The Stars are taking their local broadcast rights into uncharted territory, creating a new ad-supported streaming platform called Victory+ that will be the primary home of all in-market telecasts. Today's news sparked discussion about whether the Stars' model makes sense -- and if other sports properties may follow suit.
The most notable element of the model is that, as of now, there is no linear TV distribution to complement the free streams. Stars President and CEO Brad Alberts said the team is exploring the possibility of bringing a “small package” of games to an over-the-air network, but that's not a sure thing.
Octagon EVP/Media Rights Advisory Dan Cohen, who advises teams and investors in the RSN space, called the Stars’ shift to ad-supported streaming a “bold move," but he expects growing pains associated with leaving linear TV altogether (except for nationally televised games).
“I hesitate to say this will be a quick commercial success given sponsor visibility challenges with a growth platform vs. an established [albeit challenged] linear channel,” Cohen told SBJ. “I would strongly urge the Stars to carve out a package of local OTA [games] to help balance the reach and exposure concerns I have for this approach in the short term.”
That sort of model would be reflective of MLS, which has a primary media deal with AppleTV+, but also a simulcast deal carved out for Fox Sports.
Will the tech work? Will the money come?
Veteran media consultants John Kosner and Ed Desser each stressed the importance of ensuring that A Parent Media Co., the Stars’ tech partner on Victory+, is well-equipped to provide fans with a high-quality viewing experience (see the D.C. United-FloSports deal from 2019 as an example of what could go awry). “The technology is not trivial,” Desser said. “One has to really be sure that you put the necessary resources behind the app development, the infrastructure, quality control, testing load management. Don't assume this stuff is all so routine that it can't be a problem.”
While APMC’s prior experience largely involves serving on-demand content, APMC President and CEO Neil Gruninger expressed confidence in the company’s ability to stream live games. “We don't have the problem that the Super Bowls of the world do, because that's 100 million people at once,” Gruninger said. “We're solving the local problem with 100,000 people watching at once. That is completely different.”
Perhaps the biggest question is whether ad revenue alone without a subscription fee can come close to generating the revenue the Stars earned under their previous deal with Diamond Sports Group that saw games air on its Bally Sports Southwest RSN. The Fort Worth Star-Telegram reported the team was being paid $25 million annually under that agreement, which had one year left before it was mutually terminated in bankruptcy court last week.
“It's kind of hard to see, at least initially, how the numbers are going to add up if your source of revenue is advertising sales against these live streaming games,” Kosner said.
Alberts said the financial modeling conducted by the team and APMC suggests the team won’t take a hit financially as a result of the move, but he acknowledged there’s risk associated with moving to a new model. “It'll be almost an experiment to see how this all goes,” Alberts said. “Do we meet expectations, do we exceed expectations, or do we miss those? And if we miss, we'll have to understand why and then come back in the second year, make improvements and see if we can improve on the business.”
