Update on Sling TV

Fatty_watching_himself_on_TVI first tried Sling TV in March during the NCAA tournament. The experience was so bad in watching just one basketball game, I finally gave up. I couldn’t keep a signal long enough to make it work.

So it’s been nearly six months and we are at the beginning of the college football season and I thought I would try again. If anything the experience was worse. I tried to watch Maryland play Richmond, which was on ESPNU. So I paid my $20, found out that ESPNU was an additive and paid $5 more and sat down to watch the game.

I had all of the same problems I had 6 months ago. During the course of the game I got 3 blue screens of death. The only other time that’s happened on this computer was the last time I watched Sling TV. The signal also kept freezing and I had to reboot to get it going again. Since last spring they have added an apology message when this happens, but it happens a lot and after a while you start cursing the error message. When you try to log back in to a game, Sling TV often doesn’t recognize your credentials and you have to close and reopen the program multiple times.

Maryland’s punt returner, Will Likely, had a Big 10 record day returning kicks and every time he touched the ball was electric. Or so I hear since I missed several of them.

To give a little credit to Sling TV, I went to several sports forums where others were talking about watching the Maryland game on TV and they reported that the signal was poor.

So then I did some channel surfing among the other broadcast (non-sports) channels. I never got booted out of any of these. There were major issues with audio. The volume difference between stations was huge and I could barely hear the Rocky marathon even with my computer sound system on full, a setting that would normally break out my windows. And like last spring, several times the audio feed lagged the video feed and I had to reboot the feed.

Bottom line is that after six months of doing this, Sling TV has exactly the same problems that they had during their first month online. They are still not ready for prime time. If any OTT provider wants to get the sports audience they are going to have to do much better than this. It is still better to listen to streaming radio than to watch a sporting event on Sling TV.

ESPN and a la Carte Programming

Maryland TerrapinsEarlier this month ESPN announced that it would be providing some professional basketball and other programming available by a subscription basis on the web. This got the sports world buzzing. I follow several sports bulletin boards and sports fans have been looking for a glimmer of hope that sports programming will be sold a la carte. A large percentage of football fans (at least the vocal ones on line) say that they hate paying for the big programming packages to just get sports. They all say they would gladly pay for ESPN and a few other networks (depending upon the part of the country they live in).

Unless these guys all live in bachelor pads that only watch football and basketball channels they probably are ignoring the fact that their families probably prefer to watch something other than sports. But let’s just suppose that a genie came along and gave these guys their wish. What might an a la carte sports programming world look like?

ESPN is clearly the king of the sports programmers. In 2013 they had revenues of $11 billion, about $7 billion of which came from programming fees mostly from ESPN, but also from the other sports channels they operate. The remaining revenues came from advertising. It was reported in 2013 that ESPN was in almost 100 million homes and that their average fee to cable companies was about $5.50 per month per subscriber. And that number is growing rapidly and I have already seen fees of $6.00 in 2014.

What would it take for ESPN to go a la carte and sell at a premium price only to sports fans? It’s really simple math. If ESPN was to charge $15 per month they would need 40 million customers. At $20 per month it’s 30 million, and at $25 per month it’s 24 million? Might ESPN be able to do that? It’s at least conceivable that they could get those kinds of subscriber numbers, but it looks like a tall order. It’s hard imagining a third of US households signing up for an ESPN subscription at $20 per month. I am sure the folks at ESPN are quite happy with the current regime and will only contemplate a la carte if the wheels come off the industry.

ESPN is probably the only sports network that can contemplate such a scenario. Making a change this drastic would certainly upset their comfortable business model, but if they were able to get 20 million customers they could establish a new baseline and grow again from there.

My alma mater Maryland just joined the Big 10, partly due to a promise of higher revenues from TV. The Big 10 Network, along with the SEC network are the next two highest earning sports networks after ESPN, both expecting revenues of around $350 million in 2014. Let’s look what it would take for the Big 10 network to change to a la carte. Today they charge about $1.10 per subscriber in areas where they have schools and it’s reported that outside those areas the fees are closer to $0.25 per customer. If they were to charge $10 per month they would need 2.9 million customers. At $15 they would need 1.9 million paying customers, and at $20 they would need 1.4 million.

These are certainly lower numbers than ESPN needs, but they also have a much smaller potential universe of customers. One way to see how reasonable a la carte might be is to look at recent TV ratings for Big 10 football games. Let’s look at weeks 7 and 8 of this college football season. In week 7 the Big 10 had three football games that got more than 75,000 viewers. That was Michigan State vs. Purdue, Penn State vs. Michigan and Indiana vs. Iowa. In total the Big 10 games were watched by 5.0 million people that week. Week 8 was similar and the three games with more than 75,000 viewers were Rutgers vs. Ohio State, Michigan State vs. Indiana and Maryland vs. Iowa. In total that was 4.9 million viewers for the week.

And one has to suppose that a lot of Big 10 football fans watch more than one game, so I’m thinking one might discount those numbers by 40%. That means that the Big 10 has perhaps 3 million individual viewers per week. Is it reasonable that they could talk 2/3 of those fans into paying $15 per month for the network, or half of those fans into paying $10. That seems unlikely to me.

But you might ask, “What about basketball?”. There are a lot of basketball fans, but football is king. The weekly total viewers of a league for basketball is significantly smaller than football for most schools (except those that identify as primarily basketball schools like Georgetown).

Plus, one has to ask how schools stay relevant over the long haul when only homes willing to pay a la carte pricing will watch them. That means millions of homes (and potential future fans) are not going to grow up watching their product and identifying with a given university brand. I would love the idea of a la carte being available as I have described it. I would subscribe to both ESPN and the Big 10 network at those prices. But are there enough others out there like me there to support sports a la carte? I have serious doubts.

Tomorrow: The Total Sports Programming Bill