In this article I am going to show why a streaming conference network makes sense for the Big 12 more than ever before, and then I am going to blow your mind. For much of broadcasting history the only way a fan of college sports could enjoy a game without being at the event was through radio or television.  With the internet beginning to hit speeds where streaming video has become indiscernible from cable or satellite we are entering a new era for live television distribution. As more and more channels take their shows and content online, we are now finally in a position, distribution wise, to create our own network that would be 100% streaming. Before I get to the hard numbers, just a word on three factors I won’t be factoring into the equations and I will explain why below.

Cost/Maintenance:

This is a significant advantage to a streaming network, perhaps the biggest. Anybody familiar with how Netflix or any channel like HGTV stream, it is more like a menu when you go to their channel.  What I mean is unlike regular tv, there is not something always happening on the channel when you turn it on.  With streaming you choose what you want to watch and then it streams.  Therefore there is no dead air to fill, no studios to build, no producers and employees to hire full time,  and all the costs associated with running a real 24/7  television network.  All we would require is to move all the content that is already being produced and put it on the streaming channel.  Most tier 3 sporting events are produced by a rental crew, so instead of airing it through Root or the local Time Warner, we would just stream it globally instead.  Costs wouldn’t change for us based on what we are doing now.   All the comparable conference networks have wildly different production costs based on their longevity and current start up costs at this point so we are just going to leave them out.  I would note that the point I made about efficiency above, and the production costs we have should be far, far lower than a channel that has to run 24/7.  Even so, because I can’t give 100% definitive savings number we will just leave them out.  I would argue a streaming network would be a lot less and definitely not more, but I am sure there are a few knuckleheads who would argue otherwise so we will remove it from the equation and call it equal.

Advertising:

A big reason the content owners are so quickly moving to allow their shows to be streamed is because the advertisers prefer digital marketing.  Consider we are just at the dawn of fiber gigabit internet, and TV is already on track to lose out in advertising dollars to digital ads makes the trends undeniable.  In my previous articles (The Future of Conference Networks are not as Rosy as You Would Believe and Should the Big 12 Consider Streaming Only?) I discussed why it is better  across the board, but today I just am going to quickly focus on sports advertising. The advantages to advertisers on digital ads is they can track the ads, they can tailor the ads based on your viewership and most importantly they can make them interactive. The Budweiser 7th Inning Play of the Game vote and similar could become a staple that people look forward to.  Or they could have coupon deals where you click through on your remote.  Advertisers hate the DVR like an AAC member hates their conference. Since the advertising dollars are based on viewership and not subscriptions I am mostly going to focus on subscription numbers but I will write a little further about advertising throughout the article.

Texas:

Yep, no Texas.  Since they are tied into their lucrative LHN, we will forge it alone with the other 9 schools.  If at some point they ever decided to join, it would be beyond a game changer.  Streaming is the game changer, Texas involved with us would be earth shattering.  As of now, it is unrealistic that they are leaving their network so lets see how the other 9 could do.  

So lets start with a conference network:

First, the key to this is you can’t do a monthly subscription because of the nature of tier 3.  People could sign up for one month and be done.  So then you would be forced to do too high of monthly prices.  So what you do is offer three tiers of annual subscriptions:

  1. Super Fan – $44.95 ($3.75/month) – 100% access to everything (more on that later)
  2. Football Fan – $24.95 – only access to the 9 (each team has 1) football games per year, no extra content.
  3. Basketball Fan – $24.95 – only access to the 40-45 basketball games per year, no extra content

This way you cater to two different fans.  Obviously you are aiming for the $44.95 at those prices and I think if done correctly enough would find it an agreeable price.  The key is to sell it on its affordability and portability.  You can be in Ames, Iowa or Kathmandu and if you can get the internet you can watch your team. You don’t need to subscribe to $100+ cable to watch our channel, just $3.75 a month for every live Big 12 event (tier 3 football and basketball, baseball, Olympic, etc), game replays, coaches’ shows, highlight videos, featured documentaries, stats, interviews, a vault of classic games on demand, radio programs, and really anything they can put on a server. Anytime, anywhere, anything you want on any device or TV you have is the big selling point.    If I am sitting in a hotel in Jackson Hole I can plug my phone or laptop into the TV and watch any Big 12 related content I wanted in ultra HD.  It gives a new meaning to having the Big 12 in your pocket.

So monetarily how does this stack up?  All of these numbers will be before any production costs so we are comparing subscription/carriage rates revenue only.

If the 9 schools could attract just 5 million subscribers combined this is how it would look per team.  I am basing my BTN and SECN rates on these numbers.

big12channel1

Again, this is pre production costs and does not include advertising.  I would argue that we would come out ahead in both based on  the explanations above and the fact that they have to split the advertising 30 ways to our 9 as well.  Keep in mind that even with the subscribers difference, advertising is based on viewers and considering this is tier 3 content, everybody knows these are built for subscription/carriage fees. If anyone is confused by what I mean by split 30 ways, I am talking about the 50% ownership that either Fox or ESPN owns in the BTN and SECN.  The Big Ten and SEC then take their 50% cut and split it 15 ways, one share for each team and then one for the conference. So if ESPN or FOX get half, that would equal 15 shares also, giving them 30 shares in total.  If the Big 12 wanted to carve out another spot for the conference they could, but I am not sure it would be necessary based on the low production costs for a streaming channel.

I want to believe that at $3.75 a month for everything under the sun regarding your team, including 1 football game and 5 to 6 basketball games no matter where on earth you are could do at bare minimum 5 million subscribers.  I am guessing between Oklahoma football and Kansas basketball you may get that number by themselves.  So let us look at how the numbers would look based on different numbers of subscribers.

big12channel2

So as you can see, even if we could just scrape together a measly 3 million subscribers between the 9 schools, we still make out pretty well before production costs and advertising revenue.  What is stopping the BTN and SECN from streaming too?  Nothing at all, but again, they need to still split it 30 ways.  So in the same scenario you would be looking at these numbers:

big12channel3

As you can see, the fact that they are splitting their profits makes this route even less lucrative for them.  So, what about if they had more subscribers than us given their geography or having 4 more schools.  Here is what it would look like with 2 (BTN) and 3 (SECN) times the amount of subscribers.

big12channel4

So as you can see, it takes about 3 1/2 times more subscribers than us before they pass us.  That is a pretty comfortable margin.  If Texas ever got on board it would blow them out of the water.

So now I have shown you the conference network, are you prepared to have your mind blown?  Forget everything I just told you about the conference network.  What are you paying that $3.75 a month for?  Your school.  Sure the other schools may be nice for a football game or two a year, but this is all about your school. So welcome to your SCHOOL NETWORK for $44.95 a year.  Let’s see how that would look with smaller subscription bases, but split 1 way.

big12channel5

As you can see it has a wide disparity between the big schools and the small schools, but if a school can get in the 200,000-500,000 subscription range for $3.75 a month they would be competitive with the BTN or SECN.  If a school like Oklahoma could get a couple million subscribers willing to pony up $3.75 a month to have all things Sooners, well the numbers get downright staggering.  Remember, this is based on using basically the same inventory and production used today, but instead of plugging it into the local channel, plug it into the internet.  The production costs should be relatively the same across the board, but some schools may choose to do a higher end production of their games, ie better cameras, premium announcers, etc.

In order to make it a happy conference the Big 12 has to offer some sort of revenue sharing under this scenario.  It could offer a $5 option to add the other 8 schools to your subscription so you would have access to the entire Big 12.  The pool from that money could be split among the schools that didn’t equal SECN payouts.  Then, the Big 12 could instill some sort of luxury tax based on a fluctuating number in order to bring the other teams up to speed with the SECN.  This way you could ensure that everybody in your conference is making at least what the next highest paying conference network is paying out, while still having your biggest schools making two to three times as much.

Let’s keep in mind this is all based on the cable and satellite subscriptions of today.  As they continue to plummet so will the carriage rates, distancing ourselves further.  It is also not factoring any of the $24.95 subscriptions in either of my models for the conference or school network.

This is a recipe for a solid tight conference where nobody has wandering eyes, and with real curb appeal to disgruntled power players to fill two or six slots.

Now the bad news.  First, 25% of the United States is still considered broadband deficient.  That is a very large market to be missing, and as much as it pains me to say it, a lot of that 25% is in Big 12 country.  Yep, we are rural, but honestly the way that technology is changing it is only a few years away from being solved.  The real problem is most of our schools have their tier three locked up through the decade, especially the bigger schools that require either plan to work.  Everybody knows about the Longhorn Network, but all but three teams have tier three deals in place. West Virginia has the longest deal, which expires in 2025 while  Kansas and Oklahoma have shorter deals, but all of those schools have their rights tied up through this decade.  As it gets closer to completion, the buyout will be smaller, but it is still a major barrier to forming a channel.   Fortunately most of our deals are 15 years shorter and even our longest deal is a decade shorter than the deals signed by the Big Ten and the SEC.  Before you start running out to buy a smart tv or Roku, this will take time and more likely in five years it would probably be a better time to reexamine the buyouts and the state of broadband, but there is a reason distribution is so valuable.  From the beginning of mankind, whoever controls the distribution controls the gold.

So the advantages to a streaming conference/school network are the portability, the universal coverage, the low subscription cost, and the on demand ability of the thousands of hours of stored content. Essentially all your school on demand, however and wherever you want it.  Compare that to the standard conference network that shares between 13 other schools that can only play one show at a time.  Want to watch your school’s volleyball?  Sorry looks like you got your rival’s wrestling.  Then, you may not even have access to the channel.  That is less true with the SECN than the BTN, but still you are limited to where you can see it.  Even if you can find a neighborhood that offers your channel, you are still out of luck when traveling or at a friends.  For instance how many hotels have the SECN or BTN?  Then the real problem is that you need to have an expensive cable subscription just in order to get the channel.  If you have no interest in cable, $3.75 a month is a bargain sent straight from heaven.

Ultimately streaming is the future for all TV.  The sooner (no pun intended) we get in the game, the better off we will be.  We are locked up for the next 5-9 years but even Bowlsby hinted last fall that we should be exploring streaming and he is right.  The numbers speak for themselves.  Remember these are just arbitrary numbers I have chosen to use for subscription rates.  You know your school better than me and you could probably guess how many would be willing to pay more or less than $3.75 a month for all their tier 3 content plus much more. Our production costs should be significantly less as we don’t have to have a staff to run our 24/7 network, our ads should be competitive if not better since they will be micro-targeted and we will have thousands of hours daily of content to have ads on instead of ads on on a 24 hour cable cycle that viewers can skip with their dvr. On top of that, their ads are split 30 ways, so even if we make less revenue through subscriptions, and I don’t think we would, but if we did I think our advertising and low production costs would still be a major factor in staying ahead of the pack.

The trends are undeniable.  Cable is in major decline, but even if you don’t want to believe that, the numbers for the current day still support the value of cutting out the middle man and distributing your own content.  Obviously we have some real roadblocks right now, but the $100+, one size fits all model of cable television is declining every year, and as internet speeds become faster, it will only accelerate the cord cutting.  This conference needs to be positioned by the end of the decade to take advantage of our unique position of not being tied up for the next 20 years to a publishing partner when the days of self publishing have never been more easily accessible.