Why the Market for Sports Broadcast Deals Is Soaring Despite the NBA-China Standoff

With just a week to go before the season tips off, the NBA’s standoff in China looks as uncertain as ever. China’s state television broadcaster, CCTV, continues to black-out broadcasts of pre-season games over an evolving political rift between the league and Beijing, putting a lucrative broadcast package, worth billions, in limbo.

But don’t shed a tear for the NBA, or for any major professional sports league. The value of sports broadcast deals, already lofty, is soaring—even for sports leagues suffering from attendance issues.

According to a new report from Rethink Technology Research, sports rights packages are growing not just in value, but in geographic terms. The Globalization and TV Sports Rights Report predicts that the worldwide market in broadcast sports rights will balloon from $48.6 billion in 2018 to $85.1 billion by 2025—a 70% increase, pushed in a large part by streaming services such as Amazon and China’s Tencent.

In most of the world, traditional ad-driven or for-pay television is still the most popular way to watch sporting events, the report said. But streaming services, led by streaming giant Amazon, and followed by rising competitors like Google, Facebook and possibly Apple, are on the ascent. And, more direct broadcast from sports leagues—a model pioneered by Major League Baseball in the U.S.—is on deck, and could become dominant over the next decade. 

This is an area where MLB has been ahead of all other sports leagues. MLB fans have been able to watch direct broadcasts of regular season, playoff and World Series games since 2002. The National Football League provides a similar format (which for a time was run by MLB) for fans outside the U.S., and it is gradually transitioning to direct broadcast in the domestic market.

Europe’s big leagues have been noticeably slower on the take-up. Premier League soccer in the U.K., for example, is experimenting with direct broadcast in some far-flung markets where it has not sold television broadcast rights—something baseball has been doing for nearly two decades.

“This is one area where professional baseball has been far ahead of the curve, and they have done it very well,” Philip Hunter, author of the Rethink Technology Research report, told Fortune. “Soccer leagues and other sports have been far more cautious.”

The report authors said the revenue model for sports broadcast has so far changed more or less once per generation. Half a century ago, live television disrupted the dominant radio broadcasts. Then, pay-TV burst onto the scene around 25 years ago. Now, it’s the rise of streaming services, though Hunter said it wouldn’t take long before direct digital broadcasts took over that market, too. 

None of this will occur overnight, of course. Broadcast rights are signed for multi-year packages, somewhat blunting the rate of change. 

“The advantage that streaming services have over traditional television media is accessibility: an event can be watched almost anywhere, from any smart device,” Hunter said. “But as their power grows, sports leagues will start to experiment with broadcasting their own games and cutting out the middle man.”

Amazon already owns a modest broadcast package that covers around 1 out of 50 Premier League soccer games in England; there are indications the company plans to bid on a larger package in 2022. The online retail giant also broadcasts American football games, where it charges advertisters millions for a 30-second spot, and professional tennis.

The report predicts more online broadcasters will get in on the action, and that more sports will go digital.

TenCent is a prime example. In July, the NBA extended through the 2024-25 season a broadcast and streaming deal estimated to be worth $1.5 billion. Some 490 million China-based fans watched NBA programming on Tencent’s platforms last season.

“The enormous reach and popularity of Tencent’s platforms have been a driving force behind the growth of basketball in China, and we look forward to deepening our connection with NBA fans across the country through this expanded partnership,” NBA Commissioner Adam Silver said in July.

The fallout from a Tweet by Houston Rockets General Manager Daryl Morey in which he expressed his support for Hong Kong’s protests, has put the NBA-Tencent partnership on shaky ground. Tencent joined CCTV last week in blacking out preseason games played in China, but has since quietly resumed broadcasts over the weekend.

But it’s unclear how many of the NBA’s fans in China will return to follow their favorite teams and players.

The risks go beyond the geopolitical

The switch to direct broadcasts by leagues has its risks too, Hunter points out, since doing so will remove broadcast revenue that big media partners and streaming services pay. The sports leagues will want to be sure they’ll have enough paying subscribers to replace that revenue. Leagues would also need to find content to fill the programming gaps between game broadcasts, meaning they may need to seek out partnerships with content producers if they don’t want to take on that obligation fully themselves.

“The Premiere League is already starting to experiment in some small markets where there are no television contracts,” Hunter said. “But at first I think the prospect of direct broadcasts in major markets will be used as a threat, with sports leagues warning broadcaster that they need a good deal or they’ll start looking at a different model.”

“At some point,” he adds, “the tide will turn, and then direct broadcasts will suddenly become very significant for all sports.”

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