- RSN has local rights to NBA and NHL teams in New York area
- Morgan Stanley predicts subscriptions could fall to 3.7m by 2025
Madison Square Garden (MSG) Entertainment plans to launch a direct-to-consumer (DTC) version of MSG Network, making the regional sports network (RSN) available to viewers without the need for a cable subscription.
The RSN, which has the local rights to the National Basketball Association’s (NBA) New York Knicks and the National Hockey League’s (NHL) New York Rangers among others, has seen subscribers fall by nine per cent over the past year as more viewers ‘cut the cord’.
The company hopes streaming will help arrest this slide and has confirmed to the New York Post that it was working on an over-the-top (OTT) platform. It is speculated the service could cost between US$20 and US$25 a month with an incentive to purchase an annual subscription.
“We are progressing in the design and development of our direct-to-consumer offering, and remain on track to launch in the second half of the current NBA and NHL seasons,” MSG Network chief executive Andrea Greenberg told the New York Post.
RSNs have traditionally been one of the main beneficiaries of the cable bundle, which sees consumers pay for a collection of channels rather than picking and choosing which services they want to receive.
Cable providers pay the RSN a fee regardless of whether the customer wants the channel or not, which means a steady, reliable stream of revenues. However, as more consumers ditch cable for streaming services, RSNs are disproportionately affected.
Many are turning towards streaming as a way of addressing this declining viewership. Boston-based New England Sports Network (NESN) became the first RSN to launch a DTC service earlier this year, while Sinclair has launched Bally Sports+ in selected markets.
Going DTC risks cannibalising a steady, reliable revenue stream by antagonising cable partners, as well as involving additional investment in infrastructure, marketing and customer support. But for many RSNs, a failure to act risks an existential crisis.
MSG Network’s conundrum in finding the ideal balance is typical. It is already one of the more expensive RSNs on the market, receiving US$8.90 for each cable subscriber, but the suggestion is that it wants to increase this to US$10 to compensate for declining viewership.
Such a demand would already likely be resisted by cable companies who might refuse to carry the channel. Indeed, Comcast has already ditched the channel, causing MSG’s subscriber base to contract by ten per cent in October 2021.
The launch of a competitively-priced DTC offering could increase tensions even further. But with Morgan Stanley predicting MSG Network subscribers will fall from 4.5 million to 3.7 million within three years, the RSN might feel it has no option.