NBA International League Pass

Not many NBA playoff games make it onto television in the UK; usually it’s only the finals. This year I’ve been watching over the internet using the NBA’s International League Pass service.

The technology the service uses is lousy. You can only watch the games using the RayV player browser plugin, which (for the Mac at least) is incredibly flaky. It requires admin access to my machine, it crashes my browser regularly, live streams need to be manually refreshed periodically, and the plugin seems to need re-installation every time I restart despite automatically launching a daemon at login. And in a business decision worthy of a company whose home page looks like this, they release a new version of the player every few days, hassling all their users to upgrade every time they watch a video. Despite all this, internet video is a simple enough problem that even RayV hasn’t managed to make the games completely unwatchable.

For international customers (only), the NBA offers two packages: you get access to every playoff game in “standard definition” for $24.95, or every game in “high definition” for $34.95. I only subscribed to the standard definition package this year, and the quality is comparable to YouTube: easily good enough to follow the action and read the players’ body language, but you’re not going to pick up on facial expressions in the long shots.

The price seemed pretty reasonable; much more and I wouldn’t have paid for it this year. But affordable pricing for sports packages is rare. I wanted to crunch the numbers to see whether the price makes it competitive with TV ad-supported broadcasts.

The online video is actually just a copy of the US television feed, and includes all of the US ads, so in theory the NBA could claim some of the network’s ad revenue, or insert its own ads during the breaks. But let’s assume an ad-free feed; how much would you have to charge users to make up for the ads they’re not seeing?

I have very little data at my disposal, but the few sources I’ve found quote rates around 5 US dollars per thousand viewers or 4.62 British pounds per thousand viewers for a 30-second spot. The first figure suggests that the value of each (potential) viewer of an ad is roughly half a cent. Assuming 48 minutes of advertising in a three-hour basketball game, that puts a price of 24 cents on each viewer. If the TV networks could keep the same ratings, but charge every viewer a quarter, then they could drop advertising entirely and maintain the same revenues. Their profits would go up, however, since they spend money getting all those ads sold.

The NBA playoffs include fifteen series, each with up to seven games, for a maximum of 105 playoff games per season; this season there will be between 84 and 87 playoff games. A viewer who watches every single game on television increases the networks’ total advertising revenue by about $21 this year, and by about $26 in a year when every series goes seven games.

In the simplest model, the TV networks should be perfectly happy to give up a viewer to watching on the internet (and possibly missing all their ads) if they are paid $25. More importantly, if the NBA could get $25 from everybody who watched the playoffs they wouldn’t need to sell television rights to any network at all. They’d have to get somebody to produce the game video, but the revenue they’re generating would cover that, just as TV ad revenue covers it now.

Those are the numbers I came up with. Now some thoughts: