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There is a major logical error in this post. "Sports" is not about to pop. Anecdotally, I would assert sports (NFL, NBA, futbol/ soccer) seem to be growing mor

There is a major logical error in this post. "Sports" is not about to pop. Anecdotally, I would assert sports (NFL, NBA, futbol/ soccer) seem to be growing more popular to every day people. What is potentially about to pop is the "entertainment" apparatus around Sports. Ie ESPN's programming the majority of hours per day that sporting contests are not airing. It feels like ESPN is going the way of MTV. I doubt that music is less popular than it was in the 90s, but the one of its strongest previous consumption channels was disrupted by dozens of access/ consumption points - and simultaneously instead of dedicating themselves to airing music videos, MTV began to divert a lot of their airwaves (and I would assume resources) to reality TV and non-music video content. ESPN (specifically) is in a similar position. On one hand, they appear to be working hard to offer streaming options - but they haven't gone all in on any type of consumption based or bulk access (to my knowledge)... Instead, they put "characters" like Mike&Mike or Stephen A Smith to put on shows that are related to sports. Unfortunately for ESPN there are too many content options (as well as competing sources for contract rights) for them to skate on thinly veiled sitcom characters and _very_ poor quality highlights in a world where we aren't locked in to 1 or 3 "channels" to access what is happening in the Sports world.

gniv 11y ago
The comparison with MTV is insightful. But what do you see as the equivalent of "dozens of access/consumption points" in sports? (I'm not following any organized sports)
- binxbolling 11y ago
  Not sure about dozens, but: you can get push notifications to your phone about teams you follow; scores & updates available right within your fantasy sports app; highlights endlessly replayed on Vine etc; blogs and analysts on Twitter to provide insights without need for a bloviating ESPN pundit; endless ways to identify with your favorite teams, non-score updates & behind-the-scenes stuff via Facebook and Instagram; near real-time sports news on any number of sites.
- btrautsc 11y ago
  Just thinking out loud, there are a few angles to it. #1 is that ESPN doesn't own the rights to air all sports (1), they have rights to certain events or leagues to air games on certain nights. For example, ESPN only airs 1 NFL football game per week, which is on Monday night. CBS, Fox, & NBC air games (which are subject to localized markets) on Sundays at various times. Another example, DirectTV (a satellite provider) offers a content package called NFL Sunday Ticket which gives subscribers the ability to stream any game live in any market (which is in many NFL fans opinion, the superior option). ... which brings another note to the parent topic - I would assert Sports (specifically the individual sport leagues) are effectively monopolies. The NBA is the professional basketball league in the USA. Its largely considered the best league in the world. It's product is very difficult to replicate. So those specific "properties" will continue to try to maximize their value as well as grow their audiences - and its not like you know Seinfeld is super popular so you can just write a new show and call it Friends. 2. When I was growing up, Sports highlights were ESPN's bread and butter. You couldn't watch every game the day or weekend before, so you watched ESPN that morning or night to see what happened and the spectacular plays. Well, now twitter or youtube or reddit are better sources of highlights than ESPN. They are on demand, close to real time, and (IMO) often higher quality. 3. Lastly, the "analysis" and ancillary Sports content that ESPN works hard at, is very competitive now. There are great podcasts and blogs for every sport and most teams. Those channels can be accessed almost anywhere - and they are often more "targeted" than what ESPN is offering. For example, I am a Memphis Grizzlies NBA fan. Let's equate that to I'm an Enterprise SaaS fan. Well, r/MemphisGrizzlies is kind of like Jason Lemkin's SaaStr - a site dedicated primarily to my specific niche. ESPN would be more like TechCrunch at large. 1: https://en.wikipedia.org/wiki/List_of_ESPN_sports_properties https://en.wikipedia.org/wiki/List_of_ESPN_sports_properties
  - GVIrish 11y ago
    The other problem I think ESPN has is that they've dumbed down their content a bit, in an appeal to the masses. Now hardcore sports fans are moving to other venues to follow sports because ESPN isn't what it used to be. Sports subreddits are a prime example of how hardcore fans are finding more focused and higher quality venues to follow sports. The comments on r/NFL or r/NBA seem to be of a much higher quality than those on espn.com. As you said, over time it means fans just use those sites as their sports portal rather than espn.com or Sportscenter.
bryanlarsen 11y ago
Where's the logical error? If ESPN switches to an MTV type model to survive as you assert, then they're going to stop paying tens of billions of dollars each year to the leagues. The leagues and sports will survive, of course, but the transition will be very painful.
- deleted 11y ago
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- deleted 11y ago
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- MeVfm 11y ago
  ESPN is a big company.
arbitrage 11y ago
> ... a major logical error ... followed by > Anecdotally ... Perhaps you should rethink the flow of your argument, here?
crabasa 11y ago
Not a logical error at all, much less a major one. The obfuscated "taxation" of American households led to higher bids for airing games which led to salaries for players and higher valuations for teams. The cost to ESPN of the entertainment (Mike & Mike, Bill Simmons, etc) is a laughable fraction of the cost of broadcast rights. So I believe the author is possibly correct in his assertion that cutting off the money from non-fans (since fans will presumably pay in some way) will materially affect the valuation of these leagues.
- Dwolb 11y ago
  One could argue the non-fans do not substantially subsidize NFL programming - Disney is able to capture most of this value internally as opposed to the specific leagues. i.e. the value from bundled programming profits don't get passed on to the NFL
- VanillaCafe 11y ago
  To be precise, I'd say the article's core argument is something like: The obfuscated upper bound of $40/mo/subscriber cannot be recovered since the transparent pricing upper bound is $20/mo/fan. ESPN currently accounts for approximately half of all revenue for major league sports teams. The internet is driving unbundling which is forcing a move from obfuscated to transparent pricing. With that premise and those numbers from the article, the crash will be something like a 35% drop in revenue (bounded by 25% and 50%) for sports teams when the transition from obfuscated to transparent pricing is complete. That seems like a big deal.
  - digikata 11y ago
    I think the mistake is assuming that $20/mo/fan is the upper bound. That's just a baseline direct subscription number. What ESPN should do then is offer a menu of more specialized sports products on top of that baseline. I do think there's going to be a painful transition in their business model in moving from leveraging a price from a wide range of cable subscribers, to offering premium products directed at sports fans. But, for all the pain, I think there's plenty of money to be made.
wtvanhest 11y ago
To answer some of the questions you are getting about the logical error: The logical error is assuming that sports franchises are overvalued just because the entertainment options that report on sports (ESPN) may be overvalued. The OP is saying that reddit/r/cfb, reddit/r/nba, bleacher report, twitter, youtube etc. all now actively compete against ESPN's cash cow, highlights / analysis. People are tuning in to live sports more than ever, and sports are the only consistent option for TV advertisers to capture viewers due to the importance of watching sports live. Several major college football conferences will be renegotiating their TV rights over the next 36 months, including the Big 10. Most people expect it to be the highest price ever paid for TV rights because there are so few 'live' options left for advertisers and the Big 10's viewership is increasing rapidly. At the same time, less and less people think ESPN is important.
- btrautsc 11y ago
  This is not only a more concise but also a clearer explanation. well put!
  - wtvanhest 11y ago
    I thought you had a great comment, but when I read the rebuttals, I realized that it needed a more detailed explanation for people who do not watch sports and assume that ESPN is "sports". Since you cannot buy ESPN alone, we do not know who is cancelling ESPN because they never cared about ESPN and are simply ending their relationship with cable. I know that if it wasn't for live sports, I would not have cable and from talking to friends that also seems true. Those 7m subs that ESPN lost, may all be people who switched away from cable because ESPN wasn't important to them. If that is the case, ESPN may be able to actually get more value from less subs. There are going to be a lot of bloggers out there that do not understand how value is migrating from one group to another. Its a complex problem for cable companies and ESPN and I think ultimately, sports franchises are going to be able to capture most of the value.
    - p4wnc6 11y ago
      This is not quite accurate. You'd have to figure that if people are canceling subscriptions as part of a random process, then they ought to also be signing up for a subscription randomly too. When it averages out, ESPN should be seeing about as many people canceling as they see signing up if it all just comes down to noise. If it's not all noise, then there are a few different scenarios: 1. Some exogenous factor is causing more people to cancel in general than to sign up. This would mean that across the board every television content provider would be seeing similar subscriber loss as what ESPN sees. I'd argue that we're not seeing that, even though there is huge rage against the major cable providers. People are tuning into live sports on network TV more than ever ... so if they are doing that, yet ESPN sees consistent subscriber loss uncompensated by complementary new account sign ups, it's evidence that people are indeed choosing to drop ESPN specifically. 2. There could be an exogenous factor causing people to sign up for cable more than drop it -- in which case ESPN's subscriber loss would be even worse. I don't think we're seeing this either. 3. It could be the endogenous factor that ESPN's content offerings are no longer compelling. This is generally directly tied with advertising metrics, so if advertisers are putting a red flag on ESPN, you can bet that they did lots of due diligence to ensure they were measuring the right thing, and not some accidental side effect of exogenous changes in cable habits overall. On this last point, I think it bears pointing out that ESPN has a lot of different digital properties. There is the WatchESPN app which provides a ton of free content that doesn't require anything but an internet connection, even though it also provides more premium content that does require you to obtain login credentials through a supported cable provider based upon your level of ESPN subscription. It's very easy to see how they could use the overall viewership statistics of WatchESPN combined with the specific statistics based on the subset of viewers who actually log in via a subscription to watch WatchESPN content. From that you could derive reasonable estimates of the changing number of subscribers. Add on to that things like fantasy sports accounts, "insider" subscribers, and so forth, and it should give you a decent holistic understanding of whether subscriptions overall are increasing or not specifically in response to ESPN's offerings.
Deregibus 11y ago
Agreed, this seems to conflate sports in general with the specific issues faced by sports-entertainment complex that is ESPN. The dramatic increase in the valuation of sports is largely due to it being one of the few remaining forms of entertainment that can still reach people with advertisements. Most people watching games want to do it live, which means they cant block or skip through commercials like they would with an everyday TV show.
waylandsmithers 11y ago
I couldn't agree more. And when you look at ESPN's actual sports programming it's mostly SportsCenter and talking heads, ie, non essential viewing to sports fans. MLB and NBA are all on local affiliates or TNT/TBS, and NFL has one game per week on ESPN and the rest on Fox, CBS, and NBC (and NHL is somewhere not on ESPN). Basically ESPN has a nice hodgepodge of college and pro sports, but isn't really necessary to any one fan base.
zeveb 11y ago
> Anecdotally, I would assert sports (NFL, NBA, futbol/ soccer) seem to be growing more popular to every day people. Are they? As average IQ continues to rise (the Flynn Effect), I would expect to see fewer and fewer people being as heavily devoted to sports as previously, not because sports fans are stupid, but because intelligent people are capable of enjoying more than just sports. The folks in my D&D game like to talk about the game sometimes, but they have other fun things in their lives too.
- wall--e 11y ago
  Please tell me you're not suggesting that D&D is a game of higher intelligence.
  - ArtDev 11y ago
    Clearly there would be a significant IQ difference between the average sports fan and the an average D&D player. If you are comparing fans of esports vs. D&D players, that gap would probably be narrow to non-existent.
    - dpark 11y ago
      > Clearly there would be a significant IQ difference between the average sports fan and the an average D&D player. Really? What do you base that claim on? The fact that lots of "geeky" people play D&D doesn't mean that the average person playing D&D is actually smarter than the average sports fan. In college I knew some smart people who played D&D, but I knew some dumb people who played it, too.
      - brewdad 11y ago
        The fact that all of those players were in college makes them above average to begin with. Show me the D&D groups made up of high school dropouts.
        dpark 11y ago
orthoganol 11y ago
Another dimension here, the millennial sports fans I know don't like ESPN (TMZSPN). I feel like they're digging their own grave especially with stunts like the terrible treatment of one of the Millennial Gods, Bill Simmons and their dismantling of Grantland. You can feel out this ESPN sentiment on various sports subreddits too, like r/nba, a community of 300K users, who from time to time will collectively pile on disdain for ESPN, usually for their often sensationalist (terrible) coverage, dramatizations, politics, and censorship of important issues like ones that make the NFL look bad. Not entirely sad to see ESPN on the wayside. Maybe a new request for startups could pop up, "Kill ESPN".
- nickstinemates 11y ago
  The future of twitch.tv, maybe.

gniv 11y ago

The comparison with MTV is insightful. But what do you see as the equivalent of "dozens of access/consumption points" in sports? (I'm not following any organized sports)

binxbolling 11y ago
Not sure about dozens, but: you can get push notifications to your phone about teams you follow; scores & updates available right within your fantasy sports app; highlights endlessly replayed on Vine etc; blogs and analysts on Twitter to provide insights without need for a bloviating ESPN pundit; endless ways to identify with your favorite teams, non-score updates & behind-the-scenes stuff via Facebook and Instagram; near real-time sports news on any number of sites.
btrautsc 11y ago
Just thinking out loud, there are a few angles to it. #1 is that ESPN doesn't own the rights to air all sports (1), they have rights to certain events or leagues to air games on certain nights. For example, ESPN only airs 1 NFL football game per week, which is on Monday night. CBS, Fox, & NBC air games (which are subject to localized markets) on Sundays at various times. Another example, DirectTV (a satellite provider) offers a content package called NFL Sunday Ticket which gives subscribers the ability to stream any game live in any market (which is in many NFL fans opinion, the superior option). ... which brings another note to the parent topic - I would assert Sports (specifically the individual sport leagues) are effectively monopolies. The NBA is the professional basketball league in the USA. Its largely considered the best league in the world. It's product is very difficult to replicate. So those specific "properties" will continue to try to maximize their value as well as grow their audiences - and its not like you know Seinfeld is super popular so you can just write a new show and call it Friends. 2. When I was growing up, Sports highlights were ESPN's bread and butter. You couldn't watch every game the day or weekend before, so you watched ESPN that morning or night to see what happened and the spectacular plays. Well, now twitter or youtube or reddit are better sources of highlights than ESPN. They are on demand, close to real time, and (IMO) often higher quality. 3. Lastly, the "analysis" and ancillary Sports content that ESPN works hard at, is very competitive now. There are great podcasts and blogs for every sport and most teams. Those channels can be accessed almost anywhere - and they are often more "targeted" than what ESPN is offering. For example, I am a Memphis Grizzlies NBA fan. Let's equate that to I'm an Enterprise SaaS fan. Well, r/MemphisGrizzlies is kind of like Jason Lemkin's SaaStr - a site dedicated primarily to my specific niche. ESPN would be more like TechCrunch at large. 1: https://en.wikipedia.org/wiki/List_of_ESPN_sports_properties https://en.wikipedia.org/wiki/List_of_ESPN_sports_properties
- GVIrish 11y ago
  The other problem I think ESPN has is that they've dumbed down their content a bit, in an appeal to the masses. Now hardcore sports fans are moving to other venues to follow sports because ESPN isn't what it used to be. Sports subreddits are a prime example of how hardcore fans are finding more focused and higher quality venues to follow sports. The comments on r/NFL or r/NBA seem to be of a much higher quality than those on espn.com. As you said, over time it means fans just use those sites as their sports portal rather than espn.com or Sportscenter.

bryanlarsen 11y ago

Where's the logical error? If ESPN switches to an MTV type model to survive as you assert, then they're going to stop paying tens of billions of dollars each year to the leagues. The leagues and sports will survive, of course, but the transition will be very painful.

deleted 11y ago
[deleted]
deleted 11y ago
[deleted]
MeVfm 11y ago
ESPN is a big company.

arbitrage 11y ago

> ... a major logical error ... followed by > Anecdotally ... Perhaps you should rethink the flow of your argument, here?

crabasa 11y ago

Not a logical error at all, much less a major one. The obfuscated "taxation" of American households led to higher bids for airing games which led to salaries for players and higher valuations for teams. The cost to ESPN of the entertainment (Mike & Mike, Bill Simmons, etc) is a laughable fraction of the cost of broadcast rights. So I believe the author is possibly correct in his assertion that cutting off the money from non-fans (since fans will presumably pay in some way) will materially affect the valuation of these leagues.

Dwolb 11y ago
One could argue the non-fans do not substantially subsidize NFL programming - Disney is able to capture most of this value internally as opposed to the specific leagues. i.e. the value from bundled programming profits don't get passed on to the NFL
VanillaCafe 11y ago
To be precise, I'd say the article's core argument is something like: The obfuscated upper bound of $40/mo/subscriber cannot be recovered since the transparent pricing upper bound is $20/mo/fan. ESPN currently accounts for approximately half of all revenue for major league sports teams. The internet is driving unbundling which is forcing a move from obfuscated to transparent pricing. With that premise and those numbers from the article, the crash will be something like a 35% drop in revenue (bounded by 25% and 50%) for sports teams when the transition from obfuscated to transparent pricing is complete. That seems like a big deal.
- digikata 11y ago
  I think the mistake is assuming that $20/mo/fan is the upper bound. That's just a baseline direct subscription number. What ESPN should do then is offer a menu of more specialized sports products on top of that baseline. I do think there's going to be a painful transition in their business model in moving from leveraging a price from a wide range of cable subscribers, to offering premium products directed at sports fans. But, for all the pain, I think there's plenty of money to be made.

wtvanhest 11y ago

To answer some of the questions you are getting about the logical error: The logical error is assuming that sports franchises are overvalued just because the entertainment options that report on sports (ESPN) may be overvalued. The OP is saying that reddit/r/cfb, reddit/r/nba, bleacher report, twitter, youtube etc. all now actively compete against ESPN's cash cow, highlights / analysis. People are tuning in to live sports more than ever, and sports are the only consistent option for TV advertisers to capture viewers due to the importance of watching sports live. Several major college football conferences will be renegotiating their TV rights over the next 36 months, including the Big 10. Most people expect it to be the highest price ever paid for TV rights because there are so few 'live' options left for advertisers and the Big 10's viewership is increasing rapidly. At the same time, less and less people think ESPN is important.

btrautsc 11y ago
This is not only a more concise but also a clearer explanation. well put!
- wtvanhest 11y ago
  I thought you had a great comment, but when I read the rebuttals, I realized that it needed a more detailed explanation for people who do not watch sports and assume that ESPN is "sports". Since you cannot buy ESPN alone, we do not know who is cancelling ESPN because they never cared about ESPN and are simply ending their relationship with cable. I know that if it wasn't for live sports, I would not have cable and from talking to friends that also seems true. Those 7m subs that ESPN lost, may all be people who switched away from cable because ESPN wasn't important to them. If that is the case, ESPN may be able to actually get more value from less subs. There are going to be a lot of bloggers out there that do not understand how value is migrating from one group to another. Its a complex problem for cable companies and ESPN and I think ultimately, sports franchises are going to be able to capture most of the value.
  - p4wnc6 11y ago
    This is not quite accurate. You'd have to figure that if people are canceling subscriptions as part of a random process, then they ought to also be signing up for a subscription randomly too. When it averages out, ESPN should be seeing about as many people canceling as they see signing up if it all just comes down to noise. If it's not all noise, then there are a few different scenarios: 1. Some exogenous factor is causing more people to cancel in general than to sign up. This would mean that across the board every television content provider would be seeing similar subscriber loss as what ESPN sees. I'd argue that we're not seeing that, even though there is huge rage against the major cable providers. People are tuning into live sports on network TV more than ever ... so if they are doing that, yet ESPN sees consistent subscriber loss uncompensated by complementary new account sign ups, it's evidence that people are indeed choosing to drop ESPN specifically. 2. There could be an exogenous factor causing people to sign up for cable more than drop it -- in which case ESPN's subscriber loss would be even worse. I don't think we're seeing this either. 3. It could be the endogenous factor that ESPN's content offerings are no longer compelling. This is generally directly tied with advertising metrics, so if advertisers are putting a red flag on ESPN, you can bet that they did lots of due diligence to ensure they were measuring the right thing, and not some accidental side effect of exogenous changes in cable habits overall. On this last point, I think it bears pointing out that ESPN has a lot of different digital properties. There is the WatchESPN app which provides a ton of free content that doesn't require anything but an internet connection, even though it also provides more premium content that does require you to obtain login credentials through a supported cable provider based upon your level of ESPN subscription. It's very easy to see how they could use the overall viewership statistics of WatchESPN combined with the specific statistics based on the subset of viewers who actually log in via a subscription to watch WatchESPN content. From that you could derive reasonable estimates of the changing number of subscribers. Add on to that things like fantasy sports accounts, "insider" subscribers, and so forth, and it should give you a decent holistic understanding of whether subscriptions overall are increasing or not specifically in response to ESPN's offerings.

Deregibus 11y ago

Agreed, this seems to conflate sports in general with the specific issues faced by sports-entertainment complex that is ESPN. The dramatic increase in the valuation of sports is largely due to it being one of the few remaining forms of entertainment that can still reach people with advertisements. Most people watching games want to do it live, which means they cant block or skip through commercials like they would with an everyday TV show.

waylandsmithers 11y ago

I couldn't agree more. And when you look at ESPN's actual sports programming it's mostly SportsCenter and talking heads, ie, non essential viewing to sports fans. MLB and NBA are all on local affiliates or TNT/TBS, and NFL has one game per week on ESPN and the rest on Fox, CBS, and NBC (and NHL is somewhere not on ESPN). Basically ESPN has a nice hodgepodge of college and pro sports, but isn't really necessary to any one fan base.

zeveb 11y ago

> Anecdotally, I would assert sports (NFL, NBA, futbol/ soccer) seem to be growing more popular to every day people. Are they? As average IQ continues to rise (the Flynn Effect), I would expect to see fewer and fewer people being as heavily devoted to sports as previously, not because sports fans are stupid, but because intelligent people are capable of enjoying more than just sports. The folks in my D&D game like to talk about the game sometimes, but they have other fun things in their lives too.

wall--e 11y ago
Please tell me you're not suggesting that D&D is a game of higher intelligence.
- ArtDev 11y ago
  Clearly there would be a significant IQ difference between the average sports fan and the an average D&D player. If you are comparing fans of esports vs. D&D players, that gap would probably be narrow to non-existent.
  - dpark 11y ago
    > Clearly there would be a significant IQ difference between the average sports fan and the an average D&D player. Really? What do you base that claim on? The fact that lots of "geeky" people play D&D doesn't mean that the average person playing D&D is actually smarter than the average sports fan. In college I knew some smart people who played D&D, but I knew some dumb people who played it, too.
    - brewdad 11y ago
      The fact that all of those players were in college makes them above average to begin with. Show me the D&D groups made up of high school dropouts.
      - dpark 11y ago

orthoganol 11y ago

Another dimension here, the millennial sports fans I know don't like ESPN (TMZSPN). I feel like they're digging their own grave especially with stunts like the terrible treatment of one of the Millennial Gods, Bill Simmons and their dismantling of Grantland. You can feel out this ESPN sentiment on various sports subreddits too, like r/nba, a community of 300K users, who from time to time will collectively pile on disdain for ESPN, usually for their often sensationalist (terrible) coverage, dramatizations, politics, and censorship of important issues like ones that make the NFL look bad. Not entirely sad to see ESPN on the wayside. Maybe a new request for startups could pop up, "Kill ESPN".

nickstinemates 11y ago
The future of twitch.tv, maybe.