Steve Ballmer Shrugs Off $60 Million TV Offer For Clippers Games, Considers Streaming Instead

from the tick-tock dept

It was really only a matter of time. As cord-cutting continues as a trend and the cable TV market as we know it today struggles to stay relevant by grasping at major pro and college sports broadcast deals, the injection of a tech-industry giant into the sports ownership arena meant that the chance of streaming for sports could only increase. Truthfully, When Steve Ballmer bought the Los Angeles Clippers for $2 billion, he wasn't the first tech celebrity to own an NBA team. Mark Cuban, after all, has owned the Dallas Mavericks for some time now. But Ballmer has been quite progressive in a traditionally conservative league in pushing the Clippers forward into modernity. Given the state of the team's business practices when he made his purchase, there was always going to be a lot of heavy lifting to do. Still, it seems that Ballmer isn't going to let that keep him from considering some very big ideas.

And one of those ideas appears to be transitioning the broadcast of games away from the television model to a streaming model. The New York Post reports that Ballmer has turned down a $60 million per year contract offer from Fox and is mulling over plans for an over-the-top streaming network instead.

If he follows through on the plan, Ballmer, the former CEO of Microsoft, would be the first owner of a major US sports team to deliver games direct-to-consumer via a Web-based service and not through traditional cable or satellite companies, sources said.

Clippers games are now aired to roughly 5 million Los Angeles-area homes through Fox Sports’ Prime Ticket regional sports network in a deal that runs through the 2015-16 season. Prime Ticket currently pays the team a rights fee of $25 million a year — and offered a 140 percent increase, to $60 million, but the billionaire Ballmer turned it aside.
There are hurdles to be jumped over to make this work, of course. Production of the games is a job currently done by the networks, meaning Ballmer's service would need to come up with its own crews, commentators, and production values. That said, it feels silly to suggest that he isn't capable of that jump. More difficult would be creating a subscription model for the broadcasts, which is what the link above seems to think is the plan.
While he may have the technological smarts to pull it off, Ballmer may find it hard to earn more than $60 million in revenue a year from a single sport streaming RSN, experts said. The Clippers would have to sign up around 10 percent of LA’s 5 million households and get a pretty high price for the service, those people said.

“If it costs $12 per month, multiply that by 12 months in 500,000 homes, it would add up to $72 million — but then you’d have to produce the games and market the product,” said one.

And that’s if Ballmer can give fans a reason to subscribe during the five-month off-season. If he can’t, revenue would only come to $42 million.
And? The Clippers' deal with Fox currently stands at $25 million per year. Even under the notion that a $12/month subscription is the model, surely some percentage of fans would sign up. But, actually, I don't particularly understand why a subscription should be necessary to start with. Instead, free the product and let it grow in a streaming service that would be watchable on any internet-connected device. This means smart TVs, devices hooked up to regular TVs that can stream content, phones, computers, tablets, etc. If the accessibility of the games means that more viewers and fans can get the stream for more games than they could under the broadcast product, the advertising premium should see a correlative jump as well.

That extra revenue ought to make up for the lack of a subscription, I think. Meanwhile, you become the team with the most accessible product on the market, allowing the fanbase to grow. They might end up being America's basketball team, leading to even more revenue. Either way, streaming might be a win for Ballmer's Clippers.

And another nail in the cable coffin.


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  • icon
    jupiterkansas (profile), 28 Aug 2015 @ 12:22pm

    The idea that he has to make $60 million to make it worthwhile is a joke. All he has to do is make a profit - or even take a loss for a while. What he gains is complete control over the streaming and advertising market for games, as well as creating a model he can use to make deals with other teams in other cities. In the long run, that's worth far more than whatever deal broadcasters might give him.

    reply to this | link to this | view in chronology ]

    • identicon
      bob, 28 Aug 2015 @ 2:54pm

      Re: finally someone not stupid or greedy enough to fall for just the money.

      Exactly, he doesn't have to make a profit anywhere near the 60 million, just a profit. Even if for the first bit it is a loss. May not even need to do commercials and can just make money on subscriptions. Course the telcos will start to claim like they did with Netflix that he has to pay more but that will be up to the FCC to police. Anyone know who Wheeler's favorite team is? I think though he might run into problems of broadcasting rights for the other teams. I don't know if the team you play has to be part of the same broadcasting agreement or if during the game you each can broadcast as you want.

      reply to this | link to this | view in chronology ]

  • icon
    Chronno S. Trigger (profile), 28 Aug 2015 @ 12:25pm

    Random question: If Ballmer decides to do this and offer his team threw streaming, what about the other team? What if they took the $60 million deal with fox? How would that work out?

    I would assume that there's some kind of exclusivity in the contract. If Ballmer had signed up with Fox, he wouldn't be able to stream his games. What if the other team has that exclusivity deal?

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 28 Aug 2015 @ 1:04pm

    "Instead, free the product and let it grow in a streaming service that would be watchable on any internet-connected device."

    "free the product" HA, HA, HA! Gonna make me burst somethin' one a these days, kids! Is that what you want and are trying with this?

    Umm, okay. That'd let pirates cut out all your commercials and splice in ones that pay them instead of Ballmer. With me so far? Doesn't matter if a bit delayed (maybe a second or two for such on-the-fly video editing), so long as people don't see the original commercials. Who will know? Who will check? How would you enforce -- in Techdirt terms meaning NO copyright enforcement -- and when you're giving the product away FREE?

    See "Dan Bull" item of this week. SUPPLYING FREE CONTENT MEANS GIVE UP ALL RIGHTS. For Ballmer that won't be true in a court setting, but getting into court is the fun of copyright enforcement. This'd be chasing a hundred constantly shifting thief sites. As you pirates gleefully point out, that's near impossible.

    Any product put out for FREE will be taken and re-purposed by amoral grifters. But why don't you start an email campaign to Ballmer and urge this? I'd like to see it tried because he's an evil nitwit and has too much money, so just might go for it. But a full-scale experiment would bury this notion forever. As "Dan Bull's" little experiments should show, but you boy-clowns just go on dreaming of markets with no bad actors...

    Oh, and I DO admire the casual way you rush past production and commentators. Yeah, that's trivial and you're an expert. Sheesh.


    Again, not showing up after TWELVE tries. Difficulty goes up to impossible, yet sometimes little or even no problem, so I conclude it's sometimes switched to manually okay each comment.

    reply to this | link to this | view in chronology ]

    • identicon
      Automatic Grammatizator, 28 Aug 2015 @ 1:59pm

      Re: "Instead, free the product and let it grow in a streaming service that would be watchable on any internet-connected device."

      Huh, weird. Your comments aren't showing up for me either. At least, not at first. They seem to be behind a grey link. Maybe you just need to submit better comments?

      reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 28 Aug 2015 @ 2:53pm

      Re: "Instead, free the product and let it grow in a streaming service that would be watchable on any internet-connected device."

      Free as in beer is not the same as free as in liberty. Your claim is ridiculous. And anyone re-streaming and inserting their own commercials would quickly be noticed if they could remotely have an effect on the market.

      So, are you going to stop people from peeing or going to the fridge or starting another load of laundry during commercials yet? Or what?

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Aug 2015 @ 10:49pm

      Re: "Instead, free the product and let it grow in a streaming service that would be watchable on any internet-connected device."

      SUPPLYING FREE CONTENT MEANS GIVE UP ALL RIGHTS.

      [citation needed]

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Aug 2015 @ 1:22pm

    OTT video is just a garden of Eden that will be shattered by mysterious throttling by [insert your FAVORITE] broadband/wireless provider - until THEY get a cut.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Aug 2015 @ 1:53pm

    I'm not a basketball fan but if I was and I paid $10-$15 a month to have a non-commercial DVR like function to be able to watch the game whenever I want; yeah, I think that might be worth it.

    Even with restrictions, to watch any game at any time within that month. That still doesn't sound bad.

    If he starts something like that and can form a company where other teams do the same thing, have a al la carte choices of teams and charge a reduced cost per moth the more teams you follow. And even other sports...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Aug 2015 @ 2:45pm

    Streaming by itself isn't the savior yet.

    1) Asking folks to pay a fee each month for 12 months when the season doesn't run 12 months will turn folks off. A package with 3 or 4 payments is a lot more salable. And if the package does NOT include playoff games it's a loser.

    2) No matter how noble the intentions there will have to be some advertising within the stream or the service will be priced too high for many people. There just doesn't have to be as much advertising as there is now on broadcast/cable.

    3) Most NBA teams already employ the broadcasters for their local broadcasts; they are contracted out to ABC/TNT/regional broadcasters for those broadcasts. The reverse is also true: a broadcaster employed by ABC/TNT/regional broadcaster can be contracted by a team for a local broadcast. So who the broadcasters will be isn't an issue unless the streaming service uses unknown folks, and that will be a hard sell.


    Streaming will be nice, but it cannot be the only way any game for any sport can be presented to the public. It's the same argument with recorded music: give the public choices and you'll do well. Give the public only one choice and you'll not do so well.

    reply to this | link to this | view in chronology ]

  • icon
    orbitalinsertion (profile), 28 Aug 2015 @ 2:46pm

    Might Ballmer actually know how to manage some sort of business? Things are getting scary.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Aug 2015 @ 5:56pm

    Developers!
    Developers!
    Developers!
    Developers!
    Developers!

    reply to this | link to this | view in chronology ]

  • icon
    Tom Mink (profile), 28 Aug 2015 @ 6:57pm

    Subscription? How about a la carte per game?

    If Ballmer is willing to brave the inevitable lawsuits... non-LA residents who want to see their team through a streaming service would probably pitch a couple bucks even if it's only to watch them play the Clippers. Even better if he can get access to away games. The local subscriber base would naturally make up most of the income but offering worldwide access online enlarges the market considerably.

    reply to this | link to this | view in chronology ]

  • icon
    The Groove Tiger (profile), 28 Aug 2015 @ 10:15pm

    I'm actually waiting for the biography of Ballmer to make it into a movie. I'd definitely watch it if David Koechner plays him. It would start like a comedy documenting his clueless antics in Microsoft, but then could get a bit more deep with him not sucking and doing more stuff like this.

    reply to this | link to this | view in chronology ]

  • identicon
    rainy day, 29 Aug 2015 @ 8:24am

    Hmmm

    Putting the words "business practices" and "Ballmer" in the same article is funny (AND Scary).

    The good news is that most of the chairs in the stadium are bolted down.

    : )

    reply to this | link to this | view in chronology ]

  • identicon
    BruiserBrody, 30 Aug 2015 @ 2:22pm

    This is the future. It is happening.

    Why are the subscription estimates only being run against the population of LA?

    A streaming service is accessible worldwide.

    If I don't live in LA and I like the Clippers, why wouldn't I signup for this service?

    Ballmer could be changing the game if he plays this right.

    reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 31 Aug 2015 @ 7:25am

    Awesome idea. I don't think you need to charge $12 for a subscription. Make it free with paid tiers. The free one offers, say, one game per month (dunno how many times they play) except for the bigger ones (between traditional rivals for instance). Then a tier starting at, say $1, offering all games. Then another tier for, say, $3 which will offer different angles, advanced analysis. A $5 would offer custom replays and multi-screen experience (the game keeps rolling but you can choose other angles or even a live chart with the game statistics). For $10 you could have full access to past games. And if you add $2 to any tier you get the experience ad-free.

    Along with the streaming experience you can offer 'partnership' plans for fans that include tickets to matches, team merchandising (such as official fan t-shirts only available for subscribers) and bundle the streaming service to those packages. You know, add value.

    There are plenty of possibilities here.

    reply to this | link to this | view in chronology ]


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