Does anyone know how long the original cable/satellite deals last? More specifically, how long until the conference is legally allowed to offer on-demand programming over the Internet?
I know I sound like a broken record on this issue, but I am convinced the Pac-12 Network will generate more money when it is available on demand.Â
Let's look at some numbers now. According to this,
http://www.whatyoupayforsports.com/numbers/ the Pac-12 is getting $.39/mo per cable subscriber and it is in 12,300,000 homes. That works out to $57,564,000 in annual revenue, or pretty close to my crude estimates for a pay online only model that would look something like this:
How many Pac-12 fans are there in total? Would 100k fans per Pac-12 school on average be a reasonable number? That would give the Pac-12 1.2 million fans. Seems a little light to me, but let's use this for starters.
If you had say half of these fans paying for a Pac-12 Network subscription for say $100/year, the conference would net:
600k fans x $100 = $60 million in annual revenue. This number seems conservative to me.
We know the actual model is paying the schools about $1MM - $1.5MM per year. My proposed online only model would match that. BUT, the online model would leave room for revenue growth, by growing the fan base, something that can't be done with the barriers to cable and satellite subscriber growth. Advertising revenue would also increase. The current model doesn't allow for any growth, and if anything, revenues will shrink because cord cutters and cord nevers is only a growing trend, not a fading one, so no other distribution partners are going to add much more to that 12,300,000 number.Â
Seriously, wouldn't you rather have a business that serves 600,000 people happy to pay $100/yr, than one with 12,300,000 people - many who don't have any interest in your product - paying $4.68/yr for it?