Pac-12 network did it wrong
(Written by kencraw)
I promised myself I wasn’t going to get into this mess, but I just can’t help myself…
Last year Pac-12 commissioner Larry Scott laid out a beautiful vision for Pac-12 sports. All football games to be televised nationally! ABC/ESPN and FOX/FX to carry our “big” games and the rest to be on the nationally available Pac-12 network. A deal has been cut with the big 4 cable companies to ensure just about everyone (subtext: who’s willing to switch providers) will be able to get the Pac-12 network! Plus there will be streaming available too!
Sound great, right?
Yes it does… only one problem, they made a deal with the devil, or at least his video content branch office: the cable companies, who are very adept at making it sound great, but in truth it’s nothing like promised.
When the network launched last week we quickly found out how UN-foolproof the contract Scott negotiated with the ‘big 4’. Apparently the weren’t obligated to carry the Pac-12 network just about anywhere, even in areas well within the “league footprint”, much less across the country. At the same time, the Pac-12 is bound that they can’t stream to non-cable-subscribers, even for a fee, even in regions where they have no ability to get the content, at any price, from a cable company. And I won’t even start (at least in this post) about the whole regional channel problem, where much content will be unique to regional channels and there are currently ZERO providers who offer the ability to get more than one regional channel at any price.
But this isn’t even my complaint for this post. The retort to all the above complaints is that this was the best way to get the Pac-12 to the most homes in the quickest fashion and similarly the best way for the Pac-12 to capitalize (literally: make money) on the Pac-12 network right now.
Frankly, it’s a fair argument and they’re probably right.
But it’s also very short sighted.
Everyone in the know acknowledges that the cable companies are in a tough spot right now. Internet streaming is gutting their business. Netflix streaming was the first salvo that dramatically undercut the cable companies. Over time there will be very little the cable companies can do to prevent customers from getting what they always wanted all along: a-la carte programming directly from the vendor.
But the problem is that the percentage of viewers who are ready for an all-streamed solution is small, particularly outside technically savvy regions like Northern California. So what do you do when you’re the Pac-12 network? Do you eschew the cable providers and go all-streaming knowing that in the short term you’re going to lose some viewers? Or instead do you make a deal with the devil’s local branch office?
I’m actually OK with making the deal, with one caveat… you have to come up with a transition plan/strategy. How are you going to get out of that deal in 5-10 years when just about every American household is streaming capable and all the cable companies are doing is holding you back?
And unless Scott is a super-genius who’s written in some key time-bomb/exit clause into his contracts (which the way the last month has unfolded seems exceedingly unlikely), that’s the problem.
This contract was written explicitly to ensure that the Pac-12 CAN NOT make the transition. The reason is simple: you have to have an agreement with a cable company for the Pac-12 to be able to stream content to you. In other words the cable companies have ensured that they’re the arbiter of the Pac-12 Network. There’s no escape. The only way out is a cold-turkey approach, one that will tick off people who are stuck in multi-year contracts with the cable company when the Pac-12 finally decides to stop selling the Pac-12 network to the cable companies and stream independently. Those customers will, for a year or two, be stuck paying their cable bill without getting the channels they signed up for AND be asked to pay independently for the Pac-12 streaming service.
The right solution was to start off all-streaming and charge for that stream. There are enough die-hard Pac-12 fans who are young/savvy enough to start off with meaningful revenue in 2012. Work aggressively to get a plug-in on all the major streaming boxes from the Roku to the Bluray players and the TVs to make it available to the somewhat savvy. The NHL did it that way, and I don’t know how successful it is right now, but I guarantee you in the long run they’re going to look like geniuses.
But not the Pac-12.
5 years now when business magazines and websites will be lauding the NHL for re-inventing itself after their strike and getting ahead of the technology transition, from being locked in to the cable companies, the Pac-12 will be mired in binding contracts and we’ll be wondering what the heck Larry Scott was thinking in 2012 when he made the remarkably short-term decision to make a deal with the devil.
August 23rd, 2012 at 12:12 pm
Ken,
Thanks for the post. This whole issue has been unclear to me — perhaps you can answer some questions.
1. What about satellite — I have DISH — are we out of luck?
2. Are you saying that PAC 12 Net will not be streamed via the Internet, at least not for several years?
August 23rd, 2012 at 1:31 pm
1. Both satellite companies are currently in negotiations with the Pac-12 network. The “insider scoop” is that DirecTV will be signing a contract before the first game but DISH is a long-shot and probably won’t be signed for this season. So yeah, it appears you’re out of luck unless you want to switch.
2. The Pac-12 Network is streaming already, but you have to be authenticated. And to be authenticated, you must have a cable (or perhaps satellite, if the contracts get worked out) subscription that includes the Pac-12 network.
This is almost easier to go look at:
1. Go to http://video.pac-12.com you’ll see a red key off to the right of the snapshot graphic of what is currently showing. Hover over that red key and it’ll say “You must sign in with your TV Provider login to watch this video!”.
2. If you click on that snapshot graphic, it will take you to a new page that gives 3 choices, one for “Brighthouse”, one for “Time Warner Cable”, and one for “Cox”. Apparently if you have Comcast you have to get to the stream an entirely different way through their streaming service.
So, it’s there, it works (or so I’m told), but it’s of no use as far as getting access to the Pac-12 network when you don’t already access via your TV. From what I gather it only has two values:
1. To get access to the content when you’re away from home.
2. To get access to the other regional content that is not available in your region.
August 23rd, 2012 at 1:31 pm
Wow, Ken you are an omniscient one. I am going to begin a campaign to get Larry Scott fired and have you run the PAC. This will surely lead to trillion dollar revenues for each team
August 23rd, 2012 at 1:37 pm
Rueben, that’s funny, I thought I indicated in my post that I understood what I’d suggest would make the conference less money in the short term.
Why don’t you reply with some meaningful rebuttal as to why I’m wrong instead of just a snarky yet meaningless comment?
August 23rd, 2012 at 1:43 pm
Sorry about that one I just couldn’t help myself. I was just trying to point out that it is much easier to see how everything is going to unfold once the dominos have already begun to fall. For instance, I am sure that Larry and his team would like to have another shot at creating the agreement and stipulating that these cable companies broadcast the network to every available television set. However I do believe an agreement with direct tv will help with this specific problem.
August 23rd, 2012 at 2:08 pm
OK, fair enough Rueben. You’re right that it is easier to sit back and criticize than to actually do it. I’m sure if he had done a streaming-only solution there would have been plenty of criticism.
You’re also right that a DirecTV contract will take a lot of heat off, because it will mean anybody in the US who wants the Pac-12 channel can get it if they’re willing to change providers. I’m assuming DirecTV customers will get access to the streaming content, because the rumor is DirecTV will only carry the national network (If Scott gets them to carry all 7 channels, it’ll be a huge coup.).
It would have been nice if people would have had more than a few days warning to switch providers, but I know how difficult these negotiations can be.
August 24th, 2012 at 8:24 am
Ken,
Thanks for the info.
Someday, far into the future, all content will be distrbuted via the Internet. Until we get there, we will have to deal with the fractured landscape of satellite vs. cable vs. streaming.
I wish DISH would merge with DirecTV, like sat radio has done. Competition is not a good solution for the distribution of some services.
Thanks again.
Thanks again.
August 25th, 2012 at 2:42 pm
As someone who usually lives outside the PAC-12 “footprint,” this contract was a very cruel joke. I don’t see how this helps me watch Cal games at all.
August 28th, 2012 at 10:22 am
This stinks, I’d love to say that I called this. Luckily for me I did. I believe my exact words were:
“As long as they let ESPN handle the streaming service, I’m all for this”
The reality is/was, in order to have a successful internet streaming service you have to have applications on platforms like Roku, Xbox Live, Playstation, and whatever other set top box you like. You have to give your customers an ability to watch it in lieu of giving money to cable companies first. That’s why Netflix and Hulu are kicking butt, while things like HBO Go are struggling. ESPN has by far the best application out there. MLB, NHL and NBA are way behind in terms of overall presentation and ease of use. Considering that we have this contract with ESPN, it’s maddening to know that the games aren’t being streamed on ESPN’s service…
I’m one of those tech savy people who actually can hook up a computer to a TV, and cut the cord. I never ever want to go back. I guess I’ll keep going to sports bars and supporting my local businesses than give that money to the Pac-12.