Expensive sports rights are a major cost for the United States television industry. Sports also brings huge ad revenue and a male audience that is much prized by advertisers because it's so elusive.
Now the NBA has signed new TV deals that run nearly a decade. This time the buyers get significant rights to Internet distribution of games, highlights and related content. Clearly, this is just another step toward the Internet becoming a full-fledged alternative to typical TV distribution. An ESPN executive said its Web site had a million unique visitors daily during the NBA playoffs earlier this year.
Is this a big deal? Well, it's more than $7 billion dollars worth. That's what Disney and Time Warner are paying for an additional eight years of NBA games. There is no direct allocation of costs between TV and online. Games will be both live and on demand via the various Web sites involved.
Two things are significant. Exclusive sports content like the NBA will help the Internet grow beyond its paltry 5.5% of all American ad dollars. Secondly: it shows the NBA embracing the new technologies, not resisting. Major League Baseball is going after the Slingbox, for example. Another sport that's keeping up with the times: the NHL has cut a deal with the Slingers.
One last pertinent point, the NBA itself will be streaming some games exclusively from its Web site and keeping that ad revenue. So a question regarding the future of sports online: who gets the money advertisers will gladly spend? Well, that's still a jump ball.