Here is the third and final instalment of the outside-the-box idea trilogy on how the NHL could improve.
- August 14 – Rethinking the NHL: Conferences/Divisions/Scheduling/Playoff format
- August 25 – Rethinking the NHL: An expanded league needs more awards
- Today – Rethinking the NHL: TV, blackouts and hockey’s future online platforms
It’s 2017 and cable TV networks are still holding hockey fans hostage with online blackouts. Why?
OUT-OF-MARKET vs. IN-MARKET STREAMING
The most obvious concept in hockey and other sports is that most fans support their local team. Generally, Pittsburghers want to watch Penguins games; Philadelphians want to watch Flyers games, then kill themselves. Yet due to blackout restrictions, you generally can’t watch games involving local teams through NHL.TV (or the Canadian version, NHL Live) as these services are out-of-market streaming options. Here is the rationale for blackouts straight from the NHL Live FAQs:
Regional blackouts are a mandate of the NHL, designed to cultivate and protect a team’s home market. For example, in order for the Senators to grow their fan-base, they want people in Ottawa to watch their games over the Canadiens or Maple Leafs. These regional rights are then taken by the team and sold to a broadcaster. Each team has between 50-60 regional games per year… Blackouts exist due to NHL broadcast regulations in order to protect the financial interests of the NHL’s local broadcast partners that purchase the rights to Regional NHL in-market games from individual NHL teams in their local territories.
In short, the NHL is granting exclusivity to the broadcasting network who paid rights fees for their block of games on TV, but also online. If you live in Vancouver and TSN is broadcasting a Canucks game, your NHL Live subscription will not include that game unless you have a cable package that includes TSN. Similarly, this Thursday night, unless you subscribe to a cable package that includes AT&T SportsNet Pittsburgh, your NHL.TV screen will be dark if you want to watch the Penguins game at Tampa Bay.
As a response to hockey fans who eschew cable TV entirely but want to watch local teams, FOX Sports GO in the U.S. reached an agreement with the NHL to stream games in-market for 12 clubs while in Canada, Sportsnet offers in-market streaming of 4 clubs through Sportsnet NOW.
DOUBLE-CHARGING = INVERSE THINKING
So fans who simply want to watch all of their favorite teams’ games online – not on TV – might still reluctantly have to purchase a cable TV package along with a streaming option:
- out-of-market streaming service (NHL.TV/NHL Live – $20/month (U.S.))
- local cable TV/internet package ($100 to $150/month)
- in-market streaming service (FOX Sports GO/Sportsnet NOW)
This is inverse thinking for a league that wants to grow its viewership, especially in the United States. Nothing alienates and frustrates fans more than barriers to accessing hockey online. You don’t grow the fanbase by shaking them down for every last penny and cite “rights fees” and “territorial exclusivity” as the rationale. Even Sportsnet NOW on the surface, seems like a reasonable solution, yet depending on where you live, blackout restrictions might force you to either miss some games, or shell out more money for an additional hockey-viewing service. In 2017-18, Flames, Oilers and Canucks fans in Calgary, Edmonton and Vancouver respectively, can receive all 82 of their teams’ games via Sportsnet NOW since Sportsnet is the sole broadcaster of hockey in those three cities. However, Leafs fans in Toronto can only catch 56 contests – even though they pay the same $25/month (Canadian) Sportsnet NOW fee, due to blackouts stemming from TSN owning rights to the remaining 26 Leafs games. The single-team, out-of-market package the NHL offers in the U.S. also has similar location-based problems.
TV NETWORKS AND BORDERLINE COLLUSION
Let’s be frank about broadcasting rights and blackouts. They are an artificial method for the television networks and the NHL to double-charge fans. Think about how ridiculous it would be if you bought a ticket to a Pens game at PPG Paints Arena, arrive at your seat, only to see a large sheet draped over the glass with a huge Miller logo on it, obscuring your view of most of the ice. Then an arena worker tells you that Miller paid a lot of money for that ad space. He tells you the sheet will be removed if you buy a Miller beer. That’s basically what networks are saying to fans.
In a logical world, the network who has paid for exclusive rights to broadcast the game would want online blackouts lifted so that more eyes will see their brand and the TV commercials that make up a large source of their revenue. As for the all-important funding arrangement, the NHL and the networks can determine the percentage of NHL.TV/NHL Live monies the exclusive broadcaster will receive either per game or based on projections of combined TV and online viewership. They can also account for the probable reduction of cable TV subscribers in the ideal scenario where blackouts no longer exist and all games, in-market and out-of-market, become available to all online streaming subscribers.
Some will say it’s ludicrous to expect networks to work together to end blackouts. In a free market where cable TV companies battle each other daily for subscribers and advertising revenue, how would competitors ever agree to split revenue or make decisions jointly?
But are large telecommunications companies truly competitive with each other? In Canada, some have noticed that Bell (owner of TSN) and Rogers (Sportsnet) “coincidentally” raise their phone plan pricing almost simultaneously – simply because they can – an unspoken, tacit agreement to maximize revenue on the backs of customers. And more blatantly, the two “competitors” joined together and purchased 75% of the Maple Leafs five years ago.
TV networks: do the right thing. Divide up the revenue amongst yourselves from online broadcasts but end the blackouts. Disgruntled, litigious fans, paying $100 to $150/month (U.S.) for bundled cable packages, won’t wait forever.
THE REVOLUTION WILL NOT BE TELEVISED
That’s because on both sides of the border, whether due to cost or the plethora of on-demand options, cable TV subscriptions are in decline. Indeed, ESPN alone lost close to 3-million subscribers in 2016-17. Shrewdly, Disney/ESPN partnered with MLB Advanced Media to develop a sports streaming service. The days of fat-cat TV networks thinking that they will easily recoup a multi-billion dollar rights deal from sports content are rapidly fading away.
What if by next decade, when NHL broadcast rights come up for bidding, the NHL, observing the slow death of network TV, finds that the highest bids are from online-only companies? What if the twin kings of social media – Facebook and Twitter – join forces to expand their menu of offerings to sports fans and sign their first-ever multi-season contract to stream all NHL games – blackout-free – on their platforms, to the exclusion of TV networks? What if other online heavyweights like Amazon or Google jump into the picture? Suddenly, FOX Sports, NBC, ESPN, TSN and Sportsnet will all seem antiquated and irrelevant.
Television’s current strict control over its content including online streaming in hockey will not last forever. Whether the networks choose to end their monopolistic practises professionally, or choose to be blindsided by new media in the imminent future, is up to them.