Every so often our social media-verse is upended by various viral topics eliciting our attention. Be it milk crates, games about squids, or the next 007, you’re bound to have your phone blow up eventually.
The Utah Jazz fanbase experienced a similar phenomenon mid-last week on the subject of mediums with which to watch the team. Who knew the biggest frustration for fans would be impediments to consume the product?
After reports of Dish Network dropping ATTSN hit the news cycles, the beehive state was a buzz (I just had to okay) with fans clamoring for alternative methods to watch their team.
Fans were met with some disdain, primarily being accused of wanting the games for free. You can imagine how that was received.
Still unsatisfied with the arguments AGAINST a streaming service to replace existing TV deals?— Adam Bushman (@adam_bushman) October 6, 2021
Good news is you can expect more research and a more robust proposal debuting Monday...
...only at @slcdunk. Stay tuned #TakeNote
Generally speaking, fans have been discouraged by most media personnel about alternative methods to watch their team. Today, we’ll debunk some of those arguments and explain a service that follows a model seen across other entertainment industries and
It’s important to note how the Jazz make money from their games.
The Utah Jazz collect revenue from the league as part of the NBA’s “sharing” of revenue generated from NBA League Pass (available to out of market fans) and National TV games. Whatever is done with the Jazz local broadcast won’t affect these options. So we’ll factor them out for this discussion.
The Utah Jazz then collect revenue from advertisements, those announced during the broadcast (i.e. “Jiffy Lube Team Timeout” or “Ford Dunk”) as well as ads that run during commercial breaks.
Per a source within the Jazz organization, the Utah Jazz coordinate and sell these advertisement spots directly with local businesses. Therefore, any ad revenue currently collected will continue in a streaming service.
That leaves local TV rights revenue from their current partner AT&T SportsNet. The topics and math below related to a TV deal (or replacing such with a streaming service) are designed to replace this revenue.
Early last week a proposal was made via Twitter thread for an in-house streaming service. Following additional research and thanks to a more appropriate medium, I’d like to detail the service.
Imagine a service that has live and pre-recorded content. This service is accessible from any internet browser, but also features a channel on the various casting apps like Roku, Fire Stick, and Apple TV, as well as apps from your phone’s app store.
Imagine a service that’s paid via a monthly subscription or, for a small discount, paid on an annual basis. There are varying levels of subscriptions, unlocking additional content and removing certain advertisements.
Imagine this service creates catered, unique content and series that cannot be found elsewhere.
You probably don’t have to imagine for too long before settling on a service that actually exists: Hulu. While following a similar model, the service actually being described is a Utah Jazz streaming service.
ESPN+ is a similar model concentrated in the sports industry. Again, widely available, live and pre-recorded content, subscription-based, unique series, and access to premium features.
While such services are increasingly more abundant, it’s not without its difficulties. There’s infrastructure, physical and virtual, to setup in addition to content teams to assemble.
The point is such services are out there and are the future (more on these topics later).
“Jazz are Leaving A Lot of Money on the Table”
Many have pointed to the fact that the Jazz are likely to command $30-$40M in TV rights revenue with a new deal given the excellent local ratings and recently signed deals from other teams.
If the Utah Jazz sole goal is to maximize their TV rights revenue and grab every cent available to them, a direct-to-consumer streaming service will not get that done.
Such a goal comes at a cost, specifically pricing out. $85 per month (your average TV packaging including local sports) and all of its red tape has proven to turn away customers, and Jazz fans are no exception.
Fortunately, the Utah Jazz are giving indications that maximizing TV rights revenue IS NOT their only goal:
“Streaming is absolutely our top priority... There are gonna be better options in the future.” - Jim Olson, ESPN700
“Better access to broadcasts remains a top priority for future seasons, and we are pursuing ways to improve viewing options of Jazz games for fans.” - Jazz Senior Vice President of Communications Frank Zang commented to the Salt Lake Tribune.
“I do believe that we can do better at not just the one size fits all... I’m excited for that challenge and this is right in our wheelhouse.” - Jazz Majority Owner Ryan Smith commented to the Salt Lake Tribune.
My interpretation here is that giving consumers an excellent experience is as much of a priority as securing a lucrative TV deal.
“The Math is Hard”
Some math is hard, but as long as we keep our facts straight, anyone could do fine with this subject matter.
In fairness, what is actually meant with this argument against streaming is that the balance between volume (# of subscribers) and efficiency (per month subscription cost) is difficult to equate the current and future TV deal approximations.
This argument generally comes in response to ideas such as matching the league pass cost with 20K subscribers. That math is hard, but if we use what real numbers we have, we can get there.
As a stipulation, we don’t have all the numbers. In fact, Jazz President Jim Olson on ESPN700’s Friday afternoon drive show admitted that no one knows the real breakdown of Utah TV households whose focus with their TV package is the Utah Jazz.
However, we can get a good idea with the numbers we do have. Let’s go over those (watch the video if math is intimidating):
- Utah TV households: 1.2 million (approximated with 2020 Census data & Nielsen’s TV estimates for 2020)
- Average TV rating*: 5.9 (interpreted as 5.9% of TV households tuning in; via SL Tribune)
- Average annual Jazz TV rights revenue: $20 million (via SL Tribune)
- Average projected annual Jazz TV rights revenue: $30-$40 million (per Andy Larsen)
*NOTE: this is an average rating and is not indicative of how many TV households are consuming Jazz games; that number will be higher
Based on the above numbers, we can deduce that the average number of households tuning into Jazz games via local TV is approximately 70,800 (0.059 * 1.2M).
But remember, that’s an average. The REAL % of TV households consuming Jazz games is likely in the 8-10% range. People pay and don’t watch all the time, or they record the game, or go to the game.
Such human behavior affects the public TV rating, but TV providers are still cashing in and so would the Jazz.
At 8%, the Jazz have approximately 96,000 TV households tuning in via local TV. At 10%, the Jazz have approximately 120,000 TV households. These numbers also don’t count cord cutters who have opted to hunt for free streams every game.
In order to replace a new TV deal worth $30-$40 million, subscribers would need to pay between $20 and $35 monthly for the streaming service outlined above.
($30M / 120K / 12 = $20.83 and $40M / 100K / 12 = $33.33)
If Jazz are rolling out their own subscription service, there’s no TV deal which means there’s no traditional cable channel where you can watch the games. The TV household volume mentioned above would have to move over.
Good news is the math still works.
If you want to keep cable, $70 (basic) + $35 (Jazz) = $105, a $20 increase from what TV providers charge now. Cable loyalists will pay, just like many Jazz loyalists have overpaid for years.
If you want 100% streaming + cable, $65 (Hulu TV) + $35 (Jazz) = $90, only $5 more than what TV providers charge now. They’ll do it in a heartbeat.
If you’ve only ever wanted the Jazz, suddenly your bill is reduced +60% or if you’ve cut the cord, you’re only paying 40% of what you once paid.
What’s the maximum per month price you’d pay for a Jazz streaming service.— Adam Bushman (@adam_bushman) October 1, 2021
• No blackouts
• Pre, half, and post game
• Access via devices that support YouTube TV and Hulu TV#TakeNote #JazzNation
As imperfect a poll as you can imagine, there’s something to a $20-$35 per month option being viable.
Again, there are still problems to work out but there’s clearly a path to this working.
“There Just Aren’t Any Precedents”
This is a multi-layered argument. In a general sense, it’s incorrect. Sports are entertainment and the entertainment industry is actively bucking the old model sports is still stuck in.
For example, NBC continues to land TV rights revenue to TV networks but are also streaming live and catered content through Peacock, their in-house streaming service.
We already talked about ESPN+, which is another model like NBC in the sports verse.
But when pundits bring up precedents, they’re really referring to a streaming service specializing in regional sports. They’re not referring to FuboTV, which was announced today as the 2nd streaming option for ATTSN.
There is a model forthcoming that is an over-the-counter, regional specialized streaming service from Sinclair Broadcast Group.
Sinclair, through their subsidiary Bally Sports, Sinclair owns the regional sports rights to “more than half of all MLB, NHL and NBA teams based in the United States.” You may remember Sinclair looking to buy out ATTSN’s rights to the Utah Jazz back in 2019.
Sinclair is an RSN rights powerhouse and using their widespread reach to implement an over the counter option for fans beginning for next year’s baseball season upon reaching their funding goals. It’s reported that their target monthly subscription fee would be $23 for customers in market.
What does this mean for Jazz fans?
Suppose the Utah Jazz and Sinclair strike a TV deal for the 2022-23 season. Jazz fans would have the option, through Sinclair’s streaming service, to pay $23/month and gain access to all games currently and historically distributed through ATTSN.
Not only is this model in the final stages of development as a real trailblazer, it validates our math of $20-$35 per month.
There’s disruption happening all over the entertainment industry. Even Jim Olsen mentioned in the aforementioned ESPN700 interview that, “The current model isn’t working... We’re considering everything.” While the sports industry is lagging a bit behind, there’s evidence they are about to embark on a new era.
Given the Jazz desire to innovate and blaze new trails like with the practice facility, it’s disingenuous to argue against a streaming service because there are no active precedents.
Don’t buy the narrative circulating the Utah airwaves that a specialized streaming service for the Utah Jazz is impossible and outlandish.
Such claims are ignorant of the entertainment industry setting a precedent for sports and ignores forthcoming models backed by regional sports network powerhouses like Sinclair Broadcasting Group.
It’s also disingenuous to praise Ryan Smith and the Jazz for their innovative nature and at the same time cast aside such an idea as “unprecedented” and “not how things are done”.
The counterarguments also fight what they call “hard math” with flawed math of their own, when in reality there is enough volume to command the TV deal money the Jazz could get typically via an exclusive streaming service.
Furthermore, such a service priced as outlined above leaves enough room for cable loyalists to continue to subscribe to basic services distributing national content while regaining a significant portion of the fanbase cut off from the team due to a multitude of factors.
The reality, as explained here, paints an optimistic future for Jazz fans following the conclusion of the ATTSN deal this season.