Sinclair Broadcast Group CEO Chris Ripley said that the gamification aspect of its planned over-the-top regional sports networks offering slated for next year will provide users with more of a lean-in, video game-like experience rather than just another vehicle to watch live games.
Sinclair has said its Bally Sports Networks RSNs will launch a direct-to-consumer version in 2022 for all 19 of its channels. While Ripley did not address reports that the company was trying to raise $250 million for the launch -- and that the DTC version would be priced at about $23 per month -- he did offer some slightly new insights to the product.
At S&P Global Market Intelligence’s virtual Kagan Media Summit Thursday, Ripley said that the DTC service will be more than just delivering games to subscribers.
“This is really about giving people a whole metaverse around sports, for them to interact with fans that have self-selected teams they like, and giving them opportunities to engage in different types of content, like short form editorial to highlights and then gamification,” Ripley said in a pre-recorded conversation with Kagan senior research analyst Justin Nielson. “When you think about bringing a sport fan who would have historically watched on linear channels, bringing them into a digital environment where you know their name, you know their payment information, you know their preferences, it opens up a whole plethora of opportunities in which you can increase engagement and you can increase revenue opportunities.”
While there has been some speculation that the DTC version of Bally Sports could offer out-of-market games to subscribers, Ripley said that is not the case, at least for now.
“The core rights that this enterprise will start with, those are limited to the regions the RSNs operate in,” Ripley said, adding that there is still a significant opportunity there. Sinclair has said within its existing footprint of 70 million homes there are about 35 million homes that don’t get live sports.
“That means that over half of households are not getting their local sports product,” Ripley said. “We think that within that opportunity set there is a significant amount of fans who will now be able to engage with us.”
Gamification has been cited as potentially one of the more lucrative aspects of a DTC sports channel -- some research estimates it could be worth as much as $10 billion to $20 billion annually over the next several years. But Ripley said the goal on that end is to give users, particularly younger users, a more interactive experience. He added that Sinclair is working on a new experience with Bally that would allow viewers to watch and play at the same time.
“Currently it’s a passive experience,” Ripley said of watching sports. “In all of our research the younger generation is looking for that video game-like experience, a lean-forward experience, where they are able to interact, to play a game within the game. That’s the goal of the [Bally’s] partnership, to be that cornerstone at least as it relates to the for-money version of gamification, to build out a new sports viewing experience.”
The idea of a standalone streaming sports service on the surface seems like a no-brainer. If sports is often the most-watched programming on linear TV, why wouldn’t a DTC service be equally popular with consumers? But there are a mountain of factors that could affect a streaming RSN product, starting with pricing. While reports have said that Sinclair is targeting a $23 monthly price point for the service, others have said it will probably be closer to $30 per month. But even at the lower price, it’s still a difficult sell.
Adding to the pressure is that while RSNs currently receive fees from pay TV distributors for all of their subscribers, regardless of whether they watch or want the programming, that won’t be the case with a DTC service. The prevailing wisdom is that about 30% of traditional pay TV subscribers watch sports, but it can be lower. Earlier this week, Altice USA chief financial officer Michael Grau said at the Credit Suisse virtual Communications Conference that about 15% of its nearly 3 million video customers "are reasonably or heavily engaged in watching regional sports networks.”
Sinclair is one of the largest TV station owners in the country with about 186 properties in 87 markets; and is the largest individual owner of RSNs, with 19 properties and minority interests in two more --YES Network and Marquee Sports Network. At the Kagan conference, Ripley said that he expects consolidation to continue in both industries and that Sinclair will be a participant.
“We’re always interested in figuring out a way to consolidate the marketplace, both on the TV side and the RSN side,” Ripley said. “The TV side is entirely too small in the world of big tech and big media and it’s really outdated regulations that keep it that way. Consolidating the industry is a commercial inevitability both on the broadcast side and then on the RSN side, it’s also a commercial inevitability there that consolidation will be effected. Being about half the industry there, we will play a major role in that.”
Michael Farrell is senior content producer — finance.
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