Could subscription services radically change market strategies?

[HugoSimon]

My understanding is that the NHL has been seeking large national contracts for about 30 years. Reason being that national coverage creates more revenue. So if I have 1 million fans in 1 state and 1 million spread out over the entire country, the national contract will beat out the local.

But if we end going to a subscription based structure could this be the end of that strategy? I.e. it is better to have die hard fans that'll pay several hundred a year for coverage over trying to get a massive number of casual fans coast to coast?

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[Barclay Donaldson]

Have you ever heard of NHL Gamecenter? The NHL's subscription service? Carries every single out of market NHL game the entire regular season? National TV providers and their NHL rights aren't going anywhere. They are significantly more lucrative.

 

[tarheelhockey]

IMO the big change is going to be the breakup of tiered cable packages into direct subscriptions. At this point the only thing keeping it from happening is the inertia of old systems being slow to die.

Not sure this is really going to impact the NHL that much. The contract is with the network, not the cable company.

 

[HugoSimon]

Have you ever heard of NHL Gamecenter? The NHL's subscription service? Carries every single out of market NHL game the entire regular season? National TV providers and their NHL rights aren't going anywhere. They are significantly more lucrative.

Then why bother with television companies at all? This is my question.

At some point we'll reach an equilibrium where its not worth it for either side.

 

[Barclay Donaldson]

Then why bother with television companies at all? This is my question.

At some point we'll reach an equilibrium where its not worth it for either side.

Why bother with television companies at all? National TV provider NBC's NHL rights are worth $200 million per year. Their contract is worth $2 billion total. NHL Gamecenter annually provides a few hundred thousand per year last time I checked. One provides millions of eyes on a regular basis and is significantly more lucrative and will continue to be more lucrative as the NHL has increasingly become a more popular league nationally. The other one is a subscription service. At one point an equilibrium might be met, but simply looking at how one-sided the provision is for money and eyes, it will not be at any point in the short- to medium-term.

 

[Yukon Joe]

Have you ever heard of NHL Gamecenter? The NHL's subscription service? Carries every single out of market NHL game the entire regular season? National TV providers and their NHL rights aren't going anywhere. They are significantly more lucrative.

The problem with Gamecetre is the "every single out of market" part. You can't use Gamecentre to watch your local team, which is all most hockey fans want to do. Don't get me wrong it's fabulous for someone like me who moved away from my hometown, but I'm in the minority.

NHL might potentially make more money if they went all-digital, but that would mean cutting out the broadcasters so that might be seen as being too risky.

 

[Barclay Donaldson]

The problem with Gamecetre is the "every single out of market" part. You can't use Gamecentre to watch your local team, which is all most hockey fans want to do. Don't get me wrong it's fabulous for someone like me who moved away from my hometown, but I'm in the minority.

NHL might potentially make more money if they went all-digital, but that would mean cutting out the broadcasters so that might be seen as being too risky.

The broadcasting stations would simply adjust. With the amount of ad revenue that they have to lose, they're not going to lose out to subscriptions. Sporting leagues around the world have offered some sort of viewing subscription, there is a reason why they haven't completely replaced broadcasting stations internationally with how much cheaper and more accessible they are to the fan bases. The reason Gamecenter has blackout games is to protect to the local broadcasting stations and keep them happy, because that is where the real ad revenue is.

 

[MNNumbers]

I think what is being discussed is something like this:
If viewership is enough for NBC that they can make more on advertising than they are paying in rights, then is there a way that the League itself can skip the middle man and access that same advertising dollar? After all, advertising works because the people who make ad buys think that they get more out of it than they put in.

Presently, Game Center is out-of-town only because I am sure that the individual franchises don't want GameCenter messing with their local broadcast contracts. And, that makes a lot of sense, because really, the valuable part of the US broadcast contract is playoffs. Regular Season games don't make nearly as good of ratings. Local ratings, I am sure, are better. So, you can't interfere with that.

I personally wonder why anyone would pay for the national regular season rights. The only reason must be that it's the only way to get the playoffs.

 

[LadyStanley]

For 19-20, Center Ice (TV/cable/satellite equivalent of Game Center) was ~$155US. (I got a $25 credit for NHL cancelling rest of RS after calling my cable provider. Should have been automatic, IMHO. AHL.tv credited account holders immediately after season was cancelled.)