Nathanson: Sports in the U.S. – Where Will This Obsession Lead Us?

Nathanson: Sports in the U.S. – Where Will This Obsession Lead Us?

Our typical response to where long term U.S. Pay TV penetration will find a natural bottom has been that the absolute floor will depend on the number of households who consider sports content absolutely essential to their video consumption plans

Michael Nathanson | Moffett Nathanson

September 26, 2019 | As cord cutting accelerates, investors are increasingly focused on where long term U.S. Pay TV penetration will find a natural bottom. Our typical response has been the absolute floor will depend on the number of households who consider sports content absolutely essential to their video consumption plans. However, we have never attempted to quantify that floor until now.

In order to test that thesis and to learn more about the underlying passions of sports fans, we partnered with Altman Vilandrie & Company, a leading strategy consulting firm that specializes in TMT. Altman Vilandrie & Company conducted an online survey in August 2019 to more than 5,000 U.S. respondents that measured consumer interest and willingness to pay for sports and news programming.

The research found that 53% of our respondents watch sports either daily, weekly or monthly and that 90% of these viewers continue to subscribe to Pay TV. These sports consumers are also wealthier, more male, and more likely to watch live news than the non-sports fan consumer. In fact, the 47% of the universe that doesn’t watch sports at least monthly seems to be at the forefront of cord-cutting and cord-nevering as only 67% of this group is subscribing to Pay TV.

So, while sports content will likely lead to stickier set top Pay TV consumers, there is a clear risk that non-sports fans will continue to cut the cord or never sign up, which puts about 1/3 of today’s Pay TV homes at risk. Given 120 million U.S. households and 53% of the market selfidentified as sports fans with 90% of the cohort subscribing to Pay TV, we would think that the absolute floor would be about 57 million households plus a sub-set of the non-sports fan (maybe another 15 to 20 million households) for a total of 70 to 75 million vs. the 88 to 90 million base today.

Looking at sports viewership by Pay TV subscribership, it’s not surprising that traditional Pay TV subscribers have a higher concentration of sports viewers than non-Pay TV subscribers. However, the even higher concentration of sports viewers among vMVPD subscribers flies in the face of conventional wisdom that the current crop of skinny bundles attracts non-sports fans.

 

 

Michael Nathanson is Founding Partner and Senior Research Analyst at MoffettNathanson, covering both the Media industry and the leading Digital Advertising companies. This was excerpted from his September 23 research note, “Sports in the U.S.: Where Will This Obsession Lead Us? ” 

For more information, please visit www.moffettnathanson.com

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