Wednesday, June 11, 2014

Can Internet Sports Channels Rival ESPN? Part 1

For many years, ESPN has been the most dominant force in sports television. It's online, television and print offerings are high-quality and their throne has never been seriously challenged by anyone. Those who tried to challenge it usually fell short and ceased operations.

In this era where sports are bigger than they've ever been, there are more rivals for ESPN than ever before. Fox and Turner, who both started ESPN rivals in the 90s which failed to put a dent into ESPN's superiority, have come back with a vengeance in an attempt to accomplish this major feat. But, the most interesting rivals who've emerged come from the world wide web.

Internet sports channels have found a new way to connect with fans by providing an exclusive peek into the lifestyle of those who influence the games we watch. They've also provided viewers with videos featuring different stunts and tricks which will probably catch the attention of a younger audience more than two talking heads arguing about a topic. There is also a sense of uncensorship which the likes of ESPN couldn't commit to for various reasons.

The two big determinants to rivaling the likes of ESPN will be advertising and winning sports rights. As of now, none of these channels seem poised to acquire live games because of their dependence on YouTube which distributes their content. This conscious coupling forces the channels to split ad revenue with the video behemoth. If any of these entities were to ever become serious about competing for deals with television networks, they would need their own video player and their own infrastructure to pull it off in order to prevent having to split any profits with YouTube. The likelihood of splitting is slim to none because it's unlikely that any of these channels will be willing to leave the comfort of YouTube, the number one distributor of online video. It's hard to convince online viewers to leave YouTube for a different standalone video website no matter how good the content is. Previous attempts have been unsuccessful.

(On a sidenote - Online video distributor Google is considering a bid for Saturday night NBA games. If they win, it'll be interesting to see if Google produces those games in a traditional television style or if they end up as a free-flow internet style broadcast. I'm also curious as to whether they would import talent from Internet sports channels who aren't traditional journalists)

It's also hard for internet sports channels to garner television-style advertising deals because the Internet doesn't have an established ratings system like television. It is also more likely that advertisers will be exposed to a bigger mass audience on television than they would online because viewing habits and behaviors haven't transformed as much as we think they have....yet. Television still remains the dominant visual medium. 

"Blacktree TV," an entertainment program, recently moved from YouTube to actual television and they told StreamDaily that their profit from television overpowered their internet profit by far even though they're on a new television network (Soul of the South is currently available in 14 U.S. markets) which doesn't have as much reach as the internet.

“Eighty percent of our revenues came from YouTube 2 years ago, and now we’ve flipped it,” says BlackTree TV founder Jamaal Finkley. “We still appreciate what the YouTube ad sales revenue does for us, but traditional [TV] dollars are a better backbone for building a media business.”

This tells you that many traditional advertisers are still more comfortable investing in an obscure television show instead of a YouTube video even if the online video garners more views over time than the show does in it's scheduled timeslot. 

Advertisers want guarantees from television networks in terms of the number of viewers who'll tune in to a certain show during a certain time period. Online video can't provide that luxury to advertisers yet because viewership is so sporadic. Advertisers know what they're paying for with television networks but that same precedent doesn't exist with online channels.

Internet sports channels have a long way to go before they can seriously rival their traditional television counterparts but there's no question that if they continue to build up their fanbases and produce quality programming that they'll put a dent into ESPN and Fox Sports' profit margins sooner rather than later. Internet sports channels are focused on successfully producing something which has rarely translated successfully onto sports television: quality sports lifestyle and entertainment programming.

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