Weekly Column: Parting of Sports and Entertainment Means Higher Cost

In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the business strategy of entertainment, media, and sports streaming platforms looking to divide content on multiple platforms.

You can read the full column below.

The day was always going to arrive when prices would go up for streaming platforms. In the past television was limited to a few channels and eventually grew to hundreds of channels with on-demand options and satellite as well. Prices went up as options and technology expanded. When streamers entered the entertainment and sports space the technology and competition drove costs down for consumers. Now that streamers like Amazon Prime and YouTube have added NFL, MLB, and other live sports, Amazon is looking to create a sports specific app or platform to be separate from the Prime app/platform and would most assuredly come with an increased price. This makes sense from a revenue and loss standpoint as a business that is purchasing million and billion dollar live sports rights cannot float the cost—eventually consumers will pick up the tab offset the debt and keep stock prices level or increasing in value.

As sports continue to grow in online distribution, the cost for such services will increase and potentially be separated from entertainment and other television options. This is because there is profit to be made in separating services and having the consumer pay a fee. In midst of the golden era of content distribution, there was a thought that maybe platforms would avoid the separation of content to increase the price strategy so consumers could access content in an easier fashion. That seems to be changing as of the writing of this article.

This author has believed for some time that the best platform would be one that is (1) easy to access, (2) for a competitive price, and (3) have a wide array of content options including live sports and entertainment (movies, series, and linear). Better yet, a platform that combines access to multiple platforms to avoid what one might call, platform surfing. AppleTV serves some of that role and as do Amazon and Roku.

However, the next question is whether Disney will sell the worldwide leader in sports, ESPN, to an outside buyer. If that occurs, the Disney bundle of Disney+, ESPN+, and Hulu would likely disappear. Meaning, ESPN would be a part of another platform or entertainment and sports company and likely be sold for an additional price.

It was rumored that Apple might be in the market to purchase a company like Disney. However, that would mean Apple not only making a very significant investment in its business strategy in entertainment and sports, but also in an environment where mergers are increasingly being challenged by the Federal Trade Commission. Disney CEO Bob Iger second run at the role may help to determine who the next major entertainment, media, and sports players will be—namely if Disney sells or buys—and who is on the other end of the deal(s). The hope is that as platforms look for growth, their leaders and developers also look for opportunities to collaborate, increase efficiency, and use technology to lower cost.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.