A new report from S & P Kagan predicts content providers (cable, satellite and telco's) will lose 45% of its revenue from the peak in 2016. At its peak, operators made $116.4B in revenues and the new reports that will drop to $64.71% by 2025.
The report does not show the drop in revenue for the programmers, but streaming is not expected to make up the difference from these losses. This is because virtually every operator customer pays for each and every channel whether they watch it or not. Further more, programmers that increasingly have to rely on money from streaming will now deal with fewer customers and the new reality of subscriber churn which was mostly felt at the operator level.
So what does that mean for us? The programmers will have fewer dollars to invest in programming and thus deals, like the upcoming Big12 and, to a lesser extent, PAC12 - both will likely be reduced. This is not just because the twins are leaving, but because of the realities of economics. Programmers will still pay a premium for prime content (SEC deal), but not for content with limited appeal. It also means you can expect more games to be streamed as the shift to the new model escalates.
So could a new player emerge (YouTube, Amazon, etc.)? It may happen, but it's not clear how or if that would make a material difference. And while the new SEC contract and likely B10 contract will not be effected this go around, by the next deal all college rights deals will be dramatically impacted. This report, if it holds, will show that athletic conferences will have to find new revenue streams to stay where they are or even increase. This is not unlike musicians that now must tour because album sales have plummeted with the advent of music streaming.
The report does not show the drop in revenue for the programmers, but streaming is not expected to make up the difference from these losses. This is because virtually every operator customer pays for each and every channel whether they watch it or not. Further more, programmers that increasingly have to rely on money from streaming will now deal with fewer customers and the new reality of subscriber churn which was mostly felt at the operator level.
So what does that mean for us? The programmers will have fewer dollars to invest in programming and thus deals, like the upcoming Big12 and, to a lesser extent, PAC12 - both will likely be reduced. This is not just because the twins are leaving, but because of the realities of economics. Programmers will still pay a premium for prime content (SEC deal), but not for content with limited appeal. It also means you can expect more games to be streamed as the shift to the new model escalates.
So could a new player emerge (YouTube, Amazon, etc.)? It may happen, but it's not clear how or if that would make a material difference. And while the new SEC contract and likely B10 contract will not be effected this go around, by the next deal all college rights deals will be dramatically impacted. This report, if it holds, will show that athletic conferences will have to find new revenue streams to stay where they are or even increase. This is not unlike musicians that now must tour because album sales have plummeted with the advent of music streaming.
