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Why NBC Wants You To Subscribe To Cable To Watch The Premier League

nbc sports logo 600x450 Why NBC Wants You To Subscribe To Cable To Watch The Premier League

Philip Badger’s plea to NBC Sports Network to let Premier League fans pay for NBC Sports Live Extra separately covers a few of the reasons why the online service will be available only to cable subscribers, but it ignores some key facets of cable TV economics that play a role in NBC’s decision.

As Philip mentioned, NBCUniversal is owned by Comcast, and Comcast is a cable company, and gee, why would Comcast ever want to give you a reason not to subscribe to cable? On the other hand, while Comcast is the largest cable company in the U.S., it only has 22.3 million cable subscribers, or roughly 30% of the market share for cable TV. That 30% share does not include the 37 million or so people who have satellite dishes, or the rising number of people ditching cable in favor of fiber TV services from AT&T and Verizon.

Still, Comcast-owned NBCU has a stake in all those subscribers, and not just for sports. That’s one key reason why NBCSN is only offering its online service to cable subscribers: NBC wants you to pay for all its other cable channels, too.

Those channels include:

  • USA Network ($0.55/month)
  • CNBC ($0.29/month)
  • SyFy ($0.21/month)
  • E! ($0.20/month)
  • Bravo ($0.19/month)
  • MSNBC ($0.16/month)

Those six channels account for $1.60 of your monthly cable bill. If all of those channels reach the same 80 million homes as NBCSN, NBC collects an additional $1.53 billion in subscriber fee revenue. That $10 million or so that FOX Soccer 2Go collects is a pittance in comparison.

Also, if you live in Philadelphia, Chicago, San Fran, Houston, D.C., Baltimore, or any part of New England, you’ll be chipping in for the Comcast SportsNet channel in that area. Regional Sports Networks account for at least $2.50 of your monthly cable bill. Some RSNs can cost up to $4/month.

This is just one form of bundling in the pay TV ecosystem, and it’s largely a result of media consolidation. Five corporations control the rights to nearly all the sports you see on U.S. television: CBS, Comcast, Disney, News Corporation, and Time Warner. These same five companies also own a huge portion of the channels on your pay TV service. Bundling all those channels together allows these corporations to collect revenue for all sorts of news, sports, and entertainment programming. The end result, though, is that customers end up paying for dozens of channels they don’t watch.

In addition, individual channels can serve as bundles, too, especially for sports. This explains why News Corp. is launching FOX Sports 1. By moving high-cost properties like the UEFA Champions League, NASCAR racing, and UFC from three niche channels (FOX Soccer, Speed Network, and Fuel TV) that collect less than $0.60/month combined to one general sports channel that’s expected to command at least $0.90/month, FOX Sports can not only shift the costs of those contracts off to consumers, but it can also collect enough money to pay for more high-value properties like Major League Baseball, and top college conferences like the Big East, Big 12, and Pac-12 — not to mention the FIFA World Cup and other major international soccer events, starting in 2015.

NBCSN works much the same way. At $0.31/month in 80 million homes, NBCSN collects $298 million per year. The NHL currently accounts for $200 million of that, and MLS accounts for $10 million. That leaves $88 million in subscriber fees — enough to cover the $83.3 million that NBC will pay the Premier League for the next three seasons. In order to cover those costs with its online-only service, NBC would have to find 278,000 EPL fans in the U.S. willing to pay $300/year for it. Considering that FOX couldn’t find roughly more than 60,000 people willing to pay $15/month, that plan probably won’t work.

Also, having such a high-value property also allows NBCSN to demand a higher subscriber fee and get cable and satellite services to offer the channel to more subscribers, thus increasing the channel’s revenue. Since Comcast owns the channel, extracting a few more pennies per month from 22.3 million subscribers shouldn’t be too big a hassle. In addition, everyone who gets NBCSN likely gets all those other NBCU-owned channels, meaning more money for Comcast.

This is how the pay TV game works, and since cord-cutting is not yet a serious threat to sports networks, it’s not going to change anytime soon. “TV Everywhere” services like NBC Sports Live Extra are designed specifically to keep customers attached to cable, because that’s where the money is for these corporations. On the bright side, if you do end up subscribing to cable, you can get just about all the soccer you’ll ever want. You’ll just have to decide if that’s enough to make you pay for all that other stuff you’ll never watch.

Dave Warner is a former soccer writer for the AOL sports blog Fanhouse and the founder What You Pay For Sports, a website that explores the relationship between sports and television and shows consumers how their cable and satellite bills subsidize major pro and college sports.

This entry was posted in Leagues: EPL, NBC. Bookmark the permalink.

42 Responses to Why NBC Wants You To Subscribe To Cable To Watch The Premier League

  1. wade says:

    It still seems to me that NBC is leaving 60,000 times $15 times 12 months ($10,800,000 yearly) on the table. If NBC offers this separate from TV subscriptions, I’m sure most FoxSoccer2Go subscribers would jump at the chance to have roughly the same online coverage. And $15 a month is way more than the few dollars that subscribing to every NBC-owned channel would get Comcast/NBC, even if all 60,000 of us went back to subscribing to cable. I’m not saying that they won’t make more money by trying to get more people to subscribe to their channels through cable, but there are plenty of die-hards like me that will never go back, and that is the revenue that they will be missing by completely excluding us. It’s the classic, “Let me give you my money!” argument. I don’t get why a company won’t take essentially free money.

    • Phil Badger says:

      The difference between NBC’s streaming next year and Fox’s is that I’m sure a lot of people subscribed to FoxSoccer2Go as a supplement to Fox Soccer on cable. Usually instead of paying extra for Fox Soccer Plus, or maybe it wasn’t available. For NBC, there won’t be any people who would subscribe to the internet package separately if they already get it included.

    • Dave says:

      Because when you can convince 80 MILLION people to pay $0.31/month for a channel that only a tiny fraction of them will watch, what’s 60 thousand? Pay TV is a numbers game, and right now, those numbers give NBCU all the leverage. They already get so much money from pay TV subscribers that they can demand you pay for this on their terms, and if you don’t want to do it, they’ll pat you on the back and tell you to have fun at a pub that WILL pay.

      It sucks for folks like you, sure, but the harsh reality is that they don’t need your money unless you’re willing pay for the whole shebang. That’s how pay TV works here.

      • wade says:

        OK, time to move to England where I can watch all of the games… oh wait.

        Is there any country that offers every Premier League game online for a fee (legally)?

        • The Gaffer says:

          I don’t know about other countries, but media rights (including Internet rights) are sold on a country-by-country basis, so if you live in the United States, the only legal way to go is via NBC’s product offering.

          Cheers,
          The Gaffer

        • Paul says:

          Yep. You can watch all 380 matches in the Middle East courtesy of the official rights holder ADMC Sport. Cost is about £60 for the whole season, which is about $90.

          • Scrumper says:

            When I travel to the Middle East Abu Dhabi and Dubai has 24 hr Premier League coverage. It’s brilliant.

          • wade says:

            Online or cable/satellite?

          • Scrumper says:

            Well I watch it in hotels in the UAE and Saudi Arabia. There are about 5-6 football channels. Two are for english football with a number of great football shows all beamed from the UK (one in english the other arabic so take your pick). It’s a live feed with repeats 24/7. If you listened closely to the Spurs Man City game you could hear the arabic announcer going beserk in the background.

  2. Frill Artist says:

    That is a poor argument. The money to be made from online streaming is additional revenue. The people that want cable will get cable sports or no sports. Among the sports fans, some will and some won’t. However, it is still pair to make money off those who won’t subscribe to cable. Online streaming. Hence the additional revenue. By ignoring that demographic, they lose out on potentially more money.

    • Dave says:

      You’re forgetting that these sorts of TV Everywhere deals keep Comcast on the good side of other cable companies — who, in case you hadn’t noticed, are also ISPs. You think Time Warner Cable, BrightHouse, and Cablevision want their internet bandwidth being used for a streaming service owned and operated by Comcast? Especially one that caters to people who refuse to pay for TV? $10M is a small price to pay to avoid that backlash.

      To say nothing of the federal regulators who were not too keen on the Comcast-NBCU merger in the first place.

  3. Phil Badger says:

    Dave, I understand all the points you make. But they’re completely shutting out a market for potential revenue. No matter how sweet the package on Comcast might be for the soccer fan, I’m not paying for it at $60/month minimum.

    If they’re arguing that offering the streaming-only package will make more people move away from cable, wouldn’t they have done so already? Does MLB, NBA, NHL, MLS offering internet-only plans hurt the cable business?

    The thing they don’t seem to understand is that the cord-cutters are like the opposite of a “sunk cost”, to use an economic term. We’ve already decided we’re not consuming what you’re offering, now matter how many perks you throw in. They can either take our money, or leave it on the table.

    • Dave says:

      About 100M people still subscribe to pay TV in one form or another, and those numbers aren’t decreasing at a statistically significant rate yet. You are 1 in 100M. Who do you think has all the leverage here?

      Yes, it sucks. Sorry. Unless 20M people cut the cord in the 12 months (and fat chance of that), this is what you get.

    • leviramsey says:

      MLB, NBA, and NHL (and maybe MLS?) don’t offer every game on the Internet, though.

      Look up the MLB territorial restriction map some time. Depending on where you are in the US or Canada, there is at least one MLB team whose games are effectively never streamed to you (outside of ESPN’s Sunday night national window and maybe Fox’s Saturday afternoon national window). In general, the team that most people in a given place would want to watch is the team that’s not offered on the streams (technically, the league doesn’t have the right to sell that game in that area, which is why even ESPN can’t show games involving that team outside of Sunday Night Baseball).

      Example: if you live anywhere in the six New England states, the Red Sox are not available for online streaming. If you live in Connecticut, the Yankees and Mets are also not available.

      If you live in Iowa, the streaming service does not include Cubs, White Sox, Twins, Brewers, Cardinals, or Royals games (conceivably on a night where 15 games are going on, despite paying full price for the streaming package, you’re only going to be able to watch 9 games!)

      A similar decision would be NBC deciding to allow direct online subscription to Live Extra, but not allowing direct subscribers to watch Man Utd, Man City, Liverpool, Arsenal, Spurs, or Chelsea games.

  4. Lost says:

    I was willing to pay up to $30 a month for the online service. As i cant do that i will do what i do now and watch the games for free via illegal feeds. As more and more illegal feeds are come online so more and sports fans are doing this.

    • Frill Artist says:

      The funny thing is that you can now find many in HD. It might get to a point that by the time these big wigs execs start offering streaming plans, people would have grown accustomed to those free footy streaming sites.

  5. Morgan Wick says:

    What will kill this system isn’t cord-cutting, but a la carte – and even if the cable companies are resisting it, THAT’S already started with Verizon and others’ sports-free packages. I actually think sports fans will be on the vanguard of cord-cutting. Here’s how it works: a la carte catches on, teams and leagues decide they don’t want to be on glorified HBO, and bam, most non-niche sports are available on broadcast, especially for fans of major league teams.

  6. Gary says:

    Do all the other non-Comcast cable companies carry all the NBC channels? Will subscribers to these other cable providers have the same access to all the games?

    Here in CT where I have Cox, one of the Comcast sports channels (I cannot remember which one) was initially offered but then was removed. Can something similar happen again?

  7. Fog says:

    I cannot wait for the start of the new season. Then everyone will either have to put-up or shut-up.

    All of the incessant whinning by cord cutters is extremely irritating. Complain, if you must, but please do it to NBC. EPL Talk is not going to change 30 Rock’s decision on this matter. This article explains it very clearly.

    Like most things in life…it’s all about the money. NBC wants it on their terms…cord cutters don’t want to give it to them.

    From 20 paces…my money is on NBC.

    • PhillySpur says:

      What did these people expect when Comcast got the rights? You’re right, the whinning is very annoying.

      • Fog says:

        The thing is that when you become a cord cutter you know that there are going to be limitations. This is one of them. They need to choose between cutting the cord and accepting the limitations or not cutting the cord.

        As Thomas, Duke of Norfolk wrote in his letter to Thomas Cromwell on 14 March 1538, “a man can not have his cake and eate his cake.”

        Same holds true today.

        • wade says:

          When I “cut the cord”, FoxSoccer2Go (or whatever it was called then) was a legitimate option, and had 90+% of the EPL games, FA Cup, etc… I didn’t even mind the delay on the big games because I got real value for $15 a month (I would have gladly paid double that). That delay and the weekly ESPN game that I couldn’t watch on-demand were the only limitations, which of course I accepted. With so many more online options for everything now, how could I reasonably expect that a company would buy the EPL rights and make it *harder* to see games online? I understand that business models change, but this is going backwards, not forwards, thus the complaints. NBC will definitely hear from me, and I’m sure from others as well, but internet forums have always been a place to vent immediately and to see how many agreee with you. If I were the lone nut in the entire country that refused to go back to cable, I could undertand the backlash, but I’m clearly not. Plenty of people have been affected by this decision, and we’re making it known that we’re not happy.

      • Chris says:

        Enough with the attitude Philly. Not all of us live in an area of the country where the NBC approach is an option at any price. If it were, believe me I would pay it. By preventing an online-only option they are forcing people like myself to either watch illegally (which I don’t want to do) or give up watching the EPL.

        • The Gaffer says:

          Chris, what area of the country do you live in where the NBC approach is not an option?

          Cheers,
          The Gaffer

    • wade says:

      I already “put up”, which is not giving Comcast any of my money for cable channels (been doing it for two years now). Soccer is just a sport, and as much I’m into it now, I wasn’t at all a few years ago. If Comcast/NBC/whomever won’t let me give them my money, I won’t. Cable/satellite is not worth it to me at even half the current prices. If I can’t use an internet proxy in another country to watch online, I’ll just catch the occasional Cup semi or final or London derby at my local pub and be done with the rest of it. I can always go back to doing something productive with my weekends, like reading forum posts in which people complain about people complaining.

      • Fog says:

        @wade – Thank you for your mature outlook and appropriate response (except the shot at me :) ). It would be great if everyone had the ability to get what they want…both sellers and buyers…unfortunately, that is not life.

  8. Dean Stell says:

    Wonderful analysis. Always nice to see these sorts of pieces from people who actually know what they’re talking about.

    What I think people are missing when they talk about how they should sell subscriptions on the side since cable-cutters won’t buy cable just to watch EPL is that even though they could make additional revenue, they aren’t in the business of making it easier to cut the cord. Their entire business model is built around selling everyone lots of channels that they don’t watch. Comcast isn’t going to be the trailblazer of unbundling.

  9. sucka99 says:

    Yup. There is nothing to be gained by Comcast going against the cartel. Pay TV authorized streaming is the direction these services are going. I suspect eventually all the shows currently offerred on streaming services like Hulu will eventually go this route. And Netflix/Amazon will only offer non-original TV shows after some sort of big ISP exclusivity period – like 2 years.

  10. Efrain says:

    Dave,

    Based on your numbers, NBC is receives more money from satellite subs than cable subs. So it’s in NBC’s interest to really push Directv and Dish to offer the “extras” to their subscribers right? Which means there is probably a good chance that the satellite companies will come up with some agreement with NBC. Am I connecting the dots right?

    Thanks

  11. Nick says:

    Subject
    —————————————————————
    NBC sports extra

    Discussion Thread
    —————————————————————
    Response Via Email(Janie Vi – 100322888) – 04/24/2013 04:29 PM
    Dear Mr. Cowell,

    Thank you for writing about NBC Sports Live Extra App and Premier League Extra. I understand these are important to you.

    While we are unable to provide information if NBC Sports Live Extra App and NBC Sports’ Premier League will be available with DIRECTV, I have forwarded your email to DIRECTV management. While DIRECTV Management is unable to follow up individually, rest assured every suggestion and inquiry from our customers is reviewed to determine what changes should be considered.

    Again, thank you for writing, Mr. Cowell. We are glad you are one of our loyal customers.

    Sincerely,

    Janie B. – 100322888
    DIRECTV Customer Service

    • Efrain says:

      Let’s keep harassing DirecTV. I already sent two emails and will follow up with one each month through August.

      • The Gaffer says:

        I would also suggest contacting them via Twitter. The bad thing about sending them e-mails is that no one else seems them. The good thing about sending them tweets is that they’re out in the open and have to respond after a while if there’s a large number of people tweeting the same questions.

        Cheers,
        The Gaffer

        • Cisseinxtratime says:

          Perhaps creating a unique hashtag for EPLTALK readers to tweet at the cable and satellite companies????
          #EPLTVPLEASE? or something like that? get it trending nationwide in no time.

  12. Mike Verzechuan says:

    Thanks for an informative article on the subject.

    • Fog says:

      Interesting last name. I have never seen it before.

      I am trying to figure out if it should be the name of a Spanish province in China or a Chinese province in Spain. :)

  13. Todd says:

    Comcast is short sighted. In business, as a sales and marketing professional, you are constantly trying to create new revenue streams to create economies of scale.

    The internet model is very favorable because as revenue grows (monthly internet subscriptions increase) the cost of doing business (or economy of scale) goes down dramatically, more dramatically than the cable business. Why? Overhead.

    In short, Comcast does not help itself by just having the traditional cable subscription model as its only revenue stream. Open up an additional revenue stream to offer the product to a new populous and you will make more money.

    Fox Soccer Plus achieved this and anyone who had that knows they got it after they already had Fox Soccer Channel and Fox did a decent job of offering new programming exclusive to Fox Soccer Plus.

    Comcast misses the boat dramatically.

    • Fog says:

      And all the time I have thought that “Fox Soccer Plus” was just another overly expensive/useless cable/satellite channel.

      Todd, in what field are you a “sales and marketing professional?” (Which I assume means that you get paid for what you do.)

      Is it technology? Real Estate? Women’s Lingerie?

      Also, what is the name of the web site where you got your great intellectual sounding phrases, such as: “internet model,” “economy of scale,” and my personal favorite “product to a new populous?”

      Got to go now, before I dramatically miss that boat…

  14. Philswin08 says:

    I missed this article yesterday but in case anyone is still reading: I’m not the least surprised by Comcast’s strategy with online but I’m disappointed, and asking for an online option .is not whining. We just want what every league in America offers(minus the NFL) an online streaming or league package.

    • Fog says:

      The NFL has on-line streaming via their NFL Sunday Ticket Max, which is a DirecTV exclusive.

      • Fog says:

        What Comcast is doing is similar to NFL Sunday Ticket Max without the added cost. NFL Sunday Ticket Max costs $300/year and includes both TV and on-line access to all out-of-market NFL games. (There are discounts available.)

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