Apple

Apple seeks Home Run with MLB Streaming Deal

Apple-MLB-Streaming

Apple has been “aggressively pursuing” deals to secure live sports rights to grow its Apple TV+ streaming service, and it’s starting to pay off.

Just a few days ago, Front Office Sports released a report that Apple was in the running to buy the available NFL rights in a multi-billion dollar deal involving three main assets:

  • NFL media involvement
  • The NFL Sunday Ticket package for out-of-market games
  • Live streaming games on mobile devices

Before all of this is potentially realized, we’re already seeing the company hit a major milestone with another incredibly popular league: Major League Baseball.

The $85 million streaming deal will include weekly Friday double shows that will air in the US, Canada, Australia, Brazil, Japan, Mexico, Puerto Rico, South Korea and in the UK.

In May 2021, ESPN announced a new seven-year deal with the league – worth around $4 billion or $550 million per year. The deal opened the door for Apple to fill its first live sports inventory, largely because ESPN walked away from about 61% of its broadcast games from last season.

Alongside the live games, Apple will air a new live show called “MLB Big Inning,” featuring highlights and live looks every night during the regular season. Viewers in the US and Canada will also have access to a new 24/7 live stream featuring replays, highlights, classic games, news and analysis.

According to Forbes, the $85 million annual value of the deal comes with $55 million a year for media rights and $30 million allocated for advertising. Apple made $191.1 billion in iPhone sales in 2021. That $85 million figure is about four hours of iPhone sales.

But these are just Apple’s first innings in this space. In fact, this is only the first step.

Streaming, Content Libraries, and Subscription Growth

A diverse content base is imperative to be competitive in streaming, and Apple TV+ has been adding content steadily since its inception in late 2019.

In 2021 alone, the service added 47 TV shows, a 147% year-over-year increase. However, according to Ampere Analytics, top streamers ordered significantly more shows in the same time frame:

  • Discovery: 556
  • Paramount: 406
  • Netflix: 403
  • Disney: 387
  • Warner Media (HBO Max): 293
  • Amazon: 162
  • Apple: 47

While Apple has seen success with properties like “Ted Lasso,” it’s debatable whether its offering is truly worthy of the subscription dollars.

Studies show that the average household subscribes to 3.6 streaming services. If Apple TV+ is going to be one of the top services, sports will likely play a big role. According to investment bank Needham & Company, 30% of streaming customers require live sports to commit to a subscription.

The tech giant has yet to officially release its Apple TV+ subscriber numbers, but according to CNBC, the service had around 20 million subscribers as of September 2021. Netflix and Disney+ have 221.8 million and 129, respectively. .9 million.

While Apple hasn’t yet made a huge commitment to live sports, the new MLB deal hasn’t exhausted its available reserves either, and it could serve as a verification mechanism that live sports rights are worth the price. ‘investment.

Impact on MLB

While the deal is a drop in the bucket for Apple, it’s a very big deal for MLB, especially after ESPN cut the number of MLB games it airs each season by around 90 in 2021 to 30-40 this season – a stark deprioritization for a network that spends $2.6 billion a year on “Monday Night Football” alone.

The new ESPN deal could ultimately be a blessing in disguise for MLB.

Traditional pay TV is on a downward trajectory – with no real signs of a comeback. According to eMarketer Datapay TV (like ESPN) has grown from nearly 100 million households in 2013 to 73 million in 2022. Non-pay TV (streaming services) has more than doubled over the same period, from 20 million households at 56 million.

Before Apple, MLB was underexposed to streaming. The league’s new deal with the tech giant changes that in a big way.

Everyone in space will eventually benefit from this change. For national broadcasters like NBC, FOX and ESPN, streaming is the tide that lifts all boats, and we’re seeing the price of annual media rights trending up and up across sports.

The leagues raise money and the broadcasters increase their audience (and their ad revenue). Win-win.

Regional sports networks

That said, here’s something to remember: Baseball’s viewership tends to be higher in local markets than in national markets, and regional sports networks generate a good portion of MLB’s revenue.

According to The Athletic, RSN fees represent approximately $2 billion of the $10 billion in total revenue generated by the league.

On the other hand, national TV deals with ESPN, Fox and Turner Sports pay MLB $1.74 billion a year, shared among the 30 clubs. Although these deals generate revenue for the league, they are increasingly costly for cable companies and generate little return on investment.

According to CNBC, the monthly average Cost of a DSR in 2021 was $6.42 per cable subscriber.

Streaming poses a threat to this whole model. If Apple’s experiment with MLB goes as planned, pay-TV distributors could potentially remove RSNs from their packages entirely.

Once the content is no longer exclusive to individual RSNs, their value decreases and streamers will have an even stronger hand.

A final consideration

While the focus has been on Apple TV+ and MLB, there are implications for other parties.

Netflix is ​​now the only major streamer without a clear path to streaming live sports. So far, Netflix has stuck to its stance that adjoining sports content like “Drive to Survive” is good enough when it comes to programming.

With Apple entering the market, most streamers have content banks that include live sports and adjacent sports programming – whether it’s the “30 for 30” docuseries on ESPN+ or the recently announced Lewis Hamilton documentary for Apple. Despite some massive successes, Netflix is ​​far behind on the live product.

It will be interesting to see when and where Netflix (inevitably) enters the conversation about sports streaming. If their live content produces anything close to the thrills of “Drive to Survive,” I’m all for it.