As Major League Baseball begins a new season today, it also unveils a set of new rules aimed at enhancing the game's pace and entertainment value. These changes, which include a pitch clock, larger bases, and a ban on defensive shifts, are part of MLB’s mission to modernize the sport and attract younger audiences. Some journalists have dramatized the new rule changes as "revolutionary", but a more meaningful and challenging opportunity to revive baseball’s relevance is starting to take an even more revolutionary shape.
Despite pioneering the very streaming technology (BAMTech) that powers Disney's streaming services today, MLB has been slow to evolve the sport and actively mitigate the steady erosion of its popularity over the last half-century.
Capturing the attention of younger audiences today has proven more elusive. In a 2021 Washington Post poll, only 7% of U.S. adults under the age of 30 listed baseball as their favorite sport to watch, trailing football, basketball, and yes, even soccer.
Commissioner Rob Manfred and league executives are preparing to transform how baseball fans access the sport, with previously unfavorable market forces now serving as a tailwind in MLB’s quest to recapture teams’ local broadcast rights. Below we outline the league’s movements in these early innings—and why we’re not holding our breath for the breakthrough streaming service baseball fans have long yearned for.
MLB’s Push to Regain Local Rights
Though lucrative, broadcast deals with regional sports networks have hamstrung MLB’s ability to superserve its fans and reach younger viewers. Fans expect to be able to watch their favorite teams play anytime, anywhere, but regional broadcast restrictions have limited the availability of games to viewers without the right cable subscription. These local blackouts have also stunted the value proposition of MLB.TV and increasingly driven fans to short-form highlights on various social platforms. Without centralized possession of its teams’ local media rights, the league simply hasn’t been capable of keeping up with changes in sports consumption habits. According to Morning Consult, Gen Zers now prefer to watch live sports through authorized streaming services (32%) more often than via broadcast or cable (28%). This margin will only widen in years to come.
The (welcome) collapse of regional sports networks is underway. Cord-cutting cratered the profitability of RSNs, and some networks have had no choice but to explore abandoning their broadcast commitments. Diamond Sports Group, the country’s largest owner of RSNs, filed for Chapter 11 bankruptcy earlier this month and has already missed rights fee payments to some MLB teams, potentially opening the door for MLB to take back certain local rights earlier than expected. Warner Bros. Discovery, which also operates several RSNs, informed teams of its plans to pull out of the RSN business altogether.
This didn’t come as a surprise to MLB, and league executives are poised to pounce. As it seeks to gain back control over local rights, the league has proactively prepared to produce and distribute its own games. In the last two months, MLB made several key hires within its new Local Media department and brought in Billy Chambers, a former Fox Sports Net executive with significant RSN experience, to lead the group. Further, the commissioner and other MLB executives have already held high-level meetings with DirecTV, Comcast, Charter and YouTube in recent weeks to discuss potential distribution opportunities.
Our Outlook
Major League Soccer was able to achieve unified distribution of all of its games through a national product without regional blackouts, but MLB’s path to do the same is less certain. After instructing its teams to allow their local rights deals to expire coterminously, MLS was able to package its local and national rights together, ultimately strengthening their negotiating leverage and securing a ten-year deal with Apple reportedly worth at least $2.5B. Mirroring such a deal in baseball won’t be as straightforward, as MLB teams have larger game inventories and are more reliant on RSN deals than MLS teams were. Even if we assume that MLB seizes local rights for 18 teams from DSG and WB Discovery, there are still several big-market teams like the Yankees who have little incentive to relinquish ownership of their own sports networks.
Recouping lost revenue is a legitimate concern and could be problematic for small market teams and their fans. Local broadcast rights have been a relatively significant revenue driver for baseball. Per Sportico, local media makes up 23% of MLB’s total revenue, more than in the NBA (13%), NHL (12%) and NFL (2%). The additional centralized revenue from a MLB DTC service might not be enough to adequately support smaller market teams who heavily rely on local media deals. According to Sports Business Journal, the Pittsburgh Pirates make $60M a year from their current local media deal—achieving the same revenue via a standalone Pirates streaming service would likely necessitate steep prices for the smaller number of fans in its market.
Successfully completing these strategic moves could still result in a Gen Z strikeout. In a Morning Consult survey, 1 in 3 Gen Zers said they don’t watch live sports (vs. 24% of all U.S. adults). When asked why, over half said they simply weren’t interested. Most alarming for MLB? 74% of Gen Zers said that not having the ability to watch wasn’t a factor at all. Good on MLB for trying anyway.
