YouTube announced today that it is in talks with the National Basketball Association and the National Hockey League to show live, streaming games on its site.  According to Gautam Anand, Google’s Director of Content Partnerships for Asia Pacific, Google is in talks with “most pro sports leagues” including the NBA and NHL, and European soccer leagues.

Such a deal would drive viewers to YouTube and generate significant ad revenue for Google.  It’s likely that any partnership with a sports league would involve an ad revenue sharing agreement with Google, bringing additional revenue to sports leagues as well.

But there will be several big losers if YouTube wins the rights to stream live sports.  TV networks pay sports leagues millions of dollars a year for rights to broadcast games.  In 2002, TNT signed a $2.2 billion, 6 year contract to show NBA games, for example.  If live games were available for free over YouTube, TV networks would likely see ad revenue decrease.

Cable TV providers might have the most to lose if YouTube wins rights to show live sports.  A growing number of subscribers are already ditching cable TV in favor of less expensive video streaming options like Hulu and Netflix, or video download services such as Apple’s iTunes.  A significant percentage of TV shows are now available online, which can eliminate the need for a separate cable TV subscription for many viewers.

But so far, live sports broadcasts have been a key differentiator for cable.  I, for one, would have cancelled my cable TV subscription a long time ago, if not for live sports broadcast in HD via Comcast cable.  But if YouTube is able to bring live streaming sports in HD to my computer, connected TV or Google TV, I would gladly cancel my $100 plus a month cable subscription in a second.

Some leagues currently broadcast games online or on mobile devices.  Major League Baseball’s MLB.TV service, for example, streams most games live over the Internet.  However, MLB.TV is expensive at $120 a year for the premium package, a key barrier that reduces the attractiveness of the service.

At this point it’s not clear how close Google is to securing rights to broadcast NBA and NHL games.  In fact, a spokesman for the NHL has denied that the league is in talks with Google.  Additionally, Google made no mention of MLB or the NFL, not to mention college sports, which could prevent customers from ditching their cable TV subscription.

Still, I have the feeling that live streaming sports online is a “not if, but when” proposition.  With an NFL lockout looming and the NBA collective bargaining agreement set to expire soon, it’s clear that team owners and leagues are scrambling to find new sources of revenue.  YouTube is an excellent platform for live sports broadcasts that could provide owners with a new income stream – imagine a future where leagues sell both broadcast and online rights to content.  We’ll see how this plays out over the next few months, but I wouldn’t be surprised if this is a watershed moment for the television industry, and perhaps the beginning of the end of cable TV.

Source:  Bloomberg