Could Intel’s cable killer undermine the entire sports business model?

The New York Times ran a piece yesterday on Intel’s plans to offer TV channels via the Internet, and cable and satellite companies’ plans to fight tooth and nail to stop them. All of which is very interesting if you care about telecoms and tech giants beating each other over the head with lobbyists — or, as sports economist Rod Fort notes, if you watch sports:

The implications if Intel is successful go far beyond whether you’ll be watching future NBA postseasons on your TV or your computer. Cable revenue, always a big deal for the sports industry (except for the NFL, where it’s swamped by network cash) has become an even bigger deal in recent years, as cable channels have thrown crazy money at the only events that people still watch en masse without DVRing through the commercials. To earn it back, they’ve — well, in part engaged in massive layoffs, but mostly turned around and gotten cable and satellite providers to pay through the nose for the rights to carry the sports channels. Hence the growth of “sports surcharges” that have caused your cable bill to head skyward. Sports teams, meanwhile, especially those in large cable markets, have been raking in record profits; it was the promise of future cable riches (albeit now slightly less rich, thanks to MLB revenue sharing rules) that led the Guggenheim Group to plunk down a ridiculous $3 billion for the Los Angeles Dodgers.

And here’s the part where I cop out by not actually answering the question raised in my headline: I don’t pretend to know precisely how adding Intel (and presumably other Internet-based providers) as competition will affect the cable-to-sports-owner money pipeline, but it certainly has the potential to be a doozy. More options for viewers could lead to a price war that would drive down cable fees, or it could lead to a programming war that could drive them up. Putting more content online, meanwhile, can only make piracy easier (I’m sure Intel has plans to keep people from re-streaming their services, just as I’m sure there are already people working to get around them), speeding the day when TV sports becomes just another thing that you look for illegal downloads of. Not to mention the day of reckoning for sports leagues to figure out those nasty local blackout issues.

Either way, it’s a huge bomb waiting to be dropped into what for the past 30 years has been a fairly simple system of steadily increasing payments from viewers to cable systems to cable channels to the pockets of sports team owners. It’ll likely be several years to a decade before we see how things will shake out, but for any teams making plans for the 2020s, it might be a good idea not to count their cable money before it’s hatched.


9 comments on “Could Intel’s cable killer undermine the entire sports business model?

  1. This happens there will be a national day for “cord cutting”… lol, with out sports cable, iptv and sat providers have no real reason for customers to stay. Unless you dont mind the high fees.

    I dont know how many times I have heard “if i could get live sports online like i do every tv show i watch, i would cut the cord instantly”

  2. The cord cutting has begun, here in New York at least. I know plenty of people who have been shutting off their cable. I snipped my cable when Time Warner agreed to air the NFL Network. I realized that between MSG, Yes Network, SNY, ESPN and now NFL that I was paying in excess of $20 a month for programming I didn’t care about. The Yankees alone get over $50 a year from EVERY CABLE SUBSCRIBER in New York. Fuggetaboutit. Between Netflix and on air channels I get all the programming I need for $10 a month.

    If there’s a game I really want to see, I’ll either go around the corner to a bar or go to a friend’s house and watch. If I really feel like staying in, there are plenty of outlets online to watch any game illegally. In fact, I’m considering going over to Best Buy and buying the cheapest laptop I can specifically to watch games online without having to worry about viruses. It would still be cheaper than paying for cable.

    Major sports leagues are playing a terrible long game. I was/am an obsessed sports fan. I still listen to sports radio to relax, but I hardly watch games anymore. I tried to watch the NBA game last night and I couldn’t believe how long it took to tip off, the in game promotions, the countless time outs. I flip past a Mets or Yankees game and see the HORRIBLE optics of empty seats behind home plate that the home team could care less about – seeing that they’re already paid for. I sit through NFL games until I get sick of touchdown/extra point/commercial/kickoff/commercial and wander off, not returning.

    As a result, my two sons don’t care about pro sports at all. I learned it at my dad’s feet. What I hope to teach them is not to be suckers.

  3. Sunnyside, have you heard of Aereo TV? its out in NY, you rent a tv antenna for $8 bucks a month and they stream to you any over the air channel the antenna can pick up. You also get a cloud DVR to record the channels, which means you can record and watch online any games that are on the over the air network channels…

    Luckily for Aereo they have won court battles that allow them to keep operating they go through their legal wars with the networks.

    Over here on the west coast a similar company started up but the networks won an injunction and for now no similar technology can be offerend in the western united states.

    This would work out great for us for football since the local NFL teams are on over the air channels but not Basketball, Baseball or Hockey.

  4. I had Aereo for a while. I love the idea; the implementation is a little lacking. It bogs down a little bit during big events like the Final Four; maybe they’ve upgraded their servers from when I tried it.

    More infuriating is that the stream cuts off exactly when the program is scheduled to end, which for sports fans is a deal-breaker. I was watching an NFL playoff game live when it cut me off as the winning touchdown pass was in the air. By the time I restarted the stream I had missed it. I called them all sorts of names after that.

    TL;DR—Aereo isn’t really for sports fans. It’s more for people who want to record their favorite dramas/comedies and watch them later.

  5. Thats good to know about Aereo’s implementation, I been wanting to sign up for it and check it out. But you need to have a NY billing address to get an account.

    Yeah the idea is great… for me I would like to have the option to cloud dvr some games then access them easily.

  6. Some other stories about the Intel push to TV have suggested that Intel’s not going for something that will be cheaper than cable, necessarily, but may be a “premium” service.

    http://www.reuters.com/article/2013/06/10/intel-television-idUSL2N0EM0DE20130610

  7. What’s the premium service that people would be getting, exactly? Fewer channels for more money, but on a smaller screen, with no ability to fast-forward through commercials?

  8. I’m not sure why anybody would think that a slightly different delivery method would have much impact on cost to the end user. Comcast/NBC is still going to bundle your Comcast-owned RSN with Bravo. Disney is still going to insist that if you want ESPN you gotta pay up for the Disney Channel, too. Same for all the CBS/Viacom stuff.

    The piracy possibilities might make it of interest to the “I don’t want to pay what they’re charging, so it’s okay if I steal it” crowd, but otherwise hard to see it as a game-changer.

  9. It could be that Intel wants to do it, because pretty much every major computer/chip company has suggested TV and internet-delivered products at some point in the past decade. Maybe they’re trying to play coy and flexible on what the service is because they’re still early in trying to cobble it together from multiple networks who are all throwing out their own rule ideas to make it less attractive than their own services (for an example, look at what book publishers do to libraries by trying to actually check out an eBook at Seattle Public Library’s website… some require one ap, some deliver via wifi, some require a computer program and connecting the reader via USB).