Consumers are moving to better value services, not away from traditional services. Basic cable TV represented an outstanding value in the 1990s when it cost $20 per month and there was no service like Netflix.
In the 1990s cable TV competed with free broadcast television and, for those who wanted something more and were willing to pay, video stores. In the 2020s, basic cable TV service costs more like $75 per month. While video stores are no longer significant players, free broadcast television is very much around and there are a number of subscription video services (e.g., Netflix, Disney+, Max, Paramount+) which offer additional entertainment choices for those who want something more and are willing to pay. iTunes and Amazon rentals are the new video stores.
It was inevitable is that consumers would leave services that seemed to offer less compelling value and move to services that offered better value. Streaming was the technology that enabled these options; it wasn't necessarily that the technology was better (virtually all of the viewing is still at home on a TV; phones and tablets are a small part).
It is not inevitable that the streaming offerings in the marketplace now (e.g., Bally Sports+ typically at $20 per month, MSG at $30 per month, NESN at $30 per month) will be the solution to the regional sports network business going forward. The CEO of Diamond Sports Group, the parent of the Bally Sports RSNs, David Preschlack, is an experienced sports executive with stints at both NBC's regional sports networks and ESPN. Preschlack had to admit yesterday in court, that its over-the-top a la carte subscription service had only 203,000 subscribers after 9 months in the marketplace, a figure is only 55% of the entity's budgeted number. That 203,000 subscriber count works out to an annual revenue "run rate" of only $36 million, which is a fraction of the amount of revenue that Bally's needs to generate to make up for the shortfall it is seeing it its fees from MVPDs, whose customers continue to "cut the cord" in large numbers.
Sports fans still want to watch their local teams' games. It appears to me that the fundamental problem here is that customers don't think that the value of these streaming services is attractive. Consumers see the same problem that caused them to drop cable TV in the first place.
The other streaming services, all of which have a monthly ticket cost of less than $20/month, are perceived by customers as a reasonable value (if not quite as attractive a value as they were a few years ago).
The contrast between a pro game every day or two on Bally Sports+ in a given month for $20 and Max at $16 (or less with ads), for a content library with hundreds of high-profile hours does not flatter the sports service. From a content standpoint, Bally Sports matches up more favorably with a service like Apple TV+, which retails for only $6.99/month. Like Bally's, Apple TV+ is a service focused on new programming; it doesn't have a large valuable library of popular older content.
Regional sports networks are not required to sell themselves on a monthly subscription basis. All of the services I have mentioned in this post also provide an annual subscription with an effective discount for those who purchase it (for Bally it's $190 annually, a savings of 20%). In addition to cutting the monthly rate, the services might also experiment with selling single games or other lower-priced offerings. Ultimately the rights holders should be flexible in considering how they might entice fans to want to buy in. Running a sports service is a fixed cost business and the games can't be sold after they are played. In this way, the business is much like an airline. Airline-style "yield management" might make a good deal of sense to maximize each service's revenue.
The RSNs are not alone in the annals of communication in finding their historical business model does not seem to be holding up in today's world. A similar situation is playing out in audio, as FM radio continues to hemorrhage listeners. Unlike cable TV, FM radio listening is free and the streaming solutions for music (e.g., Spotify, Apple Music) generally have a monthly subscription fee. FM represents a poor value for music listeners is because of the high commercial advertising load on such stations. FM became a lousy listener experience at some point and eventually services emerged as alternatives (first Sirius XM, later Internet delivered services). Music fans are willing to pay for Spotify to avoid the high commercial load on FM (Ad-supported Spotify has a much lower ad load than commercial FM stations). Also those who don't subscribe to a streaming music service can easily put together hours of their own audio programming via free podcasts and collections of music they have assembled on their phones and can easily play in their cars.
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