Last week, the NBA announced its new “reimagined all-in destination global app” that it basically wants to make a one-stop destination for the league’s fans worldwide.
It could become a very big deal because of the idea of one digital storefront to sell the rights to view all of the league’s games, the implications of Sinclair potentially heading into bankruptcy and what the app could mean for the next national TV rights negotiations.
Let’s go through it.
What the NBA announced: Here are some of the highlights of what the app will feature:
• It will be available globally.
• Wall-to-wall content from every game.
• Continued development of alternative ways to view games.
• Behind-the-scenes access to players and teams.
• Access to NBA League Pass with a new low price of $14.99 per month or $99.99 for the whole season.
• Access to classic games.
Let’s put our two index fingers up Windhorst-style and say, “Why would the NBA do that?”
1️⃣ The nature of distribution has changed, which has resulted in those with the most vital content having more power. The internet has created the chance for an individual or a business to reach the whole world at scale without needing another delivery service.
Though a content provider such as the NBA still can enjoy the fruits of the old model — and does, via its cable and broadcast TV deals — it can increasingly see a world where it can go direct-to-consumer or, at least, position that option as a threat to the old model to leverage even more billions of dollars in future deals.
2️⃣ This is happening while the cable model is under extreme pressure, especially with Sinclair Broadcast Group flirting with bankruptcy. This is a pressing issue for the NBA, MLB and the NHL because Sinclair owns the local broadcast rights to the games of 16 NBA teams, 14 MLB teams and 12 NHL teams.
3️⃣ The NBA recently “helped” Sinclair with its re-financing while granting Sinclair the rights to stream the games of teams for which it already owned the cable rights.
(Windhorst fingers time!)
Why would they do that? Well, I don’t know the intricate details of the deal, but my understanding is the NBA could take back the broadcast rights of (including the Mavericks, Heat, Bucks and Clippers), which would help the league develop a direct-to-consumer model. The aforementioned app could be at the center of the offerings.
4️⃣ The NBA is watching what MLS is doing with Apple. Apple will sell MLS subscriptions all over the world. Though it is debatable whether this approach will work with MLS, which is merely a top-10 league in the world and nowhere near the best, the NBA is one-of-one in professional basketball. The NBA could take an iTunes approach, selling subscriptions out of one store (with no real middleman because of the reimagined app-based distribution center).
The NBA could do this with a lot of partners or just one. The incumbents, ESPN and Turner (which is already a partner on the app), plus Apple, Amazon and who knows else could be partners. The NBA could try to go it alone, too, though, I doubt it will.
5️⃣ Let’s be clear: ESPN/ABC and Turner Sports (or a similar entity) aren’t going anywhere. The NBA’s next rights deal in 2025 will include networks with broadcast television being the platform of choice. But it would be surprising if, at the least, a third package is not added. And major changes to how we pay for and view local games are most definitely in play over the next decade, maybe much sooner.
6️⃣ Dating back to the late commissioner David Stern, the NBA historically has been very good at figuring out the market. It understands that a younger set of fans takes in sports differently. You can see that in the app announcement. It is not just about watching full games. It is about creating a hub for the NBA experience and different ways to view games and highlights. It is trying to put the fan — especially the younger fan — first. It is increasingly a problem for sports – and the NBA it is at the forefront of this issue – that the regular season has lost importance and if LeBron James does something spectacular, the highlight is everywhere on social media in moments. The incentive to watch a game live is not as great as it once was, and the NBA does not control the relationship if the highlight is viewed on Instagram.
7️⃣ The NBA used to have two apps, one for the domestic audience and one for the international audience. Now it is trying to have one-stop shopping. What digital distribution allows businesses to do is to open up a store that is as easily available in Boston as in Bangladesh as long as customers can access the internet. The NBA has grown the popularity of its sport internationally for a long time. It could sell its games directly to consumers around the whole world.
8️⃣ The NBA could change how it produces local games. If regional sports networks (RSNs) eventually disintegrate, the NBA could try to do everything in-house, producing and broadcasting the games in a central way. And sell them that way, too.
9️⃣ The NBA also could create its own subscription service that may work in conjunction with RSNs. So there could be an overall subscription for all the games, including your local ones, but there also could be an offering just for Knicks games, for example, in which the rights holder (MSG, in this case) would see most of the money. The NBA could create its own front door to directly reach fans and/or negotiate with cable companies if cable stays viable.
1️⃣0️⃣ Though a form of the plan we have outlined very well could happen, it wouldn’t surprise us if the NBA just uses this as leverage.
1️⃣1️⃣ To be clear: The league actually probably wants Sinclair to survive and thrive because, while this is all well and good, the RSN system is still very sweet for the NBA.
Last shot: The digital disruption of distribution has given the biggest and strongest global content providers enormous power.
NBA Finals ratings are still important, but there is a new game emerging.
So put up your Windhorst index fingers and ask yourself about last week’s announcement of the all-in-one NBA global app and say, “Why would the NBA do that?”
It is a hint of what is potentially coming with the 2025 TV rights negotiations around the corner.
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