ESPN May Give Its Wireless Users an Assist
For sports fans addicted to streaming videos and live updates on their mobile devices, it's the equivalent of a game-winning home run -- ESPN may be in talks with carriers to help subsidize its users' wireless data usage. However, the winning play for any media company trying to grow its wireless content has to balance that user happiness with revenue sharing questions and network demands.
05/13/13 12:08 PM PT
ESPN is in talks with at least one wireless carrier to help subsidize data usage for customers who stream sports video content on their smartphones and tablets, according to a report in The Wall Street Journal.
News of the possible deal comes as more mobile device users are turning to their smartphones for data-intensive activities like playing games and watching videos. With so much bandwidth being consumed, many carriers, including AT&T and Verizon, have put an end to unlimited data plans and have started capping data usage per month.
That means mobile users have to be careful about how often they check in to sites like ESPN, which offer content like streaming sports videos and apps with live game updates.
ESPN is reportedly looking into a possible plan with an unnamed wireless carrier in which the sports media giant could pay the provider to ensure that any of the data consumed on its site wouldn't count towards monthly caps.
ESPN did not respond to our request to comment for this story.
Hanging on to Mobile Users
No matter what happens with ESPN in this possible partnership, navigating the limited mobile broadband landscape is going to be a challenge for any media company, said Ritch Blasi, senior vice president of mobile and wireless at Comunicano.
"Hardware and software can always be added to the mobile network to increase capacity," he told the E-Commerce Times. "The only true limiting factor is available spectrum."
That's especially true for a company like ESPN with content like live sports updates and video. Its mobile users seem to be loving those offerings -- the company's daily mobile Web traffic has tripled since 2010, with about 16 million users that access ESPN exclusively from mobile devices.
If users didn't have to think twice about the data they were using up, it could be a goldmine in revenue for ESPN and its advertisers, Blasi said.
"For ESPN and its advertisers, this can add substantial revenue to their bottom lines by giving viewers 24/7 access wherever they are in the world," he noted.
That doesn't mean a deal would come without challenges. Besides the question of network capability, there is also the business side of any deal. Similar deals involving media companies and carriers may be in discussions, but none have been implemented yet, making it difficult to determine how both sides could win.
"One of the biggest challenges would be deciding what the revenue share would be between ESPN and the carriers, or even how much ESPN would be willing to subsidize the data services," Blasi said. "This would be like giving viewers an 800 toll-free number for the service. Both would need a crystal ball to figure out how much traffic this could add to the already overtaxed mobile networks without infringing on other customers' service."
Eliminating Spectrum Crunch
Even if ESPN's negotiations never result in a deal - which The Wall Street Journal's report said was a possibility - the fact that they would take place at all underscores the growing importance of mobile broadband bandwidth for today's content providers, said tech analyst and consultant Jeff Kagan,.
"ESPN isn't the only company with this idea," he told the E-Commerce Times. "Every network and every business in every industry all have wireless on their agenda."
Part of that agenda might be negotiating with carriers, but the deeper issue -- a spectrum shortage -- is out of the control of most wireless providers. Possible solutions to alleviate that problem -- lobbying Congress to free up spectrum, investing in ways to use less data for mobile streaming -- would also be helpful in alerting consumers to the bigger issues involved.
"This reminds us that we need to solve the spectrum shortage problem the industry faces," he said. "Carriers keep making smaller deals ,which pushes the deadline ahead and buys them more time, but the problem is still there. Spectrum shortage could cause users to get poor quality and speeds at some point over the next few years."
That would be the worst case scenario, added Kagan. The best would be if the shortage caused companies like ESPN to think outside of the box and find ways to use all the available mobile resources in the most productive way possible.
"Wireless ESPN is a great example of a trend that is beginning," he said. "Expect many companies in many industries to use wireless to transform. The next few years could be very interesting indeed to watch both for innovation and congested networks."