By John Eakins
The new NBA basketball season has just started with the main headline attraction being the move of LeBron James from the Cleveland Cavaliers to the LA Lakers and whether he will revive the once famed basketball franchise. While his move is likely to generate more interest and higher TV viewing figures, this hasn’t stopped the NBA experimenting with a new revenue generating streaming model.
As reported here, here and here, the NBA is giving the option to fans to stream the final quarter of any game for a nominal once off fee – reported to be $1.99 in most of the stories above. From my reading, the option only appears once the 3rd quarter buzzer sounds rather than purchasing it before the match starts. It also appears to be just a streaming option at the moment (rather than purchasing it through your TV operator) and is appealing primarily to digital users which, as some of articles state above, is a growing market for basketball fans, especially younger ones. Interestingly, the articles also suggest that NBA are also looking at some stage in the future to allow fans purchase the live stream of a match at the start of any quarter with different prices points attached. A great example of price differentiation by a monopolist if there was ever one.
It will be interesting to see whether this is successful or not. In some ways it’s a no-brainer for the NBA. The actual costs of implementing such a feature are probably small – the fact that they stream the full game already would suggest that it should be quite easy to introduce a separate final quarter streaming service. In economics talk, the marginal revenue of such a service would outweigh the marginal cost. Basketball is also a game which suits such a new revenue strategy given that it’s divided into four quarters and in most games the outcome is still up for grabs coming into the final quarter. It also appeals to the behavioural concept of instant gratification, which some of my colleagues on this blog have written about before. Why waste time watching the whole match when you can catch the shorter and potentially more important part for a cheaper price. I have to admit, when watching recorded American Football highlights (another sport that this revenue model could be applied to), I myself sometimes forward to the final quarter.
Could this model be applied to other sports? One could offer to purchase the 2nd half of football matches or rugby matches, the last 10 overs of a cricket match, the last round of a golf major, the last 2 games in a tennis set or perhaps just purchase the tiebreaker if there is one. The options would appear to be endless and given how streaming is becoming more prevalent as a means of broadcasting sports events, I wouldn’t be surprised if there were more examples of this offered in other sports in the near future. However I can’t see it replace the traditional TV viewing experience just yet. There is still something appealing in watching how a match unfolds from start to finish from the comfort of your armchair on a big television screen.
The new NBA basketball season has just started with the main headline attraction being the move of LeBron James from the Cleveland Cavaliers to the LA Lakers and whether he will revive the once famed basketball franchise. While his move is likely to generate more interest and higher TV viewing figures, this hasn’t stopped the NBA experimenting with a new revenue generating streaming model.
As reported here, here and here, the NBA is giving the option to fans to stream the final quarter of any game for a nominal once off fee – reported to be $1.99 in most of the stories above. From my reading, the option only appears once the 3rd quarter buzzer sounds rather than purchasing it before the match starts. It also appears to be just a streaming option at the moment (rather than purchasing it through your TV operator) and is appealing primarily to digital users which, as some of articles state above, is a growing market for basketball fans, especially younger ones. Interestingly, the articles also suggest that NBA are also looking at some stage in the future to allow fans purchase the live stream of a match at the start of any quarter with different prices points attached. A great example of price differentiation by a monopolist if there was ever one.
It will be interesting to see whether this is successful or not. In some ways it’s a no-brainer for the NBA. The actual costs of implementing such a feature are probably small – the fact that they stream the full game already would suggest that it should be quite easy to introduce a separate final quarter streaming service. In economics talk, the marginal revenue of such a service would outweigh the marginal cost. Basketball is also a game which suits such a new revenue strategy given that it’s divided into four quarters and in most games the outcome is still up for grabs coming into the final quarter. It also appeals to the behavioural concept of instant gratification, which some of my colleagues on this blog have written about before. Why waste time watching the whole match when you can catch the shorter and potentially more important part for a cheaper price. I have to admit, when watching recorded American Football highlights (another sport that this revenue model could be applied to), I myself sometimes forward to the final quarter.
Could this model be applied to other sports? One could offer to purchase the 2nd half of football matches or rugby matches, the last 10 overs of a cricket match, the last round of a golf major, the last 2 games in a tennis set or perhaps just purchase the tiebreaker if there is one. The options would appear to be endless and given how streaming is becoming more prevalent as a means of broadcasting sports events, I wouldn’t be surprised if there were more examples of this offered in other sports in the near future. However I can’t see it replace the traditional TV viewing experience just yet. There is still something appealing in watching how a match unfolds from start to finish from the comfort of your armchair on a big television screen.
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