVs.
The tenth Digital Democracy survey from consulting firm Deloitte revealed Millennials represent more than a third of the U.S. population aged 13-66. At roughly 83 million strong, Millennials are just as likely to consume media content on other screens as traditional TVs. They spend more time streaming video than watching live TV. And, most important, they value their streaming services more than pay TV because it allows them to watch content when they want.
ESPN is now competing head-to-head with determined technology companies that Millennials love. And the cable sports giant probably won’t win, given rising content costs, falling subscribers and migration to an on-demand world.
Netflix is the best pure play for the on-demand trend. It now has more than 83 million subscribers worldwide and 47.1 million in the U.S. Amazon and Alphabet are also formidable players with Prime, YouTube and their sports-streaming aspirations. And now that its problems are finally being aired, perhaps it is time to look at beleaguered ESPN parent Disney, too.
Revisiting the Gilded Age for news?
Back in the Gilded Age – circa 1880 to 1920 – the now-defunct New York World was one of the most popular newspapers. It was emblematic of the innovative mood that pushed the agenda of corporate and Wall Street titans alike. Founded in 1860, it was purchased by Joseph Pulitzer in 1883 and became the inventor of many of the forms of journalism practiced today.
One of its most famous journalists at the time was Nellie Bly, a pioneering investigative reporter in the 1880s. The newspaper’s headquarters, the New York World Building, was the tallest office tower in the world when completed in 1890. It was torn down in 1955 to build a new ramp to the Brooklyn Bridge.
The World became one of the first papers to run color in 1896, and its Yellow Kid cartoon lent its name to the term “yellow journalism,” which means sensationalism. The paper earned that sobriquet amid a series of fierce circulation battles with its archrival, the New York Journal-American, owned by William Randolph Hearst.
Pulitzer was best known for running stories that encouraged the thriving new immigrant community to read his paper, and many of these stories had great social impact, particularly the paper’s campaign against unsafe tenements. It actively covered the exploits of flashy stock market traders – like Jesse Livermore – alternately making them out to be folk heroes or villains, depending on editors’ reading of the public mood. Sounds familiar.
Best wishes,
Jon Markman
{ 18 comments }
Jon, I enjoy most of your articles and today’s is no exception. I’m 73, so no millennial, but I like to watch what I want to watch when I want to watch it. What is driving me more and more to only viewing recorded programming are commercials. They are endless. Not only that they are repetitious. It is like watching the same very lousy movie over and over again every hour of every day. I understand commercials value, but dang! One of my frustrations is 24 hour news. There isn’t 24 hours of news to broadcast so they hire lame-brains to spout their nonsense opinions along with endless annoying commercials. Many of the web news sites are unreadable because of the endless loading and pop-up commercials.
There is a big demand for news and entertainment that isn’t being met, at least for us old guys who are not yearning for the early days of 4″ TV screens.
Allen, I completely agree with you. I am sick and tired sitting in front of a TV to watch a game that should take, say one hour, but lasts twice as long due to endless commercials.
Could it be that some of these “divias,” these overpaid players who refuse to stand and show respect for our flag, our country and our military are having an impact as well?
EXACTLY Johnw1120 couldnt agree with you more
With athletes getting pad enormous salaries to play games while everyone else struggles could one reason. Although many say young people are lazy, most have two to three jobs to make ends meet. So in essence, who has time to watch this malarkey.
Its ok for the OWNERS to make BILLIONS tho? i get so very tired of hearing people pick on the WORKERS, while leaving the BOSSES to their spoils. What players get paid is proportional to revenue. And they take tremendous health risks every time they play for YOUR enjoyment. Gimme a break…
Probably the most important aspect of this topic seems to have been missed, at least in my eyes. This streaming rather than masses watching broadcast/cable TV continues our move to man-on-an-island situation which has been growing. We are and have been getting more and more alone. Less talking face-to-face, watching different entertainment shows, less time on the phone actually talking, along with gaming online has lead to an entire country that can’t communicate and thinks everything should be given to them, in other words; entitlement. It’s just too bad we couldn’t just throw the genie (internet) back into a bottle and be done with it. With all it’s benefits, which are many, the negatives still outweigh them. I’m not going to list them because people will then try to defend them, using their biases and agenda needs. I’ll instead stand pat on my statement.
The Man-on-an-island comment is apropos. Being a boomer I can recall being glued to the TV set every night during the Vietnam War. Our boys were being killed, and we were all concerned about what our country was involved in.
Fast forward to now where I couldn’t even tell you where are troops are, nor what they are doing. We are involved in Syria, Iraq, Afghanistan, supplying weapons to fight in Yemen, and God knows what else covert ops.
There is no more American “World News” on in the evening. News anchors and news people giggle their way through endless human interest stories designed to entertain rather than inform. This amid endless drug commercials which always seem to include horrible possible side effects and end with, “Ask your doctor if…”
Entitlement no, volenteering for charities more, yes. Our youth now are among the best in history no matter how you feel. There is less greed, more tolerance, less theft. And I’m not talking about corporations, I’m talking of todays youth. We as baby boomers and gen-x’ershave become poor idols and out of this even though poor. Our mellenial prevail. Look at how our corporations act, 2008 was a prime example of how to steal taxpayer’s money.
Watch who you blame for societies issues, look in the mirror.
You have to take the good with the bad. Its the growing pains of a society ready to move into a new phase of development. Maybe you miss the closeness of those times, and i can understand that. But the convenience of being able to watch what you want when you want makes more room for productivity. Which is true in my case and I’m sure many others, as evidenced by the innovation (a by-product of productivity) that has taken place in the last 20 years alone. if we look at the last 100 years, we are probably looking at an unparalleled ramp in the development of mankind since Sumer and Egypt created the blueprint for society.
For whats facing us, the productivity is warranted. Although I agree totally that we have less places where we interact, you still have for, the moment, the joy of crowded apartment stores and rush hour traffic. On the other hand, we just may be witnessing the greatest move back to the original spirit of The Constitution since the early settlers. We are setting up society to REALLY make every person’s house their castle. Businesses of all sorts can be conducted from the home/compound, we take our deliveries of supplies, clothing and equipment, and even food can arrived via monthly subscription. Children can be educated at home, and even the collegiate experience is being redefined. I currently take classes at Wharton, something i could NEVER swing at 40 years old being a single dad of an 8 year old girl who I still have to provide for.
The places we still WANT to interact (restaurants, night clubs, theatres, etc.) are still there. I don’t think it will change. What is changing is the places we DON’T, those that take time away from productivity. Although I’ve met a few attractive women at the market over the years, i’ll sacrifice that if it means i dont have to wait in line any more. Think of how many productive hours were WASTED over your life just waiting in line.
I welcome the change.
ESPN lossed viewers because of their liberal bias.
I have all but quit watching NFL games. All of the hype and hoopla about the players/their actions, their whining…. and not the game…. is disgusting to me. The coup de grace has been Kaepernick and friends, all multimillionaires, saying this country is against them……and therefore they disrespect the flag — and in the process all Americans. Enough of this childish disrespect of the USA and the NFL that supports it. I have better things to do than to listen to these children whine about how America hates them….as they pile up millions that the country bestows on them.
I for one am not a fan of the sports programming at ESPN like I once was, for the past several years the background noise has drowned out the analysts statements this makes me wonder why there are analysts in the both. Most cases you can’t understand what they are saying.
Broadcast sports also suffered “boycotts” from viewers who didn’t like football games used as a political platform by certain players.
Another wrenching problem is that many cable subscribers have been forced to buy bundles which always included the pricey ESPN. My sports watching is very low. If given the choice, I would not subsidize the big sports cable shows and opt for viewing digital individual events. Thus I have an incentive to switch away from cable (which I am investigating now). The impacts to cable in general will likely be worse than on the sports industry..
The freedom to choose times and content will force a more free market approach to the industry which has operated more as an oligarchy. When you have an oligarchy, the resistance to change can be difficult given the bias to keep the previously profitable status quo. The obvious change is to charge more for view and restrict free market through copyright infringement protection, Butt with tightening belts by the public with stagnating incomes and rising living costs and every higher taxes, the sports and cable industries will face significant challenges.
I stopped watching because I got tired of all the political BS that ESPN pushes, all the coverage of kapernick and others doing their little protest, and the sports talking heads throwing out their opinions is too much for me.
ESPN Your Fire They ruin College ? I Want College players to play the Game. The NBA is a Big Joke. I hate It’s all bout King James; What a turn Off. $ 2500.00 a year for Comcast Not Cheap.
Jon,
Do you think with all that competion a company like Neulion will carve a niche in this market?
0 debt which is interesting (no pun intended )
Headquarters Plainview, NY
Website http://www.neulion.com
Industry Cable and Satellite
Volatility Medium-High
Market Cap CAD$257.6M
Cash/Debt $92.8M/$0
Revenue (TTM) $136.1M
Earnings (TTM) $41.8M
Total Inside Ownership 34.5%
Recent Price CAD$0.92
Yield N/A