This week on Bandwidth Overkill, we’re talking about ESPN newsjacking the death of Muhammad Ali, Ad Fraud and FaceBook, The Budget Bundle and NGINX streaming video. Plus we dive into the echo chamber of sports announcers and how networks bet on ratings.
Bandwidth Overkill is a podcast from NetCast Sports Network that follows the continuing startup adventures of NCSN – Growth Hacking, Cord Cutting and Streaming Live Without Getting Crushed By The Cable Giants
This week on Bandwidth Overkill: TNT does the Calton dance over the NBA Western Conference playoff games, we talk about Fat Bundles and what the heck they are, plus ESPN is losing millions and can’t seem to stop it.
A lot of noise is being made about ESPN’s continuing subscriber losses, including 1.5 million from May to February of 2016. While ESPN still maintains they have ‘more subscribers than HBO’ that doesn’t really mean much in terms of overall subscribers. As the linked article points out, the estimated contracts that ESPN has in place mean they are on the hook for about $6 billion per year – and that has nothing to do with just general operating expenses. If the math in the article is correct, that means ESPN is about 19 million subscribers away from not even being able to fulfill their contracts – which probably means they will try to continue to slash expenses while at the same time, drive up advertising costs.
That won’t be easy – they basically have to try and increase their viewer numbers while simultaneously losing the pool of cable subscribers they have to draw from. Now, to be clear, it’s almost guaranteed that other non-premium cable networks are seeing similar drop offs in subscribers because they are all in the same cable bundles, but since ESPN costs so much more than the other channels while also having massive content deals in place, their plight is the most extreme.
ESPN’s subscriber numbers include Sling TV, but here the network also starts some mental gymnastics: the network’s CEO John Skipper claims that streaming viewers are insignificant, and recent reports maintain that streaming viewers make up about 1% of their total numbers. However, it should be noted that the only ways to stream ESPN are either to have a cable login or Sling TV – which means that most viewers have the cable option and it could be assumed that given the choice of streaming a game or watching it on cable, their choice would be cable. No confirmation yet on how much of that 1% figure is made up by Sling TV viewers.
Here’s the rub: while cable subscribers who are not sports fans have some options to get their programming without cable now, they can choose to leave the cable bundle behind but still be subscribed to their favorite channels. However, with the lack of options for ESPN subscribers, if they leave cable, they only have one option, which is Sling. So that leads to the likely reality that many subscribers who are leaving ESPN (along with cable, presumably) weren’t sports fans or ESPN viewers to begin with, and aren’t coming back. That’s the larger problem for ESPN – they rely on the bundling to keep their monthly fees low (not low relative to other channels, but low for subscribers) given that they benefit from millions of viewers who pay for ESPN but don’t actually watch it.