Celebrate the Facts!
Over the past 30 years, sports ranging from NCAA football and basketball to professional sports to quasi-sports such as professional wrestling have boomed. The sports-industrial complex diversified marketing and brought new demographics into attendance and more importantly viewership resulting in a tremendous overvaluation of franchises. But COVID changed the game and the era is now likely over.
Viewership for virtually all professional sports was down steeply from 2019:
Industry advocates contend other endemic issues were at fault for the deflated viewing and there may be some truth in these arguments. In late July sports returned after limits were lessened and the NHL and NBA seasons were stretched into the fall, while other events such as U.S. Open (men’s golf), Indianapolis 500, and Kentucky Derby were rescheduled. These proceedings joined regularly programmed fall sports; the NFL, World Series, and the U.S. Open (tennis). This overabundance of sports, they claimed, resulted in steep declines in viewing.
A secondary factor, they attributed, was President Trump’s politicizing kneeling in protest during the national anthem, however, NASCAR, which banned the presentation of the Confederate flag, much to Trump’s consternation, was only off 1%.
During the pandemic, faced with a lack of live sports broadcasting combined with more limited budgets, many viewers turned to free Internet streaming for home entertainment. Cord-cutting accelerated with a record number of consumers dropping their cable and satellite TV subscriptions as COVID fast-tracked the movement. About 6.6 million households will cut the cord this year, according to an industry estimate, with just 77.6 million still paying - a 7.5% decline.
A study sponsored by the smart-TV interface company Roku indicated cord-cutters were satisfied with their decision and wish they had cut the cord earlier. When asked what factors drove the cord-cutting, expenses were the top reason, as responders indicated they saved about $75 per month.
At the same time, subscription services have boomed including the flagship service Netflix. In December 2019, Netflix had over 167 million subscribers. By April 2020, Netflix had almost 183 million subscribers, increasing to nearly 193 million subscribers by July 2020. People were spending their money elsewhere for content other than televised sporting events.
As demand increased subscription services responded by universally raising prices. Hulu, an emerging provider, raised its price by an eye-popping 18% in December. Netflix raised the price of its most popular plan to $14 from $13 with premium tier costs increasing to $18.
For corporate sporting media companies that package these goodies and operate in an informal partnership with the leagues, be they professional or amateur, there is a much scarier possibility, that the power of habit will change the behaviors of the viewing public permanently.
Economics of lowered ratings affected the broadcasters and their permanent adjustments reflect their lack of faith in the market returning to normal. In April ESPN cut the pay of its commentators and executives, ostensibly to avoid furloughs and layoffs, and in November fired 300 workers. Other corporate media companies have had layoffs during the pandemic as well, including Fox Sports and NBC Sports.
People who earn their livings in the bubble of entertainment marketing may be inclined to presuppose one product replaces the next – in other words, other content has displaced televised sports. Another thought-provoking notion is home-based life may have encouraged other habits, such as spending time with a family, reading, creative endeavor, or exercising. Such developments would likely be much healthier than simply consuming creative products but that is a topic for another investigation.
The results of these developments prompt interesting questions:
A missive on NCAA football ratings was presented at https://footballscoop.com/news/a-look-at-the-college-football-tv-ratings-so-far-this-season/. A rationale for lower viewership was provided by https://www.forbes.com/sites/bradadgate/2020/10/29/an-oversupply-of-tv-sports-led-to-low-ratings/?sh=3bc14ef55071. Cord-cutting during the pandemic information was obtained at https://fortune.com/2020/09/21/cord-cutting-record-covid-19-pandemic/#:~:text=Cord%20cutting%20is%20breaking%20records%20during%20the%20pandemic&text=About%206.6%20million%20households%20are,drop%20on%20record%2C%20eMarketer%20said. The Roku-sponsored study was obtained at https://advertising.roku.com/newslist/cord-cutting-in-uncertain-times. Information on the Hulu rate increase was provided by https://deadline.com/2020/11/hulu-to-hike-live-tv-subscription-price-18-percent-disney-streaming-1234616402/. Information on the ESPN layoffs was obtained at https://www.washingtonpost.com/sports/2020/11/05/espn-layoffs-coronavirus/.
Michael Donnelly investigates societal concerns with an untribal approach - to limit the discussion to the facts derived from primary sources so the reader can make more informed decisions.