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29 Jan 2009

Why NFL Network is Stuck on the Sidelines

Excellent article at Sports Business Journal about the problems at NFL Network. A lot of the problem seems to be the eight-game regular season package -- because the NFL decided to keep those games for itself, the network has to charge exorbitant carriage fees, and that's why cable systems don't want to put NFL Network on the "basic tier." Other one-sport networks, like MLB Network, have sold part of their equity to larger broadcasting companies in order to help get carriage on more cable systems... and I believe MLB Network set a record this month, premiering in more homes than any cable network in history.

Posted by: Aaron Schatz on 29 Jan 2009

30 comments, Last at 01 Feb 2009, 3:13pm by roguerouge

Comments

1
by Joseph :: Thu, 01/29/2009 - 12:09pm

Great article.

The NFL has overestimated the value of its product. Eight out of 256 games is 3%--and if your team is playing in one of those games, you get to see it for free, anyway (unless you have already paid for a ticket to the game). Those few who still don't have cable/satellite aren't going to pay for it--they don't care enough already. With the economy in a slump, most people won't/can't pay extra for it. [My neighbor cancelled his BASIC cable because his wife was already having to work, and now nobody was home to watch it]

I know the NFL won't read this comment thread, but if they were to do what was suggested at the end of the article and put EVERYTHING on NFLN, that would be the worst business decision they ever made.
If they really want distribution, they should drop the price to 30/35 cents per subscriber, allow it to be on basic, and then up the fee by, say, a nickel per year. I have read that the ESPN package of channels is one of the most expensive, if not the most expensive, of basic cable channels (about $5 per subscriber)--and I'll bet they didn't start there. I would also wager that they have increased their price in small increments on a regular basis (even annually, maybe) and overall it has worked. If NFLN's products are SOOO good, let people see it--people will pay for quality.
Let me make a business analogy--PC's versus MAC's. Everyone who I have met who uses a Mac says they are much better than PC's. But Steve Jobs made a decision that has cost him BILLIONS--he wanted exclusivity. If his products are so much better, why do 95% of computer users choose the other? IBM decided that smaller profits from millions of users would be better than large profits from hundreds of users--and the bottom line has overwhelmingly supported their decision.
NFLN--get your product to more users--the profits will come.

2
by Jack (not verified) :: Thu, 01/29/2009 - 2:37pm

Actually, IBM didn't make that decision. They were in a hurry to catch up to Apple, so they designed a personal computer using off the shelf parts. They bought the operating system from Bill Gates, but did not get an exclusive license. They counted on their proprietary BIOS (Basic Input/Output System - about 1000 bytes of code that started the operating system) to protect them. Other companies reverse engineered the BIOS - then they could write equivalent code without violating copyright laws (there were no software patents in those days). The big winners were Microsoft, because they sold the operating system for all the PC clones, and Intel, because they sold the CPUs and memory chips. IBM's decision not to get an exclusive license for the DOS operating system has been called the biggest business mistake in history.

3
by I'm verified! (not verified) :: Thu, 01/29/2009 - 3:19pm

"IBM's decision not to get an exclusive license for the DOS operating system has been called the biggest business mistake in history."

Wouldn't the clones have all gone to UNIX, and we'd all be on a relatively free OS?

I don't see how IBM could have kept up with the demand, even if they'd licence out MSDOS further.

I also don't see how Microsoft not signing an exclusive license was bad for them. Did IBM have a choice, besides developing one themselves?

10
by Independent George :: Thu, 01/29/2009 - 5:02pm

I love our comments pages.

18
by dbt :: Thu, 01/29/2009 - 9:06pm

Unlikely, since unix couldn't possibly have run on PC hardware until the late 80s and didn't actually run on it until the early 90s. (Supposedly Intel came hat in hand to UCB and asked Keith Bostic to port BSD to the 386 when they were shipping it and Bostic laughed in their faces.)

BSD also wasn't "free" until the 4.4BSD Net/2 release in 1991 and wasn't really free until the 4.4BSD-Lite release in 1994 after the AT&T/USL/Novell lawsuit was settled.

15
by Jerry :: Thu, 01/29/2009 - 8:14pm

Don't forget that IBM was very concerned about possible anti-trust problems, so they weren't nearly as aggressive about exclusivity as they might otherwise have been.

30
by roguerouge :: Sun, 02/01/2009 - 3:13pm

I believe the biggest mistake in business history was Seattle Computer Products selling MS-DOS to Bill Gates for 30,000 dollars.

11
by panthersnbraves :: Thu, 01/29/2009 - 5:51pm

I live about 100 miles outside of Charlotte, so I'm not covered by the "local affiliate" exception - it doesn't broadcast this far out. Combine that with the fact this is TWC territory, and I'd be forced to buy a dish to watch one game a year.

So far, it's been a matter of asking around who has the right satellite combo, and then offering to bring the refreshments.

27
by B :: Fri, 01/30/2009 - 11:58am

Unless you live in Vermont. I don't get to see the Patriots or Jets when they play on NFL Network games. I might get the Bills, never bothered to check.

4
by lagfish (not verified) :: Thu, 01/29/2009 - 3:36pm

The clones didn't run Unix at the time, not until Linux came along years later. Right, right?

6
by I'm verified! (not verified) :: Thu, 01/29/2009 - 4:17pm

I'm sure your correct, without looking it up, but my point was that something would fill the void left by an exclusive licencing agreement that would price an IBM PC out of proportion to their value added. (See: Apple)

8
by Jack (not verified) :: Thu, 01/29/2009 - 4:39pm

Yes, and maybe we would all be better off than we are. But the reason IBM has been castigated for its decision (not to get the exclusive license) is that they lost control of the PC. Microsoft and Intel made (and continue to make) lots more money than IBM did from the PC. Anyway, I didn't mean to hijack the discussion, nor do I disagree with the original point that it would be a mistake for the NFL to try to control all of its content with the NFL Network.

9
by tuluse :: Thu, 01/29/2009 - 4:55pm

GNU was announced in 1982, but Linux wasn't released until 1991. However, if there had been more resources devoted to alternative operating systems it probably would have come out a lot earlier. Also, there was BSD and AT&T always could have ported Unix.

16
by Jerry :: Thu, 01/29/2009 - 8:30pm

In the early '80s, every machine ran its own OS. (A few vendors used CP/M, but it was far from a standard.) The big thing that IBM's entry into the market brought was an excuse for businesses to start buying PCs. ("Nobody was ever fired for buying Blue.") Because clone makers were able to enter the market with cheaper machines based on the IBM architecture, and they could put MS-DOS on those machines, a standard finally emerged, and Paul Allen could afford to buy the Seahawks. Bell Labs didn't feel the need to develop Unix for PCs, so it took hackers doing GNU and Linux to create a choice of operating systems on a single computer.

I suppose that a Tecmo Bowl reference here would bring things back to football.

19
by dbt :: Thu, 01/29/2009 - 9:08pm

Unix couldn't run on the 8086/8088 anyway. It took the 386's real VMM to make it possible.

Bell Labs couldn't sell Unix until after they were broken up because of an earlier antitrust consent decree, which is why people like BSD were allowed to write their derivatives (though they couldn't give their source to just anybody).

5
by c_f (not verified) :: Thu, 01/29/2009 - 4:08pm

This is off-topic, but FO "week in quotes" favorite Herm Edwards just got hired by ESPN. Time will tell if he will continue to be quote-worthy:
http://www.kansascity.com/sports/football/story/1007315.html

7
by Kevin from Philly :: Thu, 01/29/2009 - 4:39pm

I'd dispute the contention that NFLN content is "premium". Some of it is pretty good, but overall - nothing to write home about, from what I've seen. Maybe the draft will change my mind.

12
by andrew :: Thu, 01/29/2009 - 6:52pm

Well at least the NFL network doesn't have a dancing football robot.

13
by MisfiT (not verified) :: Thu, 01/29/2009 - 7:09pm

NFL Network is 4.99/month from my local cable provider, with the option to cancel at any time. Big effin' deal. That's worth the games, combine coverage, and some of the news.

Tune into another 'sports' channel and you get 24-7 EastCoast Sports Promotional Network content. Or, so much Favre or TO coverage you think your reading a column by Peter King. At least they make an effort to give some attention to the strategy of the games themselves and not just drama and (often unfounded) rumor, ad naseum.

28
by Snack Flag (not verified) :: Fri, 01/30/2009 - 1:10pm

What's the old adage? It's harder to get someone go from spending $0 to $10 than it is from $10 to $100? It may not seem like much, but most are in no rush to go to their cable provider, take whatever steps to add the package to their bill, and then spend $60 a year on a network they may not watch that much. I don't think Joe sports fan cares that much about the draft, or the history of the NFL, or dissecting every storyline. They just want the games delivered to their household effortlessly so they can relax on a Sunday.

MLB has it right for once - people become more interested in the sport if they don't have to jump through hurdles for it.

14
by Andrew B :: Thu, 01/29/2009 - 7:11pm

I like the NFL Network product. I rarely watch ESPN's stuff anymore, and like it much better than NBC's 7 pm fluff show. Plus NFL Network has a lot of good programs unavailable elsewhere like Playbook.

And since those hypocrites at Suckcast (who whine about the NFL being "too expensive" and not giving them a crack at the Sunday Ticket, but then turn around and refuse to put their sports channels on DirecTV so that I can't even watch local teams like the Phllies) don't carry it, it gives me one more reason not be a subscriber to those crooks.

The Original Andrew

17
by Ben Stuplisberger :: Thu, 01/29/2009 - 9:00pm

This is for football nerd stuff, not computer nerd stuff!

20
by andrew :: Thu, 01/29/2009 - 9:14pm

Football + Statistics can unify nerds of different types...

22
by Josh :: Fri, 01/30/2009 - 12:44am

Excelsior!

21
by Dice (not verified) :: Fri, 01/30/2009 - 12:33am

I had NFL Network in VA. Now living in NC, Time Warner won't let me get it. I don't miss it, and can always head to the scuzzy wannabe Italian sub place or crappy 'Irish' pub if I really want to watch.

23
by Rick (not verified) :: Fri, 01/30/2009 - 1:22am

NFL Network is, at best, a ppv arrangement, which is what cable MSO's are saying anyway. The NFL doesn't like this concept, of course, but refuses to research methods of overcoming these complaints about the product.

The NFL is trying to do something it realistically cannot pull off - maintain full ownership of its property in all venues of distribution. This is a doomed concept.

The NFL needs to embrace a more inclusive attitude if it wants to achieve its goals.
It won't. It never does.

24
by qed :: Fri, 01/30/2009 - 9:21am

Although I think the NFL Network provides some quality programming, I don't think anybody could consider it "premium quality year round". Even the most hard-core fans aren't watching 10 hours of NFL Network a week in the offseason. Even in-season I'm not sure how much NFN programming serious NFL fans watch aside from the games, and I'm pretty sure casual fans aren't tuning in to Playbook in large numbers. They should have priced it for basic cable.

I don't think the NFL is strongly motivated to create a true 24/7/365 network. I believe the NFL Network was mostly created to give the NFL leverage in negotiating TV deals with the networks. "Oh, you don't like that 20% increase in our TV rights fee Fox? And you say no other network will pay that much either? Well then we'll just put all our NFC games on the NFN."

25
by jimmo :: Fri, 01/30/2009 - 10:35am

ten hours a week may be a bit high year round, but its the only source for televised pre-draft coverage, so the hard-core fans are most definitely tuning 12 months a year. From the senior bowl through the draft, its the only sports station I watch. NFL Net's coverage this time of year is invaluable.

26
by Noah of Arkadia :: Fri, 01/30/2009 - 10:58am

I'm lucky: I get it in the basic package here in Mexico, and I love it. I do agree it's high-quality. You just can't compare it's level of analysis to any other network, especially considering ESPN and FOX have Spanish packages that break my heart.

29
by pcs :: Fri, 01/30/2009 - 6:17pm

Throughout this whole grubby saga, the NFL has ignored one simple truth: Most viewers are accustomed to not being able to watch many out-of-market games, even "big" ones. Some viewers do consider it essential to see out-of-market games, and those people buy the Sunday Ticket, which means they have DirecTV, which means they already have NFL Network. So the league is trying to extort cable operators with a package of 8 games that most viewers either already see or wouldn't expect to see anyway.

I do love the NFL's argument that the network is "more than just those 8 games." Funny, those full-page advertisements weren't urging people to call their cable operator and demand that it carry NFLN so they can watch 40 hours a week of Total Access.

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