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The rise of streaming services and the emergence of the direct-to-consumer (DTC) sports consumption model has transformed the way people watch sports. By 2025, the number of US viewers who stream a sports event at least once a month is projected to rise to over 90 million — a steep rise from 57 million in 2021.
Digital streaming has contributed to the fragmentation of the media industry, leaving the traditional regional sports network (RSN) model vulnerable. Media fragmentation, coupled with surging national rights values, is pressing RSNs to adapt to changing consumer preferences and deliver content at sustainable margins. Sports leagues, on the other hand, see opportunities in the shifting landscape.
We currently estimate the total annual spend on live sports media rights primarily distributed in the US for 2024 to be approximately $28 billion.1 This figure highlights the increasing values of national sports rights, with new agreements signed in the past 18 months for several major college conferences, NFL Sunday Ticket and MLS. Looking ahead, as the NBA package approaches expiration after the 2024-2025 season, there may be an expected surge in national sports rights value with fierce competition from traditional TV incumbents and streaming giants.
But it may not all be smooth sailing. The overall growth in the value of regional sports rights may plateau as the financial uncertainty surrounding RSNs may jeopardize rights agreements with professional baseball, hockey and basketball teams. In response, some leagues and teams have opted to take back their rights and explore alternative ways to distribute their games such as over-the-air (OTA) or via direct-to-consumer (DTC) streaming services.
With the future of RSNs uncertain, sports organizations should ask what it will take to succeed going forward and deliver fans the content they crave.
1Note: Includes only rights deals primarily distributed in the US, excluding Olympic games, with an estimated annual deal value exceeding $5 million for publicly disclosed and available rights estimates as of November 2023. These estimates do not reflect actual cash flow between entities.
The decline of the traditional RSN model
The RSN model, with its longtime dominance in sports broadcasting, is no longer a surefire success. Rights fees and production costs are soaring. Fans are cord-cutting in favor of digital streaming platforms. With crucial sports rights agreements nearing their expiration for over 29 major sports teams, a growing number of teams and leagues are strategically pivoting, choosing to deliver games through OTA broadcasts or DTC streaming platforms (or both). This shift reduces reliance on conventional RSNs and could more competitively position teams and leagues.
The days when viewers tuned in to games exclusively on local or national sports networks may be numbered. Beyond the widespread migration to streaming platforms is the rise of short-form content on social media. Instead of tuning into full-game broadcasts, some fans may prefer to follow their teams via short-form videos from their favorite social media accounts and personalities. There’s a rise in fans who tend to follow their favorite players and teams on social media who also now consume more highlights than live sports. And game offerings like NFL Redzone and NBA League Pass are more popular than ever.
With audiences dispersed across an array of devices and online platforms, distributors, leagues and franchises should reevaluate their content distribution tactics to align with audience preferences. Consider these successful examples in today’s market:
- Sports franchises, such as the Vegas Knights, are increasing their reach with OTA broadcasting for local games and creating their own DTC streaming platforms.
- Leagues, including the MLS, are partnering with media organizations to take over game production and create DTC platforms offering fans exclusive, all-access content and a personalized streaming experience.
- Networks, such as NBCUniversal’s Peacock, are attracting customers to their streaming services, with exclusive live sports rights playing a pivotal role in attracting and retaining subscribers.
- Streaming organizations, like Amazon and YouTube, are investing in live sports rights, capitalizing on sports programming's ability to attract a loyal, passionate customer base.
Potential drawbacks of media fragmentation
While these new ways to consume sports content can offer several benefits, they come with their own set of challenges. Media fragmentation can potentially hit the bottom line for sports organizations that stray from RSNs. In the short term, large rights fees go away, and franchises will need to replace the lost revenues. Franchises should evaluate OTA and DTC offerings. Over the longer term, as franchises get better data on viewers, sponsors may be willing to spend more to target consumers and it may be possible to make up the lost revenues. Access to multiple platforms could ultimately expand viewership and potentially boost overall revenue.
For fans navigating this modern landscape, enjoying their favorite teams and leagues may require multiple subscriptions and devices, resulting in increased expenses for items like an internet-connected TV, antenna or a streaming stick. Toggling between multiple apps to access different games can be frustrating. These points of friction can take fans out of the experience. And too many options and platforms can create confusion for fans who want to know what packages they need to buy and where they can find their teams each week. Network latency is also a lingering concern, and real-time alerts can inadvertently spoil the experience of even slightly delayed game action. Poor internet connections have left many fans with a buffering circle on the screen amid late game comebacks and buzzer beaters.
The takeaway: a new streaming era demands new data strategies
To thrive in this new age of sports consumption, organizations should adopt an omnichannel approach that concentrates on boosting viewership and gathering insightful behavioral data about their fanbase.
By broadcasting games over the air, some teams are expected to triple their audience reach in their home states and increase the size of their fan base. However, this audience expansion won’t significantly deepen teams’ understanding of newly reached fans because they may not be able to gather any data about over-the-air viewers. Conversely, teams that opt to circumvent RSNs and broadcasting games over the air might forgo millions of dollars in regional sports rights revenue, but they can position themselves to capture valuable fan data.
By putting games behind a free (or inexpensive) digital wall, teams can reach nearly as large an audience while simultaneously collecting -valuable fan data that can be activated and monetized to recoup –– and potentially surpass –– forgone regional rights revenue.
What could this look like in practice?
Imagine a lifelong fan of the Metro City Thunderhawks. The Thunderhawks create a team app for fans to watch the games and run a promotion for game tickets for fans who sign up for the app and answer a few survey questions such as what type of fan gear they have bought, what they like to eat during home and away games, how long their commute is, and more. With the new app, the Thunderhawks know which articles they read before the game, when they tune in to watch, how long they watch, which promotions they interact with, and what other areas of the app they click into. DTC platforms should enable teams to stay closer to fans for longer periods of time while collecting data that can be used to drive more fan engagement and increase the value of sponsorships.
Our prediction is that, while many teams will lose revenue in the near term because of the degradation of RSNs, in the medium and long term, data savvy teams can more than offset those losses by collecting more data than ever before, and using the insights they unlock to deepen customer relationships and better serve their fans and sponsors.
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