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Friday, October 6th, 2023 2:00 pm EDT
Key Points
- Transformation of Media Industry: The NBA’s decision on which companies will acquire TV and streaming rights for its live games has the potential to reshape the entire media industry. Major players like Comcast’s NBCUniversal, Google’s YouTube TV, Amazon, Apple, and even Netflix may challenge or join the current rights holders, marking a pivotal moment in media rights negotiations.
- Unique Opportunity for NBA: With the NFL’s media rights locked up until 2033, the NBA has a rare opportunity to become a media kingmaker. Live sports, in high demand among advertisers, have seen their value steadily rise, and the NBA is expected to secure a significant increase in its new media deal, potentially ranging from 200% to 350% more than the previous agreement.
- Rise of Ad-Supported Streaming and Global Reach: Netflix’s potential interest in the NBA, especially in its ad-supported tier, could disrupt the industry. Netflix’s push to add customers to its ad-supported tier aligns with its strategy to increase average revenue per user (ARPU). The NBA’s appeal extends globally, making it a valuable addition to an ad-supported streaming service. Other potential streaming partners like YouTube TV and Amazon are also in consideration, with the NBA seeking to balance demand, supply, and viewer experience to maximize rights’ prices while simplifying access for fans.
The upcoming decision by the National Basketball Association (NBA) on which companies will acquire TV and streaming rights for its live games has the potential to transform the media industry. Several major players are expected to challenge or join the current rights holders, including Comcast’s NBCUniversal, Google’s YouTube TV, Amazon, Apple, and even Netflix, according to sources. This renewal of media rights is significant, occurring approximately once a decade, and the NBA’s current rights deal expires after the 2024-25 season.
The NBA’s unique position as a media kingmaker stems from the fact that the National Football League’s media rights are already locked up until 2033. The value of live sports has been steadily increasing as advertisers seek live events where commercials cannot be skipped. Analysts predict a substantial increase in the NBA’s new media deal, possibly ranging from 200% to 350% more, according to former ESPN head John Skipper.
Netflix’s potential interest in the NBA is noteworthy, as it marks a shift in the company’s stance on live sports. Netflix is exploring opportunities to add NBA games to its ad-supported tier, which launched recently and has already attracted millions of subscribers. This move aligns with Netflix’s strategy to increase average revenue per user (ARPU) through its ad-supported offerings.
The global reach of Netflix, with subscribers in multiple countries, makes it an appealing partner for the NBA, given the league’s international star power. However, the NBA is also considering traditional broadcasters like NBCUniversal, which has both broadcast and streaming capabilities through Peacock, albeit with fewer subscribers. Other potential streaming partners include Google’s YouTube TV, which has impressed the NBA with its production quality and user experience, as well as Amazon, known for its substantial investments in live sports.
The NBA’s challenge is to balance demand and supply when carving out media packages to maximize rights’ prices while ensuring that viewers do not become overwhelmed with multiple streaming options. The league aims to use its NBA app and NBA.com as digital “front doors” to streamline content discovery and viewer access to streaming services, helping manage the complexity of multiple media partners and maintain viewer engagement.
In conclusion, the NBA’s decision on media rights partners has the potential to reshape the media landscape, with major companies vying for broadcasting and streaming rights, and the league seeking to optimize its reach and revenue while simplifying the viewer experience.
For full original article on CNBC, please click here: https://www.cnbc.com/2023/10/06/nba-can-shift-balance-of-power-in-media-with-rights-deal.html
