4 December 2018 | Russell Karp
The Future of Micropayments: How the NBA’s Latest Initiative Affects Sports Fans and Bettors
The National Basketball Association kicked off its 73rd season with the first two games on October 16th. But it made big news in the preseason as the NBA and Turner Broadcasting officially confirmed that fans would be able to purchase a portion of live games to watch on Turner’s B/R Live streaming service, nba.com, and the NBA app.
The NBA previously tested micropayments late last season by allowing fans to watch the 4th quarter of in-progress games for just .99 cents. Starting with the 2018–19 season, the league will offer the fourth quarter, the part of the game that generates the most interest for bettors, for $1.99 on out-of-market games on League Pass only. By December, fans will have the option of buying any quarter separately, and eventually the initiative may expand to selling viewing rights to as little as 10-minute blocks of real time. Though the prices will be fixed for now, a dynamic pricing model is also being considered.
It is no coincidence that Bleacher Report is owned by Warner Media, who also have a stake in Draft Kings. Though the casual fan will be attracted to this convenient offering the betting public will eventually make up the majority of consumers for the NBA’s new revenue stream.
Why are the NBA’s experiments so important?
Both sports ratings and traditional TV/cable consumption have dropped over the past few years, yet most sports fans are keeping their pay TV subscriptions. In fact, 82% of subscribers say they keep their cable or satellite service due to live sports and would have otherwise cut the cord (according to last year’s PwC’s survey). There continues to be a demand for live sports though viewing habits have changed, due to a number of reasons (which we will get into another time), where access across multiple platforms (linear, mobile, web) is now expected. Additionally, viewers are more often checking in to games during a live event rather than watching it in its entirety. Additionally, dwindling attention spans and growing proliferation of shared content turn fans to streaming platforms and social media to seek out online sports highlights, interviews, and funny moments.
The NBA currently offers numerous streaming options, including League Pass, which is a season-long, full-league package, and cheaper subscriptions, including team-specific and other customizable options. It is the first, and thus far the only North American major league, to have launched a pay-per-game and partial watch options. NBA Digital, a partnership between the league and Turner, has delivered a wide array of forward-thinking initiatives in recent years, including its industry-leading offering of live NBA games in virtual reality and placing original NBA content across social platforms such as Facebook Watch and Twitter. This has led to the NBA and Turner taking the lead in the sports micropayments market that is perfectly suited to shifting consumer preferences and on-demand content distribution models with instantaneous access to content anytime, anywhere. To quote NBA commissioner Adam Silver, “at some point in the near future, fans can choose to buy any part of any game.”
It is easy to imagine other major sports and social platforms moving to this same model. For instance, Twitter recently hinted that the platform might be developing a micropayment system that would allow fans to watch select clips of sporting events. Will the NHL sell overtime and shootouts? Or what about watching the final innings of a baseball game?
The NBA, with its younger fanbase and tremendous global reach, is pushing technology in ways no other professional leagues could. The idea behind micropayments is to reach out to a broader audience, especially for those who have placed wagers on games. In light of legalized sports betting in the United States, the NBA’s move is another example of how nimble and proactive they are compared to other major sports leagues. When live, in-game betting goes mainstream, gamblers will be more inclined to watch a portion of a game to monitor their wagers. If the offering finds significant traction among fans (which it probably will), micropayments are going to be an important new revenue stream.
An additional benefit of this new initiative is that it could help turn people away from pirated live streams and attract new audiences who are typically unwilling to sign up for recurring subscriptions but who want their customized highlights and the outcome of the game.
Micropayments beyond sports
While the NBA is learning to utilize the power of micropayments in sports broadcasting, they are far from the first entrant in this market and won’t be the last. These small transactions have opened doors for media and entertainment enterprises to monetize larger customer bases without losing revenue from their existing, more expensive offerings. Making in-app purchases for downloaded games, streaming parts of sports games or episodes of TV shows, or paying a quarter for every article you read are just a few possibilities that might soon become reality.
Microservices-based applications that facilitate agility, scalability and speed to market will undeniably play a major role in the success of media and entertainment companies that want to stay relevant in the highly competitive and increasingly crowded market.