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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 fo

by 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.
  - spacecowboy_lon 11y ago
    $20 a month woudl be cheap when compared to the Murdoch Tax in the uk to watch skysports.
    - Symbiote 11y ago
      Or £5 ($8) a month for BT Sport, which has some Premiership football, though not all. I'm not a [watching] sports fan — is BT Sport making much impact in Britain?
      - spacecowboy_lon 11y ago
        Its upsetting News international who have been lobbying to hobble BT
- ams6110 11y ago
  Pricing per-month is not the way to go. They need to move to streaming, and price per-event. $5 per event sounds like a great deal, and I bet I'd end up spending more than $40/month at that rate at least at certain times of the year (i.e. when my favorite sports are in season).

by crabasa 11y ago

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.
- spacecowboy_lon 11y ago
  $20 a month woudl be cheap when compared to the Murdoch Tax in the uk to watch skysports.
  - Symbiote 11y ago
    Or £5 ($8) a month for BT Sport, which has some Premiership football, though not all. I'm not a [watching] sports fan — is BT Sport making much impact in Britain?
    - spacecowboy_lon 11y ago
      Its upsetting News international who have been lobbying to hobble BT
ams6110 11y ago
Pricing per-month is not the way to go. They need to move to streaming, and price per-event. $5 per event sounds like a great deal, and I bet I'd end up spending more than $40/month at that rate at least at certain times of the year (i.e. when my favorite sports are in season).