Neal's Deals (Vol. 73) - Hail Mary or Fumble? Venu Sports Takes the Field ??? ??
Hey everyone - This past spring, a consortium of media giants announced plans for a new streaming service called Venu Sports, aimed at simplifying sports watching. This week, the details were unveiled: Venu Sports is set to launch this fall, and the service will bundle ESPN+ with 14 sports-heavy channels from Fox, Disney's ESPN, and Warner Bros. Discovery, all for $42.99 a month.
The timing is interesting given that sports have never been more crucial to the survival of traditional television: Of the 100 most-watched broadcasts in 2023, sports accounted for a whopping 96, according to Nielsen. The popularity of sports has led some observers to proclaim that the planned sports-streaming service could deal the final blow to traditional television, while others have brushed off the effort as a half-baked attempt to fix Americans’ long-broken sports-viewing experience. When the new service goes live, cord-cutters will have the opportunity to watch nearly all major nationally broadcast sports content without paying for 100+ channels.
This product sheds light on a couple of interesting points. It's not the first attempt to consolidate and streamline sports packages, and previous efforts have often failed. Additionally, the fragmented nature of sports watching in America, cord-cutting and the proliferation of new platforms have made things easier for some, but more complicated and costly for others. Lastly, the success of these bundling efforts could set precedents for TV media deals beyond the category of sports, making this an intriguing case study to follow.
For that reason, in this edition of Neal’s Deals, let's break down what Venu Sports is going to offer, whether they can reach their intended customer, how it is both similar and dissimilar to prior attempts, and the potential far-reaching repercussions of their launch.
What is it?
Venu will provide consumers access to a bundle of networks including ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, Fox, FS1, FS2, BTN, TNT, TBS, and truTV, along with ESPN+. The service plans to debut in time for the football season but does not include CBS and NBC, two networks that hold rights to many sports, including college football and NFL games. Venu targets “cord nevers” — younger consumers who haven’t wanted to pay for cable due to its high cost but have been seeking access to ESPN and other live sports. The theoretical user is someone willing to pay a hefty monthly subscription for a narrow segment of media: live sports, but not all live sports.
The Disney, Fox, and Warner Bros. Discovery jointly-owned streaming service is also priced significantly higher than Netflix, Max, Peacock, or any other major subscription streaming service but much less than the $73-per-month YouTube TV or a standard cable bundle, which offer a wide variety of entertainment content beyond sports.
Can Venu sell to their ideal customer profile?
It's unclear if Venu's user base will materialize due to some major obstacles. First, the total addressable market of users willing to pay $43 per month for some sports but not all may be limited. Many non-cable subscribers prefer watching highlights on YouTube and commentary from their favorite influencers. According to a survey by Kantar, cited by YouTube at its 2024 upfront, 54% of people would rather watch creators break down a major live event than actually watch the event. Additionally, NFL enthusiasts will need to subscribe to Peacock and Paramount+ to get a full slate of NFL games, or use a digital antenna with Venu, but antenna uptake among younger viewers is not happening.
How is it unique?
Venu isn’t very unique and may rely heavily on marketing and branding to drive success. A similar product, Echostar’s Sling TV, offers more for $60 per month, including the networks Venu provides — plus NBC, CNN, Fox News, MSNBC, Bravo, USA, HLN, Discovery, NFL Network, and more. Sling TV offers 46 networks compared to Venu’s 14 and has an introductory price of $30 for the first month.
As of March, Sling TV had 1.92 million subscribers but has been losing subscribers for five years, never exceeding its peak of 2.7 million in 2019. The company attributes its decline to increased competition from other streaming services offering sports programming a la carte. This presents a challenge for Venu, which must convince consumers to sign up based on its branding and technology. Moreover, their pricing may be temporary, with potential price increases hinted at its press release. The value proposition could become even tougher if Venu adds more sports content, likely driving up the price.
What are the repercussions?
Currently, it's a game of wait and see. It's uncertain how popular the service will become, but after researching for this newsletter, several issues have emerged: a mismatch between the value proposition and the target segment, lack of competitive differentiation and minimal barrier to entry for others copying the strategy. If they manage to figure out marketing and distribution, there is a path to success.
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However, from my perspective, it doesn't seem sustainable. I could be completely wrong, and they might be a massive hit, setting a precedent that makes media bundles the status quo.
All of this speculation is part of the fun!
Let’s get to it:
Bee AI , a San Francisco?startup that?is developing a wearable AI assistant designed to learn from and interact with your conversations,?raised a $7 million seed round led by Exor.
Why this is interesting: The AI wearables market is booming. Companies like Friend.com recently went viral for spending over a million dollars on their domain name and developing an AI wearable companion designed to be a real-life friend. In contrast, Bee AI is building a wearable device and app that acts as a digital mirror of your phone, providing access to accounts and notifications. It can read notifications, send reminders, write emails or tweets, and offer shopping suggestions. While this use case is more practical and less of a moonshot idea, venture funds often look for boom-or-bust opportunities. A productivity AI wearable may seem somewhat unoriginal compared to more groundbreaking wearables entering the market, but it may be one of the few that actually generates revenue and an engaged customer base. Anyways, it will be interesting to see who the AI wearable winners are and which companies can generate the venture-scale returns investors are seeking.
Grazzy , an Austin startup that offers a digital tipping platform that enables customers to tip service employees quickly and easily using QR codes, without needing to download an app, raised a $4 million seed round led by Next Coast Ventures.
Why this is interesting: Grazzy's cloud-based solution empowers hourly employees to make more money, access it the same day, and save and spend in better ways. By improving financial wellness for frontline workers, Grazzy reduces retention and recruiting costs for hotels, bars, restaurants, and salons. The extensible payments platform enables digital tipping, instant tip-outs, and banking solutions that scale with hospitality and service businesses of any size. In practice, it operates via a QR code that allows for instant tipping with a credit card or bank account. I think their white-label platform adds a new level of professionalism and couple of nice to have banking features, but from a friction perspective, enough users are on Venmo or Cash App to cover most digital payment needs. I definitely have some concerns about the technology's defensibility, but they are clearly serving a need, as evidenced by growing their customer base 100x in the last year and a half.
Farmblox , a Boston startup that provides an AI-powered platform that helps farmers monitor and manage their crops by using sensors to collect real-time data on soil, weather, and plant health, raised a $2.5 million seed round led by Hyperplane.
Why this is interesting: Farmblox understands that farming is more than just a profession—it's a multigenerational way of life. Unlike typical Silicon Valley approaches, Farmblox respects this tradition by empowering farmers to integrate new technology into their existing systems without any help. The company has developed a solar-powered connected monitor compatible with third-party sensors to track soil moisture levels and reduce water waste more efficiently. This data is fed into an AI-powered automation platform accessible from anywhere. By addressing labor shortages and minimizing the need for manual sensor checks—a task the founder was all too familiar with from his farming days—Farmblox has shown a deep commitment to listening to their customers' unique needs. This approach has paid off, with the company signing on 55 farms in just 18 months. It is not easy selling technology to farmers so this is a friendly reminder to always listen to the buyer!
Deals in the Works:?If you want to learn more - feel free to reach out
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Quote of the week:
"Energy and persistence conquer all things."
— Benjamin Franklin
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Have a great weekend everyone!
This sounds like a fascinating development in the sports streaming landscape. ??