ESPN Eyes OTT Video for NBA Games7 Oct, 2014 By: Erik Gruenwedel
NBA’s new massive broadcast contracts could mark major league sports' entry for the first time into the subscription streaming era
Lost in the hubbub of the Oct. 6 landmark $24 billion multiyear (through 2025) broadcast contracts Walt Disney Co.’s ESPN and Time Warner’s Turner Broadcasting Systems collectively signed with the National Basketball Association, was the fact ESPN — for the first time — plans to create over-the-top video channels offering live NBA games outside the traditional pay-TV bundled ecosystem.
An ESPN subscription streaming service featuring NBA games would be the first of its kind in the United States, where major sports such as the NFL, NHL, MLB and NBA adhere to lucrative broadcast agreements with multichannel video program distributors such TV networks (Fox, CBS) and satellite (DirecTV), among others.
Major League Baseball has operated subscription-based MLB.tv for some time, offering subscribers live and on-demand access to regular season games — outside local TV markets.
SVOD pioneer Netflix has repeatedly expressed zero interest in pursuing sports programming (or spot advertising for that matter), despite commanding a global subscriber base around 50 million.
"This is the first crack in the structure of the television business that has been in place for decades," Jim Nail, analyst with Forrester Research, told Reuters.
While Turner will continue to co-manage with the NBA the latter’s digital assets, including NBA TV (which is similar to MLB.tv), NBA.com, NBA Mobile, NBA League Pass, and WNBA.com, which Turner operates out of its Atlanta production facility, ESPN was granted enhanced digital rights to provide NBA content for multiple ESPN platforms, including ESPN.com and WatchESPN.
“The parties have also established a framework for ESPN and the NBA to negotiate the launch of a new over-the-top offering in which the league would receive an equity interest. Details for the new offering will be announced at a future date,” the NBA said in a statement regarding the contracts.
The blueprint for a separate ESPN subscription streaming platform could be found across the Atlantic in the United Kingdom, where BSkyB has launched OTT channels offering 24-hour, week and month-long passes to live sports, including soccer, car racing and rugby.
Talking about and actually launching a separate ESPN video channel remains very much a work in progress. ESPN, as the No. 1 sports network in the country, currently carries one of the highest fees among all premium channels contracted via retransmission agreements with MVPDs. Creating an ESPN streaming channel outside of the lucrative retrans ecosystem could very easily upset the premium channel’s gravy train.
Indeed, DirecTV just re-upped its broadcast deal with the National Football League for $1.5 billion to sell its popular "Sunday Ticket" menu to subscribers who watch live on television.
But Disney has not shied away from embracing evolving technology and changing consumer viewing habits regarding TV shows. Its recent retransmission agreement with Dish Network calls for the creation of standalone OTT platforms to be launched in the fourth quarter.
The NBA and ESPN apparently believe the sports-viewing pie is big enough to accommodate a few more slices.
"The NBA has never been more popular globally,” John Skipper, president of ESPN, said in a statement. "By acquiring significantly more NBA content on both existing and yet-to-be created platforms, we will establish a vibrant year-round relationship with the NBA and bolster what is already the sports industry's most impressive and impactful collection of media rights."