Earlier this week, Ben Thompson went so deep and so thorough on the dynamics of professional sports and reliance on cable TV that he wrote what might be an allegory for our world of consumer products and the direct-to-consumer channel.

At least it felt that way to us.

Thompson, in his weekly update, compared the growth of F1 racing to the decline of NBA viewership. The driving force, according to Thompson? Accessibility.

F1 began gaining popularity in America because of a Netflix docuseries called “Drive to Survive” (now back for a fifth season), new course locations and rules changes that require teams to interact with fans. Race viewership is up 122% since 2018.

From Thompson’s update:

“The audience that Netflix thought was going to come and watch it was very different from the audience that has shown up,” Paul Martin, the executive producer of “Drive to Survive,” said at the Season Five premiere last week. (That was held in New York, another sign of the series’ significance in the United States.) “It’s reignited people’s passion for the sport, and has brought this whole new audience as well, which is just phenomenal.”

The NBA, meanwhile, has seen declining ratings of its two flagship events—the All-Star Game and NBA Finals—over the same time frame.

We’re going to quote heavily from Thompson here, because he frames this so well, though bolded emphasis is our own:

“The first observation to make about the NBA in the context of these numbers is that the league is almost exclusively on cable; the vast majority of games, including the All-Star game, are on ESPN or TNT, or a regional sports network. And, thanks to cord-cutting, there simply is a much smaller addressable market. This seems particularly important when it comes to an event like the All-Star game, which is much more likely to attract casual viewers who might have tuned in were the game available, but were never sufficiently invested in basketball to keep a pay-TV subscription.
What about the NBA Finals, though? Those are on ABC, which is broadcast over-the-air. That, though, requires having an antenna, the acquisition of which is more work than simply clicking a button. Moreover, if you haven’t watched the NBA all year, are you really going to care about the Finals? It is the biggest games of the year where the NBA reaps the highest ratings, but if interest was not sown throughout the year then the harvest may be smaller than hoped, particularly when it comes to the casual fans that drive the biggest ratings.”

Large markets, casual fans, biggest ratings. Swap a few words and we’re talking about any consumer or durable good products.

Thompson, throughout the piece, suggests that the NBA is aimed at extracting value from its fan base off the way the TV world used to be. It is “maximizing LTV” from a core group. For the NBA and those who sell access to the NBA (ESPN, TNT, and smaller regional networks), this is resulting in larger contracts in the near-term, but reducing viewership in the long term.

“SuperFans are still watching the NBA. NonFans probably were the first to cut the cord a decade ago. What has happened over the last five years is that CasualFans who care more about TV shows than they do sports — but might catch an All-Star or Finals game — no longer have any reason to subscribe to pay-TV for the reasons I just articulated.”

F1, meanwhile, is adapting to the new world of TV. They are fueling growth by distributing the content most accessible to the casual fan where the casual fan is: Netflix. Some of them will watch a few races on cable. Very few will become super fans. But add them up? Viewership begins to grow.

In reading Thompson’s piece, it occurred to us that cable TV, at least as it relates to sports and the lens through which Thompson discussed it, is making a transition akin to moving from being a retailer to being a DTC brand. And it is bringing the NBA along for the ride.

Thompson’s view (and one we think is worth considering) is that this is detrimental to the NBA: Cable TV has reduced its offering and, thus, reduced its market. For the NBA, then, it has reduced its accessibility, which also impacts its market, and leads to a decline in viewership. Without casual fans (or, in our case, customers), a brand needs to hyper focus on super fans (customers).

When they focus on super customers, they make the product less accessible to casual customers—whether intentionally or otherwise—further creating a need to focus on an increasingly narrow set of super fans. It might, for instance, make a metric like LTV look good. But at what cost?

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