Diary of a Sports Cord Cutter: Carnage and Opportunity

By Brad Hubbard | @bradhubbard | 5.23.2017


It’s what they call in Washington a ‘True Fact’ that cord cutting is affecting the sports world in a major way. North America’s biggest sport rights holder, ESPN, is front and center in this battle of the cord cutting and the traditional way things have been done.  Subscribers are fleeing at a rapid rate (down 12% since 2010) and ESPN along with the sports leagues are trying to figure out how to stop the bleeding or profit from the change. While the traditional powers are nervous, small leagues and up and coming sports are rejoicing.

ESPN has spent billions on sports rights between the NFL, NBA, MLB, college football and others. To give you an idea of how much they do spend a year, they spend over a billion dollars on the NFL alone and they only get one game a week! With the old cable and satellite model being blown up, the network and the leagues are looking at every option available to them which is partially why ESPN’s parent company, Disney, bought into MLB Advanced Media last summer.

The NFL, MLB, MLS, PGA and NBA are already reaching out in different ways to get their live programing to their fans. Whether it is the NFL cutting a deal with Amazon or MLB and MLS signing deals with Facebook, the sports leagues are already preparing for the day when they see a decrease in the value of their sports rights. Gone are the days of multi-billion dollar deals for the exclusive right to show a sport. In the near future the leagues and big time college conferences will have to spread the costs among several outlets.

ESPN is approaching this transition a little discombobulated. The fact is that live streaming on platforms like Amazon, Facebook and Twitter will not replace the loss of dollars from the traditional cable/satellite/TV world. However, these new platforms are a life saver to niche or relatively new entities like eSports, MMA and others.

ESports were born online and are thriving on platforms like Twitch, YouTube and even Facebook. These OTT platforms are also paying a whole lot less for the sports rights than ESPN, NBCSports and Fox Sports are paying for traditional sports like the NFL and NBA. These new platforms also provide these niche or newer sports the right demographic and a ton of exposure.

What does this mean? A lot more exposure for League or Legends, Overwatch and even the UFC if they play their cards right.

Remember, these niche and newer sports and starting from scratch in a way. An mid eight figure deal for an eSports league or new MMA organization is a windfall for them. The same can be said for a non-power five conference like the Mountain West who floated the idea earlier this year of going to straight OTT model.

The fact is that Disney, Comcast, and Fox are unlikely to retract the amount of cable outlets they have. And if they are unwilling to play these huge amounts for the rights to the NFL, NBA and others then they’ll have to fill the hours on their networks somehow. That could give newer, cheaper sports entities like Riot Games League or Legends or the UFC an opportunity to swoop in provide quality content that pull desirable demos for a reasonable price.

The winds of change are upon the sports networks and leagues. You are already seeing layoffs because of these changes and you are going to see more. But these changes are inevitable and disrupting but not the end all be all. Opportunity does exist for the traditional sports networks and leagues but the have to accept the fact their options may not be as beneficial to them as things were in the past. For the newcomers, get ready for a windfall of money and a lot more exposure. Here’s to hoping that you know how to scale.

The Next Big Thing Started Big

By Brad Hubbard | @bradhubbard | 2.14.2017

Due to my day job, I had the opportunity to spend some time at RIOT Games recently. I knew that e-sports was popular but I didn’t know how popular it was until I spent some time with the RIOT Games folks. Afterwards I began to dig into the sport a little bit more and found some interesting parallels between e-sports the UFC and some of the bigger, established sports like the NBA.

The last ‘big thing’ was the UFC and you could argue that it still is. While the UFC was turned around by the near bottomless checkbook from the Fertiitta brothers and the vision of Dana White, it couldn’t have made it without the rapid adoption of the Internet in the mid to late 90’s. From bulletin boards to chat rooms to user groups, it was this medium that helped keep mixed martial arts alive while White and the Fertitta’s fought to get back the UFC back onto pay-per-view in the early 2000’s.

Full disclosure, I was a UFC employee from 2006-2013. 

Fast forward a decade and a half or so and e-sports is the now the next big thing. While the ‘athletes’ in e-sports wouldn’t last 30 seconds in the Octagon with a UFC fighter, most UFC fighters wouldn’t do well against any of these gamers either. But the Internet and global distribution are what both have thrived on.

It was a long, hard slog for the UFC to build up its global network. They built the brand up in America first and then slowly but surely locked in TV deal after TV deal in various countries around the world while also expanding their online distribution footprint to the point where they launched UFC Fight Pass in 2014.

E-sports on the other hand started globally because it was born online. From Asia to the Americas to Europe, it has been a global sport since day one. It is a sport that is thriving on over-the-top (OTT) networks like Amazon’s Twitch and Google’s YouTube.

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While networked gaming goes back two decades (LAN Party in the dorm anyone?) it has flourished in recent years drawing in several big name investors and sports organizations along the way to the point where the NBA is seeing this as a new vertical for the league and it’s teams.

Recently the NBA announced a partnership with Take-Two Interactive to launch a professional e-sports league with teams managed by current NBA franchises.

While other mixed martial arts organizations existed, the UFC was the premiere player. E-sports on the other hand have several big name players from the start like RIOT Games and Activision | Blizzard to name a few. Now with addition of the NBA and major soccer clubs like Ajax and Manchester City, there are multiple behemoths battling it out in the space.

The NBA wasn’t the first to see the benefit of e-sports or sign a major deal. RIOT Games, maker of League of Legends, signed a deal with the Big10 not too long ago to broadcast games between school sponsored teams. So Rutgers may not have a chance against Ohio State on the football field, but in League of Legends, only time will tell.

The investments by the NBA, soccer clubs, and the Big10 makes a lot of sense. Live sports have been under fire for a couple of years now. While previously seen as ‘DVR proof’, the recent decline in TV ratings for the NFL and the decline in attendance at sporting events has sent the leagues, conferences and even teams scrambling to find avenues of growth. While starting an e-sports team does not in anyway correlate to increased TV ratings or more butts in seats at a Denver Nuggets or a Purdue football game, it does provide the leagues, conferences and teams a chance to not fade into irrelevancy and leverage existing advertising and marketing partners by providing them a young desired demo.

This is good news for consumers and players in the e-sports realm. There is choice, diversity and no one entity running the show. It also means that e-sports will succeed by whatever revenue standard you put up against it. Wall Street and the NBA have a tendency to not bet on things that are doomed to fail and anytime you get college kids involved, there is no telling the innovation and growth e-sports could really have.

The NBA partnership with Take-Two and the RIOT Games deal with the Big10 can be a blueprint for other leagues and conferences to follow. If these can show short term success and projected long term growth, others will quickly jump on the bandwagon.

E-sports has an opportunity to be the biggest “sport” in the world due to it’s immediate global reach and massive backers. It is doing it differently by not having a concentrated center of power, an individualized rule set for each game and it’s reach across every existing sport and continent. Drop in the explosion in OTT providers from Twitch, YouTube and Facebook Live and you have the makings of something that can, over time, do something that UFC set out to do, eclipse soccer as the world’s dominate sport.

Further Reading

SF Chronicle

Venture Beat