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Published on 27 February 2014

Despite ever-rising carriage costs for the most coveted live content, the arguably most powerful weapon in cable, telco and satellite TV providers' customer retention arsenal is the regional sports network (RSN) because it delivers programming to fans that can't get it anywhere else, for now.

Sports fans can't do without them and OTT services don't have the content. Better still for pay-TV providers, the cheapest programming packages typically don't include RSNs. They pre-date original content series such as The Sopranos. And many providers charge extra each month on top of mid-tier programming packages for the appointment TV.

And starting recently, some operators levied a monthly RSN fee on all their subscribers to help cover the cost of this priciest of content. It's a big predicament for consumers; can't live with it price-wise and can't live without it as a fan.

Recent research claimed about 60% of households reported watching OTT content but only a small fraction of those use web options exclusively. That's no surprise given you can build your own OTT sundae but it doesn't come with the ice cream that sports fans have a sweet tooth for.

I can't count the number of consumers who have told me they're dying to cut the cord but can't do without watching local sports teams. In Boston that's the Bruins, Red Sox and Celtics games (a full calendar year of sports) on New England Sports Network (NESN). Remember the drawing power of NFL's Sunday Ticket in making DIRECTV a programming power – and it's not even a RSN per se as it's a one-sport offering.

With RSNs, pay-TV providers have many subscribers just where they want them, in place, even as the price of the programming and their content packages continues to rise. Is there anything that could match the power of this cord-cutter Kryptonite that operators need to know about? Are changes required, or will the RSN status quo suffice?

RSN Beginnings

Realizing the rising value of their video, sports teams, conferences and entire leagues have launched channels and networks starting at the pro level, which lead to college sports networks across the country. Comcast, Time Warner and Fox own some. Others such as NESN are independent, as in owned by the pro teams. There are college RSNs too. In most all cases TV providers who paid to carry the coveted content realized they had a magnetic retention tool that their customers stuck to (and with).

The epidemic level of addiction among sports fans, and advertisers, is no surprise at all given the interest in one-time U.S. and global events online such as the Sochi Olympics, next month's March Madness tournament, the Super Bowl and World Cup competitions – all of which are available for live streaming over the web in addition to network TV. RSNs typically draw local fans and provide games spanning multiple seasons, with plenty of related non-contest content. NFL Sunday Ticket enables fans that have left the local market of a team to see all their once-local games nonetheless.

Mess with Success?

So, as a pay-TV network operator, what could go wrong with your RSN success?

-New Competitors. Namely Google with its 1G Internet access rollout, though other operators are following with super-high-speed access options. The NFL is cutting up the pie for its game telecasts and could add Google to the mix at the end of this year when its deal with DIRECTV for Sunday Ticket expires. Taking game to the web via Google fiber or even YouTube would represent expanding into unserved areas beyond broadcast TV and satellite.

Some predictors say yes, some say no. But from the Google perspective, what in the world are they planning on delivering through dumb and affordable 1G pipes? And to think that their only option is to display content on YouTube is shortsighted.

The NFL is divvying up its games, spreading them across multiple broadcast outlets to grow revenues and expand the brand. To fuel this they have even taken games away from the sports channel the league owns – the NFL Network. Why would they stop short of different distribution channels such as the web?

-Fear the Innovator. All it takes is a single innovator – fueled by technology brawn and business brains to stand a business model on its head and turn and recast and industry. Remember when Blockbuster was the super power and Apple only made computers for graphics and production departments? Take a look at disruptor Aereo  for a more recent example. They are going before the Supreme Court in April to argue their case (innovative business and technology model) which already has the broadcasting industry ablaze in litigation and angst.

-First Movers. Forget true innovation. What happens when a pay-TV provider breaks rank and offers a package of compelling RSN programming, high-speed Internet and five other channels for a low price? The result could be similar whenever anyone does something first in a competitive industry – others follow or suffer. Phone upgrades & contracts? MCI's Friend and Family calling plan? Voice-over-the-net? Airlines charging for carry ons (and countless other one-time "frills"? The list of fast followers is far longer than the list of first movers.

-"Integrators." What if a combo such as Virgin Media and TiVo spread their overseas integration of broadcast network and online content through a single app/device to the U.S. and add in RSN content to make a huge impact in the market? Integration is almost a given for pay-TV providers that would rather move forward some than to be disintermediated.

-Owners of RSN Content. Content owners have benefited from mass distribution of their programming assets from cablecos and satellite operators, and more recently from telco TV providers. But what if RSN owners look at the web and partner to offer their own OTT service? It could be added onto OTT sundaes as the much-sought after cherry on top in a broadband economy where TV Everywhere appears to be more about the big movie-turned-original series channels such as HBO than RSNs.

If RSN and other sports content is available without most of all the other stuff and associated prices from a new – or even traditional – outlet, the game changes for everyone.