Over the past month, Sinclair has assuaged many skeptics of their plans to launch a direct-to-consumer streaming service in 2022 by signing deals with the NBA and NHL. With these two agreements, they will be able to bring streaming to market to 16 NBA teams and 12 NHL teams, in addition to four MLB teams to which they already owned the rights.
Assuming they get cable and satellite approval to launch a service, Sinclair hopes to soft launch its DTC product in time for the MLB season, with a full launch for the upcoming NBA and NHL season. But if they get approval, how much will it cost?
Currently, the cheapest way to stream Bally Sports RSNs is to subscribe to DIRECTV STREAM’s Choice plan ($89.99 per month).
As part of their $600 million fundraiser for their new streaming service, Sinclair has included projections for the service that give a hint as to what they plan to charge.
In its first full year of operating the service (2023), without adding additional teams to the service, the company expects $243 million in subscription revenue from 1.08 million subscribers. On average, that would mean a subscriber would pay $225 per year to access the Bally Sports app, or $18.75 per month.
But don’t expect it to be so cheap.
Sinclair’s Bally Sports App Screenings
NBA and NHL seasons only last seven months, which would mean that at $225 per year, a subscriber would effectively pay $32/month for the service – and that’s assuming they charge a fee per RSN, instead of a fee per team.
The company had circulated a price of $23 per month for the Bally Sports DTC service as part of Sinclair’s fundraising efforts. This figure was strongly denied by Sinclair CEO Chris Ripley in an interview with the Baltimore Business Journal.
He told the Wall Street Journal that would be “consistent with some of the other high-end sports services out there,” which would be exactly $200 a year.
Assuming all else goes well, that price could be the biggest flaw in Sinclair’s plans.
In most cases, 90% of cable subscribers who pay for a regional sports network don’t watch it. But, for those who do, cable subscribers have to pay for the channel year-round, even when there are no live sports. With a direct-to-consumer product, you have no reason to pay when there are no live games.
Sinclair is banking on the fact that a baseball fan is also a hockey/basketball fan, who will need a streaming service in the market all year round. Considering they only have in-market broadcast rights for the Tigers, Marlins, Brewers and Royals, at this time it only works in markets where they can pair them with the Pistons/Red Wings, Heat respectively /Panthers and Bucks/Wild.
If they acquire the MLB streaming rights, they would be in a much better position, but that doesn’t solve all markets. They don’t have that option for those who get Bally Sports Indiana (Indiana Pacers), Bally Sports Oklahoma (Oklahoma City Thunder) and Bally Sports New Orleans (New Orleans Pelicans) – and for many Tennessee fans who just want the Grizzlies /Predators and the Carolinas with the Hornets/Hurricanes.
One way to solve this problem is to partner with other RSN groups like NBC Sports or AT&T SportsNet, which seems to be in the long term plans.
During Sinclair’s third quarter 2021 earnings call, Sinclair CEO Chris Ripley said, “I think it makes sense to ultimately add the rights of other groups like Comcast and AT&T. Whether you do it through transactional partnership contracts, consortia… (these are) things that will be considered in a second stage.
The bet Sinclair is making is that they are acquiring subscribers who have already cut the cord, but at over $30 a month – is that really going to happen? And, if instead it just speeds up customers leaking their cable subscriptions, that’s not good for them either.