"The End of All or Nothing" in Sports Media, John Kosner's latest SBJ column with Ed Desser
Original Article: Sports Business Journal, by John Kosner and Ed Desser, February 21st, 2022
For the four decades of the cable sports era, the choice for fans has been simple: Buy cable/satellite and get everything. Every major national or local sports event, on all widely distributed channels, plus every major entertainment, music, and news network. In short and until recently, substantially all programming — an all-you-can-eat buffet (except movie channels) — at a set per-home price. Or, should you decline to buy pay TV, you get nearly nothing (just broadcast if you were enterprising enough to put up an antenna). Netflix now is obviously an outlier, but virtually all of the sports events you would be likely to watch were part of “the bundle.”
This ultra-simple way of buying and consuming live sports is already coming to an end. This fall, you’ll need Amazon Prime to see most Thursday night NFL games. You must have ESPN+ if you’re a UFC fan. As our friends at “The Marchand and Ourand Sports Media Podcast” pointed out, tennis fans had to pay twice (ESPN and ESPN+) to watch all of the Australian Open matches. That’s the new fan playbook, and it’s more expensive. Soon it’s rumored that Apple TV+ may be required to watch Wednesday night MLB games previously on ESPN. If you want RSNs, forget about Hulu or YouTube TV, and if you are a big sports viewer, ignore Dish altogether. The great unbundling is underway, and it is truly the end of “all or nothing.” That won’t happen all at once, but the change is coming this decade. And that’s before more seismic effects wrought by everyone from FanDuel to Discord to Fanatics.
How should sports properties navigate this transition? We have four main observations:
1. The future of distribution is fragmented — and soon to be further split among linear TV, streaming (and PPV of various durations), betting, social media, chat, and 3D interactive platforms. Ten years ago, you could reach substantially your entire audience through a single deal with one sports media company. That is no longer true, especially for younger viewers (see No. 4). Traditional “exclusivity” in media deals needs to be fundamentally reconceived — establishing greater value in more narrow grants than just cable or broadcast, first half or second half of the season or by language, geography, or night of the week, which were all that was needed pre-internet, in a simpler time when distribution channels and business models were far more limited. Thus:
2. New licensable products and formats are crucial. The single vanilla live game broadcast production (another all-or-nothing relic) is not nearly enough anymore either. Multicasts will proliferate: The ManningCast and the Nickelodeon NFL Kidscast are just the start but expect more of these targeting multiple demographics/languages from rights holders, not just rights buyers. There will be video highlights in multiple forms and lengths, increasingly personalized and curated “FAST” (Free Advertising Supported Television) channels, imaginative “re-watches,” immersive 3D interactive experiences (Sport@Roblox), betting, 4/8K, merch, and NFTs. To do that:
3. A sports property needs to become its own executive producer — in terms of audience segmentation, game presentation, formatting storytelling, strategic scheduling, and investment. Much is rightly made of the NFL’s recent blockbuster 11-year, $113 billion TV rights deals. Behind the scenes, the NFL earned the agreements by consistently increasing the value of its product for fans and media partners — pioneering the Red Zone, extending the regular season, expanding the playoffs (Super Wild Card Weekend), moving the Super Bowl and NFL draft back, creating the Rookie Combine, defining a window for free agency and making its training camps an event. The NBA and its players have achieved leading global reach on multiple social media platforms, and have invested in and accelerated interesting tech startups. The lesson for all: You can’t just rely on the network “professionals” anymore. “Who is our executive producer?” our former boss NBA Commissioner David Stern used to challenge us (Ed was the NBA’s first back in 1982). The NBA just filled that position again, naming our former colleague Gregg Winik, whose assignment is imperative because …
4. Younger sports fans are much different. The iPhone debuted in 2007, and it changed almost everything about experiencing sports. Now, fans have in their pockets: the live game broadcast (soon, multiple versions thereof); every score, 24/7 breaking news; unlimited social media feeds, alerts, stats; the ability to transact, bet and buy instantaneously, anywhere. On Jan. 31, the NBA put “CrunchTime,” its version of RedZone, exclusively on its own app, commercial-free. In 2027, this iPhone generation will turn 20, just entering their buying-power years. Are you ready for that?
The end of “all or nothing” is thus quite daunting. Sports are no longer the default source of intergenerational bonding. We can’t assume our kids just want to “go out and play” and automatically share the Little League, pickup basketball, or touch football matches that were the experience of older fans and fed traditional sports fandom, parenthood, and viewership. We also don’t know when we will finally have COVID under control and what its long-term impact is on sports. However, unbundling and new tech breakthroughs also bring opportunity (plus, of course, the promise of multiple new bundles to come). Sports properties like the NFL and NBA that go on offense now will likely be rewarded.
Ed Desser is an industry expert witness and president of Desser Media Inc. (www.desser.tv), which has advised on over $30 billion in sports/media transactions. John Kosner is president of Kosner Media (www.kosnermedia.com), a digital media expert and sports investor. Together they developed league strategy and ran the NBA’s electronic media operation in the 1980s and ’90s.
John Kosner is Quoted About his Late Colleague Tony Pace in the Sports Business Journal
Original Article: Sports Business Journal, February 10th, 2022
Former Subway CMO Tony Pace dies in snowmobile accident
Former Subway CMO TONY PACE died on Tuesday in a snowmobile accident near Big Sky, Mont., after he "struck a tree and went into cardiac arrest," according to Jack Neff of AD AGE. He left Subway in '15 after "nearly a decade" with the restaurant chain. While there, he "built the brand’s value," as tracked by Millward Brown’s annual Brand Z assessment, from unranked to No. 40, with a brand value of $22B, according to MASB. Previously, as an exec at Young & Rubicam and McCann-Erickson, he worked on such brands as Kentucky Fried Chicken, Coca-Cola and Capital One. Pace concluded a two-year term as Chair of the ANA in '16, among "other things overseeing the group’s probe into media transparency issues." Pace in '17 became CEO of MASB, a group "working toward developing standards for objectively evaluating brand value and the contribution of advertising to them" (ADAGE.com, 2/9). Pace's handprints were all over the sports space, including negotiating Super Bowl ad deals, CARL EDWARDS' NASCAR deal and Subway's pact with CLAYTON KERSHAW, among others. Subway in '11 won the Sports Business Award for Sponsor of the Year, with Pace accepting the award (SBJ). Former ESPN exec John Kosner tweeted that Pace was a "quiet MVP" in the growth of ESPN Digital because he was always "aggressively supporting" their programs and platforms, including the pursuit of BILL SIMMONS (TWITTER.com, 2/9).
John Kosner Spoke About the NCAA Gender Equity Media Study at the SBJ Media Innovators Conference in NYC on Nov. 9
Original Article: Sports Business Journal, November 9th, 2021
Sports media – and the media world as a whole – is undergoing a seismic shift. Mega-mergers and divestitures are making headlines. OTT services are reshaping programming and distribution as consumers migrate away from legacy media. RSN models are under fire. And sports betting is adding an uncharted element to the North American market and opportunities for media companies and the gaming industry. On November 9th and 10th, these issues and many more will be examined at Sports Business Journal’s Media Innovators conference. Stakeholders from across the emerging media landscape will discuss the day-to-day challenges they are facing, opportunities they are recognizing, and the long-term planning that will keep them competitive in an ever-changing marketplace.
John Kosner & Ed Desser Featured in SBJ Piece on NCAA Gender Equity Media Study
Original Article: Sports Business Journal, by John Ourand, November 8th, 2021
Consultants Ed Desser and John Kosner said the NCAA women’s basketball tournament should be worth between $81 million and $112 million per year. Former NBA executive Ed Desser, who now runs a sports media consulting company, was sitting in his California office earlier this year…
John Kosner Spoke About MegaCasts with Michael McCarthy of Front Office Sports
Original Article: Front Office Sports, by Michael McCarthy, November 3rd, 2021
Heads up, NFL. The NBA is ordering up more alternate game telecasts similar to Omaha Productions’ popular ManningCast with Peyton Manning and Eli Manning.
The league is expected to announce an alternate telecast co-starring Jamal Crawford and Quentin Richardson for NBA League Pass, its subscription-based product that provides access to hundreds of live and on-demand games.
Starting Thursday, Crawford and Richardson are expected to provide their own weekly commentary for the next 10 weeks.
The 41-year old Crawford was one of the greatest players off the bench in league history. He boasts 1.5 million followers on Twitter. Richardson, also 41, co-hosts the “Knuckleheads” podcast with Darius Miles on The Players’ Tribune.
Meanwhile, the NBA is ramping up “conversations” with national TV partners ESPN and Turner Sports about creating more alternate telecasts, sources told Front Office Sports. The goal: lure viewers who might not tune in for linear basketball telecasts on ABC/ESPN and TNT.
Some formats could be similar to the Manning brothers’ “Monday Night Football” MegaCast on ESPN2 and ESPN+: an unscripted conversation between two smart, funny stars.
Others could be focused on the lucrative world of sports betting. Or take aim at elusive younger viewers (think CBS’ “NFL on Nickelodeon” production for kids). Or target more casual viewers like ABC’s coverage of the NFL Draft.
The NBA has offered viewers more alternate telecasts than any league. Viewers want more choice beyond traditional game telecasts that have been virtually unchanged for decades, according to John Kosner, president of Kosner Media. He calls MegaCasts “the future” of sports broadcasting.
“Fans want choice — and the Internet makes that possible. The ManningCast has been a huge success because it offers authentic access to star athletes and it’s both informative and fun,” said the consultant, who previously led digital media at ESPN.
“This same approach is possible in all the major sports in any number of ways — to offer home team coverage, to get deeper into X’s and O’s, and strategies, to cater to different audiences like kids, and, perhaps, most important, to offer true interactivity, like Kyler Murray on Twitch. We are just getting started.”
But the Super Bowl-winning Manning brothers would be a tough TV act to follow. Look for the image-savvy NBA to avoid positioning any new alternate telecasts as direct competitors to ManningCast, said sources.
Still, the NBA might be uniquely positioned to create star-studded MegaCasts to rival the ManningCast.
The 75-year old league boasts global personalities such as TNT’s Charles Barkley and Shaquille O’Neal, Charlotte Hornets owner Michael Jordan, and ESPN’s Magic Johnson.
Barkley, in fact, was Omaha’s first guest on the ManningCast premiere. Jordan was the star attraction of ESPN’s Chicago Bulls documentary “The Last Dance,” which drew big audiences during the COVID-19 sports shutdown. Johnson will pinch-hit this season for ESPN’s revamped “NBA Countdown” studio show.
Besides those big names, there’s a long list of opinionated, entertaining NBA personalities who could front MegaCasts, ranging from TNT’s Kenny Smith and Reggie Miller to ESPN’s Jalen Rose and Kendrick Perkins.
While the NFL and Mannings are rightly earning plaudits for the ManningCast, the NBA and its TV partners have been ahead of the curve on alternate telecasts:
— In May, ESPN presented a Marvel-themed telecast of an NBA game between the Golden State Warriors and New Orleans Pelicans. The “Marvel’s Arena of Heroes” game featured comic book heroes like Iron Man, Black Panther, Captain Marvel, and Captain America. It was shown on ESPN2, ESPN, and ESPN Deportes.
— This April, ESPN debuted its first-ever betting-driven telecast of an NBA game. While the traditional telecast of the Brookly Nets vs. Philadelphia 76ers aired on ESPN, an alternate “Daily Wager” version of the game appeared on ESPN2 and ESPN. This telecast featured “Daily Wager” sports betting analysts Doug Kezirian, Joe Fortenbaugh, and Tyler Fulghum calling the game from ESPN’s studio in Las Vegas.
— The NBA is the dominant sports brand on Twitter. On Wednesday, the league announced it was renewing its content deal with the social media giant. The league will provide highlights, live content and Twitter Moments. It will also offer 40 free Twitter Spaces events, where fans can listen to live audio chats, according to Variety.
Whatever form they take, these secondary feeds are meant to enhance, not replace, the traditional game broadcast — at least for now.
The ManningCast has proven to be a boon for both ESPN and the venerable MNF franchise.
During Monday night’s Kansas City Chiefs-New York Giants, game, the Mannings delivered their biggest-ever audience, averaging 1.96 million viewers. That was up 22% from Week 7.
They have generated the three most-watched alternate telecasts in ESPN history. Through Week 8, MNF is averaging 13.7 million viewers. That’s up 17% from the same period during the 2020 and 2019 seasons.
To keep things fresh, Omaha can book just about any A-Lister as a guest. Over five games, the Mannings have hosted Tom Brady, LeBron James, Brett Favre, Josh Allen, Michael Strahan, Ray Lewis, Jon Stewart and Nick Saban. Even when they’re in different cities, they have the camaraderie of brothers who grew up in the same household.
“It’s authentic. Peyton, Eli, and the guests all want to be there,” said Eric Weinberger, the former executive vice president of NFL Network who now heads his own production company. “Peyton is on the Barkley, [John] McEnroe, [John] Madden communication level. And Eli shows great timing and humor.”
The NFL is not sitting still when it comes to MegaCasts.
ESPN’s parent company Disney is exploring its own kids-focused game telecast that could feature Star Wars or Marvel characters, sources tell FOS. During its recent media negotiations, the NFL gave all its rights partners (ESPN, CBS, NBC, Fox, and Amazon) the green light to produce their own alternate game telecasts, said sources.
The NFL is encouraging all of its media partners to “think of new and different ways” to engage current fans and attract new ones, said one source.
Said Weinberger: “I’m sure every network and content executive is trying to cook this up for other sports. This works so well because it feels independent and out from under anything corporate.”
John Kosner Moderated the Sports and NFTs Panel at NFT.NYC on November 2, 2021
Original Article: NFTNYC
Listen in on the discussion between John Kosner, Calvyn Justus (NFT Artist), Sam Fagin (Checkout.out), Yang Adjia (Turner Sports), and Scott Lawin (Candy Digital).
John Kosner spoke to CNBC's Alex Sherman about the Future of Sports Streaming
Original Article: CNBC, by Alex Sherman, October 10th, 2021
At last month’s Communacopia conference held by Goldman Sachs, Disney CEO Bob Chapek was asked about the importance of ESPN and sports broadcasting to his company’s streaming strategy. His answer sounded like a throw-away line.
“The number one most-viewed thing every year tends to be sports, something like nine out of 10 of the top viewership events in television are sporting events,” Chapek said in a virtual session on Sept. 21. “Who knows what the future will bring, but it’s certainly an important part of our consumer offerings at the Walt Disney company.”
Chapek’s generic response about the future for one of Disney’s most valuable assets inspired no follow-up questions or headlines. But Chapek was addressing an existential threat facing the media industry, and an issue that may one day rock the foundation of his media empire, which includes some of the most valuable studios and film franchises in the world alongside the dominant network for live sports.
Disney’s big dilemma for ESPN is whether and when to fully embrace a future without cable.
Broadcast and cable networks still make billions of dollars per year from the traditional TV model. ESPN is a huge beneficiary, because media companies earn monthly subscriber fees from pay-TV providers regardless of how many people watch their programming. Niche channels make just a few cents a month per subscriber, while sports networks charge several dollars.
Disney makes more money from cable subscribers than any other company, and that’s solely because of ESPN. ESPN and sister network ESPN2 charge nearly $10 per month combined, according to research firm Kagan, a unit of S&P Global Market Intelligence. That’s at least four times more than almost every other national broadcast or cable network, according to Kagan.
Disney requires pay-TV providers to include ESPN as part of their most popular cable packages. It’s a no-brainer for TV providers, who wouldn’t dare drop ESPN.
Meanwhile, the non-sports world is cutting the cord. More than 6 million people ditched pay TV in 2020, according to research firm eMarketer — the highest annual total ever. About 25 million Americans have dropped linear TV bundles in the past decade.
That creates a struggle within Disney that’s poised to escalate. Disney wants people to sign up for its streaming entertainment products, Disney+ and Hulu. Wall Street wants this too. Streaming video is a growth business. Traditional pay TV is a declining one.
It’s also a wise financial swap for Chapek. While Disney makes more than $10 a month per subscriber for sports, it makes far less for entertainment networks such as Disney Channel and FX, which draw lower audiences and don’t command high advertising rates.
If Disney can get a cord cutter to pay $8 per month for Disney+ and $6 for Hulu, it’s a huge win for the company.
The reverse is true for ESPN. Swapping an ESPN subscriber for an ESPN+ customer, who contributes average revenue of less than $5 per month, is a significant loss for Disney. ESPN+ is a streaming service with limited content.
Disney Chairman Bob Iger, who was CEO until last year, told investors when he launched Disney+ that Disney was “all in” on streaming video.
But ESPN isn’t. ESPN’s strategy is to cling to the cable bundle for as long as possible, knowing it can draw potentially billions of dollars from U.S. households that are each paying $120 for the network even if they never watch it.
Some analysts have even questioned whether Disney should spin off ESPN, allowing Chapek to focus more clearly on streaming. An ex-Disney executive, who recently left the company and asked not to be named, said there’s “strategic misalignment” between the parent company and ESPN, and the businesses no longer belong together because Wall Street doesn’t look kindly on declining assets. The executive said having ties to the legacy bundle will weigh down a company’s stock multiple.
ESPN’s fit within Disney
Whether or not the fit still make sense, Disney has a huge financial incentive, at least in the short term, to keep the marriage going.
At $10 per month, or $120 per year, multiplied by about 75 million U.S. homes, Disney earns roughly $9 billion annually in domestic carriage fees from ESPN and its associated networks. Advertising that comes with broadcasting sports brings in billions of additional dollars.
That cash allows ESPN to spend big on sports rights, continuing a virtuous cycle. Disney agreed to spend $2.7 billion for “Monday Night Football” in a deal that runs all the way until 2033. ESPN pays $1.4 billion annually for NBA games and will likely pay more when those rights will need to be renewed after the 2024-25 season. The network owns media rights to every major U.S. sport in some capacity.
It also allows Disney to pay up for original streaming content, bolstering the quality of Disney+ and Hulu as the company competes with Netflix and Amazon.
“We’re successfully navigating the evolution of consumer choice,” said Jimmy Pitaro, chairman of ESPN, which is majority-owned and controlled by Disney, in an interview with CNBC in April. “We believe we can be multiple things at the same time. As consumers continue to gravitate toward direct to consumer, we have the optionality that we need.”
ESPN’s role as cash machine works nicely for the time being. But if 25 million U.S. households ditch cable in the next four or five years, as some predict, the math will no longer add up, said LightShed media analyst Rich Greenfield.
“If we’re going to 40 to 50 million, the question is, ‘Is there any economic model that justifies the level of spending that we’re currently at?’” said Greenfield.
ESPN has to figure out how to make up $3 billion in annual lost pay-TV subscription revenue that’s coming in the next few years as cord-cutting continues, a decline that Disney executives are anticipating, according to people familiar with the matter.
Disney’s plan is to incrementally raise the price of ESPN+ as it adds more valuable content while maintaining contractual obligations for exclusive programming to pay-TV distributors, the people said. An early example is Eli and Peyton Manning’s alternative broadcast of “Monday Night Football,” which will air 10 times this season on ESPN2, with some appearances available on ESPN+.
Should the number of pay-TV bundle subscribers drop to a level well under 50 million U.S. households, Disney would likely take ESPN to consumers in a more complete streaming package, said two people with knowledge of the company’s plans. At that point, the economics would flip, as most of the people paying for linear TV would be sports fans. Disney could likely make more from a full-service sports streaming service than it would make in a wholesale pay-TV distribution model.
In the near term, selling ESPN separate from the linear bundle isn’t feasible. Disney has negotiated digital rights flexibility in almost every major rights renewal in the past few years. But the company is currently restricted by its linear pay-TV obligations, which require certain premium programming to stay exclusive to the cable bundle, according to people familiar with the matter.
What to charge for streaming ESPN
David Levy, the former president of WarnerMedia’s Turner Broadcasting, said that Disney will have plenty of leverage with consumers when the time comes to bypass the bundle.
Levy, who’s now chairman of data firm Genius Sports, said he thinks Disney can get 30 million customers to pay $30 a month for streaming ESPN, or more than double the cost for a standard Netflix subscription. That would bring in $10.8 billion annually — more than Disney makes today from pay-TV affiliate revenue.
“With sports, there’s a guaranteed built-in audience,” Levy said. “It’s much different than entertainment. With entertainment, every show is hit or miss, and you always have to market content. You never know what will succeed and what won’t. That’s why sports is the best content to invest in, and it will be no matter what the distribution model is.”
But Levy’s estimate may be optimistic. A top executive at one of the largest U.S. pay-TV operators told CNBC that about 15% of video subscribers are heavy sports viewers. That would equal just over 11 million U.S. households. Even if ESPN could double that number for a streaming app at $30, the service would make less than the $9 billion ESPN takes in today.
The uncertainty of how many subscribers will pay for sports in an à la carte streaming world isn’t lost on the leagues. The NFL built in early out-clauses to its most recent 11-year deals with the networks, according to people familiar with the matter, allowing the league to bail if the business model stops working. The NFL can end its agreement after seven years with CBS, NBC and Fox and after eight years with ESPN, said the people, who asked not to be named because the negotiations were private.
That’s why Disney and other networks with live sports want to keep the linear bundle around until they have to let it go. It’s difficult to make up the lost revenue in a reliable way.
“We believe strongly that the traditional pay TV bundle will remain intact for a long time,” said
Sean McManus, chairman of ViacomCBS’s CBS Sports. “I don’t think it ever whittles away to zero. And while it’s certainly possible the amount of subscribers will continue to decline, I don’t think the decline ever reaches a point in the coming years that it won’t support the current rights deals that we have, both for NFL football and our other sports.”
Churn baby churn
A streaming-only world would also subject ESPN to a challenge that it’s never had to worry about: Churn.
People who cancel ESPN unsubscribe from the whole linear bundle. In the direct-to-consumer market, it would be easy for football fanatics to only subscribe during the few months when games are played.
ESPN executives have been playing with ways to incentivize annual membership on the existing ESPN+ service to reduce month-to-month volatility. Several times this year, ESPN has sold a pay-per-view UFC fight for $69.99 on ESPN+, and at the same time offered a full-year membership, that would include the match, for $89.99, a 35% discount.
Packaging ESPN+ with Hulu and Disney+ is another churn buster, as the combined offering is 33% cheaper than buying all three individually.
However, a more complete ESPN offering combined with another streaming service would have to cost more, a proposition that would likely scare away the non-sports fans, who are used to paying much less. Disney already packages sports in some of its foreign streaming services, such as India’s Disney+ Hotstar and Latin America’s Star+. But the economics internationally aren’t the same as in the U.S.
“If you put sports into Hulu or Disney+, instead of charging $5 or $7, now you’re charging $30?” Greenfield said. “And then you’re trying to compete against Netflix at $15. There is no model I see that works. There’s no easy answer.”
Threats and saviors
Then there are the technology risks.
ESPN executives are hesitant about moving their prized programming to directly to consumers because of rampant password sharing among young users, according to people familiar with the matter.
“Watching a pirated stream or sharing a streaming service password seems like a victimless crime,” said John Kosner, who led digital media at ESPN from 2003 to 2017 and is now president of media consulting firm Kosner Media. “But it really impacts the business model of sports on streaming services.”
Whether younger audiences even want live sports is another issue for Disney. Other entertainment options, such as social media, mobile games and on-demand entertainment services may be eroding the cultural grip of televised sports. Americans age 13 to 23 are half as likely as millennials to watch live sports regularly and twice as likely to never watch, according to a 2020 Morning Consult survey.
“The overall relevance of sports is an open question for the younger generation,” said Kosner.
One potential model that could save Disney a lot of future heartburn is a new streaming bundle that effectively replicates pay TV but with more options. If that becomes the winning form of distribution, media companies may be in a familiar position, making money from their most-popular services even if not everyone is watching them.
Dexter Goei, CEO of cable TV provider Altice USA, said in May that such a product offering could work well for the sustainability of the media industry.
It “would allow us to focus primarily on our broadband product” and “be a partner for content on a direct-to-consumer basis as opposed to a partner on a linear basis,” Goei said at JPMorgan’s Technology, Media & Communications conference. It “will dramatically improve the economic trends of our business from a cash-flow standpoint,” he said.
The growing popularity of sports betting could also help. Betting by mobile app, which is slowly being legalized around the country, boosts viewership, because “if you place a bet on a game, you’re much more likely to watch that game,” Levy said.
Kosner added that augmented reality devices that create new viewing experiences and innovative products like non-fungible tokens (NFTs), which are digital collectibles, also have the potential to lure younger fans to watch games.
Add it all up, and media executives can find plenty of reasons to be optimistic despite the uncertainty that lies ahead for live sports.
“The value of sports continues to be more and more important every single year,” CBS’s McManus said. “Advertisers are going to continue to want to reach the largest possible audiences. The way to do that is with sports. I don’t see a cliff coming. Our roadways are clear.”
John Kosner interviewed Dapper Labs CEO Roham Gharegozlou about NBA TopShot & the Flow Blockchain
Original Article: SportTechie, by Sports Capital Symposium, September 29th, 2021
Monumental Sports & Entertainment and SportTechie present their second annual conference on new revenue models and investment opportunities in the sports industry: the Sports Capital Symposium. SCS offers premium educational content and elite networking and business development opportunities for leagues, teams, corporate partners, vendors, innovators and investors.
John Kosner moderated the Fireside Chat with Rohan Gharegozlou about NBA Top Shot and Blockchain x Sports.
John Kosner on sports tech investing with Chris Russo & Eric Fisher @ the Sport Business Finance Weekly Podcast
Original Article: SportBusiness, by SportBusiness Finance Podcast, September 13th, 2021
In this week’s episode, the SportBusiness Finance podcast hosts Eric Fisher and Chris Russo sit down with John Kosner of Kosner Media, a New York-based digital media and sports consultancy. A four-decade veteran of sports media and technology, Kosner has been a highly active investor and advisor with sports-related startups. Eric and Chris also discuss multiple developments surrounding the start of the National Football League’s 2021 regular season, including expected record levels of betting in the United States, robust television ad sales, a 10-year partnership between the league with Verizon, and a return of full stadiums.
John Kosner spoke with Sportico's John Wall Street about Barstool Sports & MLB
Original Article: Sportico, by JohnWallStreet, August 13th, 2021
Earlier this week, the New York Post reported, “Major League Baseball and Barstool Sports have had significant negotiations about having national midweek games on the site’s platforms” ( the non-exclusive games ESPN gave up). The story spawned a media debate largely centered around the league’s desire to cultivate the next generation of fans (see: Washington Post, Star Tribune) and Barstool’s well-documented, controversial history.
But JohnWallStreet has learned the polarizing discourse is much ado about nothing. A source familiar with the dialogue between the two parties said: “Barstool called MLB because they knew these rights are on the block. MLB fielded the call. But it hasn’t gone further than that and likely won’t. In fact, MLB was surprised to read the Post article because the conversations are barely existent.” Barstool is believed to have fed the story to the tabloid. The company did not respond to our request for comment.
Our Take: There is nothing unusual about Barstool reaching out to Major League Baseball. When tier-one rights become available, prospective partners across the broadcasting landscape will inquire. It is the smart thing to do. That’s because even if the company knows it is not going to win the package, kicking tires can be helpful in building relationships. It also provides for an opportunity to gain intel.
There is also nothing out of the ordinary about MLB taking the meeting. Doing so helps to ensure the league maintains a level of friendliness with the growing media brand. There may also come a day when the company is ready to spend $150 million per year on a national broadcast package.
What can be considered atypical is Barstool’s apparent decision to reach out to a rights owner and then look to leverage the nascent discussions in the media. But as John Kosner (president, Kosner Media) reminded, Barstool is not your parents’ sports media company. Leaking early-stage talks with MLB “is consistent with them drumming up attention for themselves,” he said, and it’s a strategy that has worked well for them.
For a company that courts publicity—good or bad—there is seemingly little downside to letting discussions with MLB be known. The affiliation helps to legitimize the Barstool Sports brand outside of their target demo and may make the company look to be more credible the next time they are pursuing a rights package.
Major League Baseball declined to comment. But the league probably isn’t thrilled by the prospect of Barstool taking talks of a proposed partnership deal to the media. The Post story has almost certainly forced them to answer questions from partners and sponsors alike.
On the other hand, baseball may not be publicly shutting down the rumors because, real or not, Barstool’s perceived interest may make the sport seem more relevant to the young demographic they desire. And there is no harm in either expanding the array of potential bidders (it’s possible that DraftKings and/or Fanatics could emerge) or having serious bidders believe the pool of prospective broadcasters is larger than previously anticipated. “It also keeps them in the news and makes the point that those mid-week game rights are available,” Kosner said.
As for those arguing MLB, and any other tier-one property, should stay away from the controversial digital media company, Kosner says they are barking into the wind. “If they have real money and want to spend it on sports rights,” he said, “there will be an audience of rights sellers.” One just needs to look at the Fox empire to make the case.
“A Revolution Led by Athletes,” John Kosner talks about sports data with Asli Pelit at Sportico
Original Article: Sportico, by Asli Pelit, July 30th, 2021
With millions of dollars on the line, athletes are discovering the power of their own personal data. Once exclusively used by sports leagues and teams to maximize performance and profits, data analytics has become a tool elite athletes count on while negotiating their million-dollar contracts.
The trend gained attention this past spring when Kevin De Bruyne, the 30-year-old midfielder for Manchester City FC, decided to negotiate with the powerhouse club without an agent. Instead, he hired a software company called Analytics FC. The company uses a database “across 100 leagues and multiple data models to highlight players that contribute to their team results in a holistic way, rather than just goals scored or xG (expected goals) earned,” Analytics FC founder and CEO, Jeremy Steele, said in an interview.
The company’s flagship product, “The Transfer Lab,” effectively calculates the expected goal difference each player contributes to the team by analyzing the player’s every action on the pitch. “We communicate the output from these [algorithm calculations] in a way which makes sense to club executives and coaches by using football language to describe them,” he added via email.
Negotiations lasted six months, but in the end, the club’s executives found the Belgian player’s argument persuasive enough to make De Bruyne the best-paid player in the Premier League, signing him to a four-year contract for $27 million a season.
De Bruyne set an example for athletes who want to control the data that leagues and teams have collected for decades. “This is a revolution led by the athletes,” John Kosner, the president of Kosner Media, said in a recent interview. “I think what is unique at the moment is how athletes themselves are sort of leading this revolution.”
One of these revolutionary efforts is called Project Red Card, and it started on the other side of the Atlantic. Last year, some 400 players across the English and Scottish leagues threatened to take legal action to establish who owns player-performance data. Data analytics companies can track over 5,000 data points per game observing player performance. The information is used by everyone from team scouts to video-game developers to betting companies. Until recently, that data has proliferated largely unchecked. The Project Red Card group is arguing that a player’s performance data is actually personal and is being exploited for financial gain without their consent. If successful, players could receive tens of thousands of dollars in compensation.
On the U.S. side, athletes are following in the footsteps of management when it comes to data. Analytics is ingrained in American sports, where data has been used to make better, more effective business decisions à la Moneyball. From sabermetrics to infrared cameras to wearables, team owners have invested in ways to collect information about athletes—in recent years with the increasing interest from PE and investment firms seeking robust returns.
More often than not this data were collected without players’ consent. When the NFL put chips in players’ shoulder pads, “some of the players did not even know they were wearing chips,” commented Brian Kopp, a pioneer in sports data analytics, who started talking about the subject 12 years ago.
Sports leagues and teams defend and promote the use of wearable technology, claiming they impact “performance optimization” or injury prevention. However, the wide-ranging consequences of collecting data and the ultimate ownership of that information are still gray areas. In their 2017 collective bargaining agreement, the NBPA pushed for a set of rules governing the use of wearable technology by the league and its players. According to the agreement, NBA teams won’t be able to use the data collected via wearable technology against players in contract negotiations. Kopp, now the CEO of Phoenix Sports Partners, thinks in the future there will be “more of a collective conversation. The caveat was always at the college level, where the players don’t have a player’s union. But I think that all changes now with the NIL ruling.”
Joshua Ebrahim, CEO of ProFitX, has a similar take. He, too, expects the new NCAA rules around name, image and likeness rights will change how young athletes look at data and its ownership. A former athlete agent, Ebrahim understands the importance of data while negotiating contracts. So he founded a software company, ProFitX, which today uses more than 90 data points compiled in the platform and AI technology to display real-time contract values and two-year projections to consult teams, players and fans.
In April the company ran a pilot program with 20 NBA teams. “I think these kids are going to come into it with much more acumen at a younger age, and maybe there’s an avenue where they start to value this data even more,” Ebrahim said. “We never had this kind of data as agents. If we did, it would have been very powerful.”
The potential power of data in negotiating contracts is kindling a new industry. This summer Analytics FC will be advising two Champions League winners, two current England internationals, and an FA Cup winner, though the company declined to name them, citing privacy considerations.
In the U.S., Steve Gera, a former NFL coach, started Breakaway Data and is consulting with a group of players in the league. “We’re basically helping them access their data, visualize it, and then customize it in a way to where they can look at their data profile,” Gera said. “The reason why De Bruyne had to hire his own [data] team is because there’s no club that wants to actually pay players more.” He believes it will be customary for players to own and use their data in negotiating with teams in the future.
And while De Bruyne decided against using one, data-savvy agents are still likely to play a huge role in negotiating contracts. “Analytics are important and crucial to make a case,” said Leigh Steinberg, the agent who secured Kansas City Chiefs star Patrick Mahomes’ record-breaking 10-year, $503 million contract. “The key is to analyze that data and show that he is statistically prolific and that he is better than the rest, using the facts. There is no arbitration, no Supreme Court in sports. How will we prevail? Stats are black-and-white values.”
John Kosner appeared on David Millay's Podcast regarding using new tech to transform fan engagement
Original Article: EngageMint, July 29th, 2021d
David sits down with John Kosner in the latest EngageMint episode, covering all things sports tech, truth speaking and leadership and the future of sports broadcasting.
Show Notes
(4:00) Forming Micromanagement Ventures with David Stern
(15:04) Importance of Humor in the Workplace
(18:11) Assembling the Right Team Around the Right Purpose
(21:51) Trust is the Essence of Every Human Relationship
(25:35) The NBA Trade Machine and Taking ESPN Digital
(32:35) Learn from TikTok, Instagram and Twitch
(34:53) Static Personalization vs. Modern Personalization
(36:55) John’s Advisory Work
(43:34) The Adrenaline Factor in Viewing Sports
(50:32) Overcoming Complacency
John Kosner spoke with Sportico's Anthony Crupi about Giannis's Instagram moment
Original Article: Sportico, by Anthony Crupi, July 21st, 2021
It was arguably the most engaging moment of the Milwaukee Bucks’ postgame celebration, but you wouldn’t have caught it if you were watching TV.
After putting up 50 points and steering his team to its first NBA title in as many years, Giannis Antetokounmpo hopped on Instagram Live to toast the championship with his brother, Thanasis. Placed in the NBA’s health and safety protocol prior to Game 5, the elder Antetokounmpo was cooling his heels in a local hotel suite while the bubbly sprayed at the Fiserv Forum.
Hundreds of thousands of fans watched in real-time as the newly minted NBA Finals MVP exalted with his socially distanced brother. A Champagne-goggled Giannis kicked things off with a Delphic riff on “For the Night” by Pop Smoke, cutting off the verse right before it would have veered into the part with the F-bombs, before telling Thanasis that he was bringing the party to his rented room.
“I’ll come to the hotel! I don’t care, I’m coming,” Giannis said, while holding his phone at arm’s length.
“No you’re not,” Thanasis shot back, grinning. “I’m not opening the door.”
While there’s no way of telling just how many people watched the exchange as it happened or viewed the clip after the fact, network execs and marketers alike probably want to tap into Giannis’ base of 9.6 million Instagram followers. Unfortunately for media’s old guard, moments like last night’s impromptu IG Live event are like lightning in a bottle of Veuve Clicquot.
“After the fact, someone at ESPN may have thought, ‘Man, I wish we could do that,’ although there aren’t too many people working in TV who’d be willing to risk picking up on a live feed,” said John Kosner, president of Kosner Media. More to the point, Kosner believes that any attempt to commoditize an impromptu social media exchange would only serve to drain it of the authenticity that made the Antetokounmpo brothers’ chat so endearing.
If the traditional media may find itself shut out of this sort of viral exchange, you can be sure that a whole lot of sports stars were taking notes during the Giannis-Thanasis chat. “I can’t think of another time when a separate live event took place during the primary live event which a broadcaster has paid for the right to distribute,” Kosner said. “But if you’re an athlete, what you saw was Giannis commercializing his success. The takeaway is that there are opportunities to create your own windows,” even in the midst of a trophy ceremony.
Naturally, with opportunity comes the inevitable commercialization that spoils everything it touches. If it had been LeBron James hoisting the Larry O’Brien hardware in L.A., fans may have had to endure a not-entirely off-the-cuff bull session between the Laker great and, um, Porky Pig. (Gotta get fannies in the seats for Space Jam: A New Legacy.)
“The natural connection because Giannis and his brother is what made the moment,” Kosner said. “Because of that, and because of all the variables that were in play—the historic championship, the fact that [Thanasis] was in the COVID protocol, etcetera—it’s unlikely that there will be a command performance.”
If Giannis’ IG celebration may be an irreplicable phenomenon, it’s perhaps worth noting that the MVP knows how to pick his spots. While nobody was going to censure the guy who put up that lurid stat line, other players have caught a fair amount of grief for inviting the outside world into the locker room. When Antonio Brown in 2017 secretly posted footage of Steelers head coach Mike Tomlin talking smack about the Patriots during a boisterous playoff celebration, the receiver’s exercise in guerrilla filmmaking would mark the beginning of the end of his tenure in Pittsburgh.
At the time Brown made the recording, he noted that 40,000 followers were watching his coach’s private address to the team. This morning, 150,000 fans watched Giannis request a 50-piece order (“not 51, not 49”) of Chicken Minis and a large drink, no ice (half Sprite, half lemonade) from a Chick-fil-A drive-through.
Giannis had the MVP trophy in his lap while he ordered the tiny sandwiches.
John Kosner on the potential NBA Mid-Season Tournament with CNBC’s Jabari Young
Original Article: CNBC, by Jabari Young, June 26th, 2021
National Basketball Association executive Byron Spruell has some work to complete before the league’s next media rights deal. The NBA wants a rights increase, and developing new concepts that attract viewership could assist.
The league’s push for a mid-season tournament is one option, but it needs to gain momentum throughout its ownership group. The players union will have a say, and the other constituencies (team executives, sponsors) will chime in, too. And then there’s basketball historians and traditionalists that will make a fuss.
It’s here that NBA commissioner Adam Silver is entrusting Spruell to help create the blueprint for the mid-season tournament. But early signs suggest he needs more incentives to make it work.
What’s in it for the viewer?
The NBA’s concept for a mid-season tournament derives from its observations of international soccer leagues. European basketball clubs also incorporate tournament-style games, and one NBA team executive noted the massive fan support those games get.
The concept would include group games -- essentially enhanced versions of regular-season contests -- and teams that perform well would be invited to the mid-season tournament. The NBA is testing the idea in the WNBA for its 25th anniversary and called it the “Commissioner’s Cup in-season competition.”
WNBA players will divide a $500,000 prize pool. The winning team gets $30,000 per player, runner-up $10,000 per player and the MVP of the Commissioner’s Cup title game takes home $5,000. Google is a major sponsor of the WNBA tournament. And Amazon is the media partner that will stream the games on its Prime video service.
The NBA wanted the concept for its 75th anniversary, but the pandemic changed things. So this year, league executives will study the fanfare of the WNBA’s format.
“It’s a visionary idea,” said long-time media executive John Kosner of the tournament. “I think we’ll see more of that.”
The NBA will use money as the main incentive for team staff and players. League officials hope this reward-based business model will drive players to compete. And adding compensation for player charities, especially social justice organizations, could help get their approval.
The thing is, what’s in it for the viewers? What will make people watch a mid-season tournament, especially with the National Football League in progress? And how would the NBA keep fans engaged?
Deputy Commissioner of the NBA, Mark Tatum holds up the card of the Detroit Pistons after they get the 1st overall pick in the NBA Draft during the 2021 NBA Draft Lottery on June 22, 2021 at the NBA Entertainment Studios in Secaucus, New Jersey.
Adding a draft pick
Kosner, who led digital media at ESPN until 2017, noted consumers have more options outside sports. Covid-19 disrupted sports consumption, and viewers have identified other entertainment options. For leagues outside of the NFL, innovation around its product is a necessity. Even if it means disrupting the tradition.
“You have to convince people that there’s a reason to watch,” Kosner said. “You have to make your product as good as you can because you’re no longer competing with another sports choice -- it’s everything else that people can view and can do.”
In a fall-winter sports cycle, the NBA’s 82-game season has become a bit stale. It has moments, like the Christmas Day games, and Thursday nights are entertaining with Turner Sports’ production. But players resting is still an issue, and that impacts the national contests.
Its top superstar, LeBron James, moving out west didn’t help matters, either.
This season, the league’s viewership averaged 1.3 million viewers throughout its national games on ESPN, ABC, and TNT. Covd-19 impacted that, but pre-pandemic numbers: for the 2018-19 season, the NBA saw an average of 1.79 million viewers. And the year before James left the East (2017-18), the average was 1.89 million.
Viewership metrics are somewhat tricky to comprehend, and the NBA’s product is strong for the 2020-21 postseason, including solid play-in viewership featuring James and the Los Angeles Lakers.
But to expand engagement and increase interest around a mid-season tournament, some in league circles floated the idea of adding a draft pick to the stakes.
The NBA could place the pick between the No. 14 and 15 slots, protect the lottery teams, and add an asset for teams that win the tournament. The league can call it the “commissioner’s cup pick” or some other title sponsor to pay for the naming rights.
The pick rewards the team that stays competitive during the regular season’s early stages. It creates an asset for team owners that executives can leverage in possible trade scenarios. And finally, that creates engagement, as social media channels are filled with NBA fans examining ways to improve teams via trades and draft picks.
Byron Spruell, President of League Operations speaks at the 2017 NBA Finals Cares Legacy Project in Cleveland, Ohio.
The NBA tossed around the idea, but so far, it didn’t get enough support. There are concerns about possible backlash and of empowering good teams with star players. It’s teams like the Lakers and the loaded Brooklyn Nets, that many expect would win any tournament. But with a knockout-style match, similar to the NCAA March Madness games, even the power teams could have a bad night.
Another team executive favored adding the draft pick. The individual called the concept, The NBA Commissioner’s Cup tournament, where every contest is a Game 7.
A peek at the viewers for recent postseason Game 7s: The Nets vs. Milwaukee’s Bucks averaged 6.9 million viewers. And the underdog Atlanta Hawks took out the power team – Philadelphia 76ers. That Game 7 that attracted 6.2 million viewers. Postseason elimination games are fun, and attracts sports fans.
The elimination style could help in the regular season too, said Kosner. He agreed with the incorporating the draft pick, adding the tournament “creates another event the [sports] betting entities would get excited about. So I think it’s a good idea and hope that they’ll do it.”
“It’s more quality programming,” said former CBS Sports president Neal Pilson said. “I can’t imagine the viewer would object or not watch. The idea of the mid-season tournament has an appeal in terms of creating more exciting and competitive games that might otherwise not exist during the regular season.”
NBA betting on patience
Pilson, now a professor at Columbia University’s sports management program, cautioned about player injuries, though.
Tournament games could raise intensity levels, and force players to play through nagging injuries they could otherwise sit out. After all, the NBA’s postseason is the most important stretch of the year. If key players are injured during a high-pressure tournament game, championships could be at risk.
But with the right incentives, the league believes even the best players would be willing to help teammates earn more money.
Draft compensation could return to the bargaining table as the NBA continues designing the blueprint. Again, the plan is to examine how the concept works with other properties, including elements in the Basketball Africa League.
Configuring home and away games will also be a challenge, and determining which part of the calendar to install the tournament is critical, too. There’s talk of inviting European clubs. And placing knock games in one location – more than likely, Las Vegas. Should Spruell and Silver develop the tournament’s logistics, and owners and players approve, league officials are betting patience will allow it to grow on fans.
The NBA renewed interest around the All-Star game. The play-in race is a fun concept. Now its exploring with its 82-game campaign to make that more exciting, too.
“If they created a mid-season tournament, with something at stake, you’ll get people to watch,” Kosner said.
John Kosner on The Athletic & the NY Times with Sportico’s John Wall Street
Original Article: Sportico, by JohnWallStreet, May 28th, 2021
Earlier this week, Axios reported that The New York Times (NYT) was “looking into a potential acquisition of The Athletic.” The story followed a Wall Street Journal piece that declared merger talks between the subscription sports site and Axios to be over and also pegged the NYT as the subsequent ‘leading contender’ for the digital sports media property. Vox is also said to be kicking the tires on The Athletic.
The New York Times Company would seemingly be an ideal landing spot for the once high-flying startup. “[They are] already in the subscription business and [from a prestige standpoint], they are one of the world’s preeminent media companies,” said John Kosner (president, Kosner Media).
It is less clear why the NYT would be interested in making a big bet on a growth business that has seemingly stalled, is losing money and competing in an extremely competitive digital media environment. The New York Times Company declined to comment, saying, “As a general matter of policy, we do not comment on rumors about potential acquisitions or divestitures.” The Athletic did the same, stating it “does not comment on rumors or speculation in the market.” But conversations with Kosner (former EVP, digital and print media at ESPN) and The New Consumer founder Dan Frommer indicated that corporate objectives, portfolio fit and a successful track record of launching subscription-based products are likely behind the company’s investment thesis.
““[They are] already in the subscription business and [from a prestige standpoint], they are one of the world’s preeminent media companies.””
President, Kosner Media
Our Take: New York Times CEO Meredith Kopit Levien publicly set a goal to reach 10 million digital subscribers by 2025. At last count (Q1 ’21 earnings), the NYT reported 6.9 million digital subs (includes: cooking and crossword products). “If you’re the New York Times and you set that goal for 2025, it’s hard to imagine you’re going to get there organically,” Kosner said, noting that new digital news subs are expected to decelerate now that former president Donald Trump is out of office. Rolling up The Athletic and their 1.2 million subs would push the NYT closer to its target.
It’s logical that the New York Times Company would look to add another complementary subscription product to the portfolio, as non-news subscribers are making up a greater portion of new subs than ever before. As Kosner explained, “Getting closer to the customer and serving them in different ways is a bigger business opportunity [than trying to sell news subs exclusively].” Frommer noted that with more subscription products the Times may be able to offer a broader consumer bundle.
An acquisition of The Athletic could in theory also strengthen The New York Times’ news product and support their international ambitions. “The Times has sort of abandoned sports, especially New York sports, and The Athletic has fairly comprehensive coverage of sports, both in this country and football abroad,” Kosner noted. A purchase of the digital outlet “would add a brand known to sports fans, fill a niche and fit into their plans to grow international subscriptions,” he explained.
For all of the positives The Athletic would bring, concerns about the business exist. User growth has slowed (granted, the pandemic likely had something to do with that) and despite bringing in around $80 million in 2020 revenue, the company is still not profitable. There are also questions about the size of the staff—600 full-time employees, including 400 editorial staffers—and how valuable its subscribers are, considering a significant portion remain on discounted plans. It is not clear the company will ever make money.
If there is a reason to believe The Athletic would become profitable under the NYT tent, it would be because the legacy media company has “a very impressive, robust technology and product division and is ahead of the curve [relative to the competition] at productizing and building businesses around different consumer products,” Frommer said. “They also have a huge breadth of experience, and depth of experience, developing and selling subscription products to consumers.”
One could argue that with more than 100 million people in the U.S. identifying as sports fans, The Athletic has barely made a dent in its total addressable market. But Kosner reminds: “The Athletic doesn’t just compete with other sports media subscription services. All of these subscription products co-exist together” (think: Netflix, Amazon Prime, Spotify, Audible, Hulu, The New York Times). It’s not clear there are enough people willing to choose The Athletic over those other digital products.
That said, Frommer can see how acquiring The Athletic could make sense to the NYT, even without a short-term path to profitability. “A company like The New York Times probably plans to be in business for hundreds more years, so they’re in a position to make 20-, 30-year bets,” he said. “If the bet is Americans will continue to love sports in 30 or 40 years, and [they] can own the dominant digital sports media brand, perhaps that’s a worthwhile [wager]–especially if they can buy [the company] with stock.” $NYT shares are trading at their highest level in more than 15 years.
The Athletic raised a $55 million Series D in January 2020 at a $475 million valuation (according to PitchBook). If one were to assume that any deal would ensure that those investors would not lose any money, the purchase of the sports site would be the second most expensive acquisition in Times history (behind only the $1.1 billion it paid for The Boston Globe in 1993). Of course, the company’s track record with mergers and acquisitions isn’t great. It ended up dumping the Globe for just $70 million, lost $110 million on the sale of About.com and saw two marketing companies it bought go under. In fairness, Levien represents new leadership; she was not in charge when those failures occurred.
For the record, Axios wrote that The Athletic has yet to hire bankers, meaning it is unlikely there is a deal in place with the New York Times Company.
The Adrenaline Economy
Original Article: Medium, by John Kosner and J Moses, May 18th, 2021
Last month, we watched the Academy Awards and were not surprised by the historically low TV viewership.
Were you?
Oscar’s 9.85 million viewers (down from 43.7M in 2014)?
No Mojo.
Today, we live in the Adrenaline Economy. Fans want action, involvement, real-time engagement. Entertainment options providing that electrical current are thriving; those that don’t are falling behind. Many, like the once mighty TV, music and movie awards programs, are suffering mightily.
The pandemic is a driving force here and has changed culture. During COVID, Taylor Swift recorded and released three albums. She engaged her fans, including 157 Million on Instagram alone. As entrepreneur and former Ticketmaster CEO Nathan Hubbard said in a podcast interview with Ben Thompson:
“Nora [Princiotti from The Ringer] and I did a song draft, 10 songs, she gave her first pick and we went back and forth and we drafted, we have hundreds and hundreds and hundreds and hundreds of people tweeting at us, texting us, DM-ing us, their individual drafts. People are dressing up and doing song draft parties. This fan base is just electric …”
Taylor’s all in. So is her audience. Taylor’s got adrenaline.
TikTok has adrenaline and, as a result, an astonishing 689M worldwide monthly users; making it “The World’s Fastest Growing Game.”
r/WallStreetBets, Crypto, Tinder, NFT’s, wagering — adrenaline! Financial platforms are now trading at a fraction of a second — co-locating at the exchanges and limited only by computing processing speeds. At the May 1 Berkshire Hathaway shareholder meeting, Warren Buffett lamented the rise of Robinhood, dubbing it “a very significant part of the casino aspect” of investing today. Guess what? The casino aspect is the point.
The games business is built on adrenaline. According to Grin Gaming founder Nick Bucheleres, the future of entertainment revolves around it. Free to play. Virtual goods. Creator Economy. Mobile. Global. Last year, people spent over a trillion hours watching and interacting with other people playing games! Valve’s Steam platform (including CS:GO and Dota 2) regularly exceeds 25M concurrent users.
And just wait until 5G hits. Our children will be able to play “World of Warcraft” on the subway — with no download or WiFi necessary. And they will have “wherever you are” geolocation — enabling them to integrate the people and things in the subway into their Roblox and Minecraft worlds in real-time! That’s adrenaline.
Sports, paradoxically, lacks adrenaline. Over Easter weekend, UCLA lost to undefeated, top-ranked Gonzaga in a thrilling Final Four overtime game, one of the best college basketball games we’ve ever seen. Yet, the Bruins’ epic loss drew just 14.9M viewers, the lowest ever for the prime time NCAA national semifinal on broadcast TV. Watching a thrilling game was once a amazingly exciting communal activity; now for many, it’s passive viewing.
Today, we have more people, in more households, with more money, better technology, and more screens than any time in history — yet the most popular sporting events and live awards show telecasts are attracting fewer and fewer viewers than ever before.
Why?
This is the fourth in a series of 2021 pieces about why games are ascendant in culture, especially among young people, and what those of us in Sports, Media, Investment … all of us in business … can learn from games. In our third installment, published on NCAA Basketball Selection Sunday, March 14, 2021, we noted that the massive virtual goods business in games worth $79B annually is coming to sports, finally, with the advent of “NFTs,” non-fungible tokens. Today, we look at what’s driving the younger generation’s move to interactive entertainment and how games are leading the way.
We are in the midst of a content revolution. The two of us grew up in an era of media scarcity, but now abundance rules. We all enjoy an ever-expanding menu of entertainment options — free and more and more of them are made and distributed by us. Besides TikTok and Instagram, there’s YouTube, Twitch, Snap, Twitter, Reddit, Discord, DraftKings and FanDuel to name just ten, free platforms commanding sports fans’ attention. These are places where the actual activity and energy of sports fans is the point.
On the pay side, most everyone subscribes to Netflix and Amazon Prime. They offer an awesome array of content to scroll through, select and watch on demand but these are not adrenaline choices. The Switch, Xbox Series X, and PlayStation 5 are — and they all sold out not coincidentally.
Games are what’s now and next. While TV networks blamed Nielsen for the ratings slump, the same research authority revealed that 55% of all Americans played games during COVID. In addition:
Twitch set a new record with over 2.1 Billion hours watched in April (29% year over year growth);
YouTube Gaming had its biggest year in 2020–100 B watch-time hours across 40 million active gaming channels. Per Pew Research, 95% of U.S. 18- to 29-year-olds use YouTube;
Games generate adrenaline, here’s how:
Choice. We can watch, play and pay for what we want, when we want it, wherever we want, and on whichever device we choose. The experience is always LIVE to us.
Persona. In games, we can be ourselves or we can adopt an avatar; and, coming soon, there are a host of new virtual identities we can assume.
The Audience Both Creates Content … Running the gamut from producing videos, podcasts, live shows, essays, comments, memes, tips, song drafts … redefining engagement … and actually…
Impacts … Games, TikTok, etc. in real-time. Our behavior matters!
Purpose. As Marcus Ticotin, a longtime games executive and now CEO of Abandon Entertainment and college classmate of John’s, says, “we have a goal, an activity, when we play.”
Place. Games take us to other worlds and situations and it’s all …
Global. Content is produced — and viewers can access it — from everywhere making the addressable and relevant audiences much, much bigger and dynamic.
Now, contrast all of those developments with watching sporting events and live awards shows on traditional linear TV. Our experience is plainly inferior. For one thing, we have little to no choice. We pay handsomely to see the games on traditional pay TV channels. And, for the sports industry, beware what you wish for. It has been so successful in building its moat (generating outsize broadcasting and related rights payments) that Sports has essentially isolated itself on its own island and it’s hard to get there. Sports is not available for the most part on the platforms that most young people use. That’s a problem, says Yannick Manual Ramcke, the OTT lead at OneFootball in Berlin, because “if it’s not happening on the platforms where you are, you don’t know about it and you don’t care.”
And the viewing experience hasn’t changed much since we were teenagers. Compared to playing games, live sports is full of dead spots — one-sided basketball games can get boring fast, not to mention the pace of baseball and football, especially with all the commercial breaks. There’s no swipe left or right. Do younger people appreciate the nuanced beauty that crops up unpredictably in big-time sports? Or has it in fact become too complex, lumbering and time-consuming to scale?
Meanwhile, in sports viewing, we cannot create or share content.
Yes, on a second screen, we can follow and be heard (to a certain extent) on Twitter but we can’t distribute NFL highlights on TikTok, we can’t access live games on Instagram or Snap. We can’t simulate the game experience of watching and playing together in real-time anywhere.
Because sports broadcasts are largely not personalized, they don’t recognize or reward the persona we bring as fans. They do take us to another place; but, once there, we serve little purpose other than as people watching passively. We don’t impact anything.
To change the current viewership declines, Sports leagues and organizations must get their games and highlights in front of far more people. More personalization would help. They need to update the playbook and rethink and rework their rights agreements. Networks need to make their broadcasts available to more devices in more geographies. We need an end to blackouts and video latency and an emphasis on the urgency and exciting communal serendipity of live events.
Most of all, we love the action and sports needs to give it to us. Compare watching this year’s Kentucky Derby (audience down 12% from its last May date in 2019) with digital, virtual horse racing [No drug testing necessary!]. Fans on TikTok must be able to create and share content that includes real-time league highlights. Fans can also lead behavior — as baseball fans are doing now @wallstreetbets-style with No Runs First Inning.
A ray of light arrives tonight with the NBA Play-In Tournament — a brilliant addition by the League (sorry, LeBron!) that has simultaneously expanded and shrunk the Playoff lineup simultaneously, adding drama while eliminating “tanking” talk. Adrenaline. And more: Sports and the NBA are actually leading the current NFT explosion.
It is illustrative to both of us that our teenage sons are happy to come watch a few minutes of any live sporting event with us but they then quickly retreat into their bedrooms to play games with their friends — leaving our traditional media “pipe” for their “metaverse” — the topic of our next column.
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John Kosner is President of Kosner Media (www.kosnermedia.com), a digital and media consultancy, and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 20 years. J Moses has been in and around the Sports, Games, and Tech businesses for over 40 years. He has been a Director at T2 since 2007, and is currently an Executive Producer on a scripted Esports show for the CW (www.optinstudios.com). Both John and J are admirers of Roone Arledge of ABC Sports.