Derek Thompson argues that, for the TV industry, “live sports is the keystone keeping the roof from collapsing”:
Networks have recognized that sports has unique social currency in live viewing, and they’ve stormed the marketplace in the last few years, throwing egregious sums of money in exchange for exclusive deals. Those costs are trickling up. As Patrick Hruby explained, “big time sports are taking a minimum of $84.90” out of each family’s budget even if they don’t care about sports. This amounts to a “sport tax” on families forced to pay for something they don’t watch. Cable companies sensing this backlash are starting to resist new sports networks. There is even chatter about what would happen if sports existed on a separate “tier” that untied the Gordian Knot of TV.
Google’s certainly been lining up the resources to offer an All Access television experience. It has original programming on YouTube, TV shows and movies on Google Play, and the Google TV software (albeit in need of a redesign) to aggregate and manage the content while also looping in online streaming sites like Netflix and Hulu.
That’s a decent hand, but Google Fiber is the ace up the sleeve. The high-speed broadband and digital cable service is available in select cities, already offers a robust lineup of channels, including, for an extra fee, HBO. As of now most people still have to pay Comcast or Time Warner for broadband internet, which incentivizes their cable packages. If the fiber-optic network spreads nationwide, it’ll be the biggest threat to the cable giants in decades.
Kirsten Salyer adds:
Just don’t cancel your cable subscription yet. Google had discussions with media companies about a similar service about two years ago, without luck, and it’s not clear how far along plans are today, or when it would launch. There’s no guarantee Google could get the licensing deals it would need to put together a service that could compete with cable and satellite providers. Media companies might be reluctant to upset existing contracts in favor of a new online service and are generally more likely to give the best prices to providers with large numbers of subscribers.