The economics of sports streaming, and why fans now need five subscriptions, a VPN, and an ad-blocker just to watch a ballgame.

By: Connor Ni

Edited by: Jennifer Zhang

In late 2025, to many sports fans’ dismay, authorities in Egypt and the United States coordinated a major operation that shut down Streameast. Streameast was one of the largest illegal sports streaming networks in the world, allowing viewers to watch live sports free of cost. However, there are still many spin-off sites and copycats of Streameast that keep the illegal sports streaming industry alive. Illegal sports streaming has become one of the fastest growing shadow markets in digital media. Tens of millions of viewers now rely on unauthorized streams to watch sporting events. This trend, usually described as a legal or technological problem, is better understood as an economic one. When pricing, market structure, and consumer incentives interact in a way that fails to align value with access, a predictable substitution effect emerges. Illegal streaming fills the gap between what sports broadcasters charge and what many consumers are willing or able to pay. 

The economics of illegal sports streaming cannot be understood without examining the market structure of sports broadcasting. Each major league sells exclusive media rights to a limited set of broadcasters and streaming platforms, which creates a series of quasi-monopoly positions across different segments of the market. S&P-Global estimates that U.S. TV and streaming sports-media rights payments will total $29.25 billion in 2025 and grow from $14.64 billion in 2015 to over $37 billion by 2030, thereby underscoring how concentrated and high-value these exclusive rights are. 

This growing rights cost has two important implications for consumers and the broader market. First, because supply is restricted (few platforms get the rights) and exclusivity is enforced, broadcasters have significant power to set prices above competitive levels. This is not a pure monopoly in the textbook sense, since there are substitute sports and streaming platforms, but it is sufficient to allow cost pass-through. 

Higher rights costs also increase the subscription or access price for consumers. The cost of allowing one more person to watch a livestream is nearly zero once the broadcast infrastructure is already established, which is good for their margins. As an academic paper explains, matches are already staged for a live audience so the incremental cost of televising them is very low. Because broadcasters must recoup multi-billion dollar contracts, they raise prices, reducing the consumer surplus for all but the most committed viewers. 

The demand side of the market is key. Hardcore fans may have relatively inelastic demand: they value games highly and will pay. Casual or moderately interested viewers are far more price sensitive. When the total cost of legal access rises, these marginal viewers may drop out of the legal market entirely or seek alternatives. In the U.S., piracy rates are strikingly high. Ampere Research finds that nearly 70% of American sports fans pirate live sports at least once per month, making the U.S. one of the world’s most active markets for illegal sports streaming, citing cost, convenience and number of subscriptions as primary reasons. High rights costs therefore place pressure on the “stacking” of subscriptions: a fan may need multiple services to follow different leagues or teams, which raises their total cost.

This fragmentation matters. When rights are divided across many platforms, each with exclusive windows, the consumer must subscribe to several platforms or forgo full access. A 2025 PwC report estimates U.S. live sports rights value at about $28 billion and notes that digital streaming and fragmentation leave the regional sports network model vulnerable. This fragmentation prevents efficient bundling: ideally a single bundle would serve most fans, but exclusive deals force many separate purchases.

These structural conditions mean that piracy is not simply a reaction to high prices, but a predictable consequence of the way media rights markets are allocated and monetised. When legal consumption requires multiple subscriptions and when networks rely on concentrated market power to pass costs forward, many viewers will seek alternatives that better match their valuation. Illegal streaming therefore reflects a rational consumer response to the pricing and access design choices made by leagues and broadcasters. 

I believe this fragmented system persists because every major actor faces incentives that reinforce the status quo, even though the collective outcome is welfare-reducing. Leagues maximize revenue by selling exclusive packages to the highest bidders, broadcasters protect their territorial rights to maintain bargaining leverage, and no firm has a reason to sacrifice short-term monopoly rents for long-term market efficiency. This creates a coordination failure in which no single party can unilaterally shift toward a unified access model, even though such a model would lower prices, expand viewership, and reduce piracy.

The market persists in this inefficient equilibrium because every actor has incentives that reinforce fragmentation. Leagues maximize revenue through exclusive deals, broadcasters protect their territories, and consumers bear the coordination cost.

This incentive structure gets more complicated when broadcasters seek to implement third-degree price discrimination by offering different tiers of access (full-season packages, team-specific subscriptions, monthly passes) so that consumers with higher willingness to pay contribute more. However, in the sports-broadcasting ecosystem, fragmentation across regional, national and league-wide rights undermines the effectiveness of this strategy. Fans often must purchase multiple subscriptions to gain full access: for instance a regional sports network, a national broadcaster and a league pass service. A recent poll found that about 40% of people who follow sports “extremely” or “very” closely rely on both cable or satellite and a sports-only streaming service because no single platform offers full coverage. 

NBA League Pass explicitly lists blackout rules in the U.S. and Canada: local games and nationally-broad-cast games may be unavailable live through the service because rights are held by other networks. Blackout rules dictate which games you are able to watch live depending on where you live via local TV networking rights. They reduce the value of the product and increase effective cost relative to willingness to pay. The mismatch between price and value lowers consumer surplus and pushes moderate-valuation viewers to the margin.

From the demand perspective, the high elasticity of consumer behavior plays a major role in pushing viewers to illegal streaming. Digital media has a multitude of substitutions that can be turned to with relative ease, and considering there is a free alternative it can be very tempting. A report finds that among fans who watch sports, up to 83% access illegal streams weekly, indicating a willingness to substitute away from paid services when legal access becomes too costly. The same study reports that 47% of the lowest-income fans said they “did not want to pay anything” when they first turned to illegal services, illustrating how highly elastic demand is for viewers with limited disposable income.

The existence of a zero-price substitute radically alters the demand curve: consumers who face legal price above their valuation see piracy as restoring utility. The marginal cost of the pirate stream is practically zero; thus, the decision depends on the utility gap created by legal access failures, not moral or legal considerations alone.

The global sports industry is estimated to lose up to $28 billion annually in potential revenue because of piracy. While this figure aggregates many markets, it underscores the scale of unmonetized viewing hours and the consequent loss of advertising and subscription revenue for rights holders and broadcasters. Broadcasters operate a multi-sided market, where value depends on jointly attracting subscribers and advertisers. Piracy reduces the measurable audience on the advertising side, which in turn reduces the revenue that can subsidize subscription prices. The two-sided structure perpetuates the welfare loss because the reduction in one side (advertising) increases prices on the other (subscriptions). This cycle where declining advertisement revenue creates the need for higher prices, which likely lowers viewership, which then leads to more pressure on advertisement revenue. 

The firm MUSO reports that in January 2019 alone, there were 362.7 million visits to sports piracy websites, highlighting the magnitude of the unaccounted audience. Lost viewership directly undermines broadcasters’ ability to monetize content via ads and subscription bundles: each viewer lost is a marginal revenue stream foregone.

Live sports rights rely on the assumption that the product is unique, real-time, and must-watch. Illegal streams challenge that assumption by offering essentially the same live content – though non-official – at zero cost. This diminishes the scarcity value of authorised live content.

Live sports depend heavily on measurable viewership for advertising revenue. When fans watch illegally, they are not captured in ratings data. A 2023 survey found that 35% of NFL fans regularly pirate games, indicating a large share of unmonetized viewers. A separate study reported that nearly one third of surveyed football fans say they regularly watch pirated live NFL games. For broadcasters who pay billions in rights fees, every uncounted viewer reduces their ability to price ads effectively. This is especially harmful in sports, where advertising rates depend directly on verified audience size.

The value of media-rights deals depends on exclusivity and predictable audience capture. Piracy weakens both. The NBA’s recent media-rights agreement illustrates the risk: ESPN, NBC and Amazon together are committing about $76 billion over 11 years for national NBA rights.

Because broadcasters must recoup these massive costs through subscriptions and advertising, high piracy rates threaten the economics of such deals. If illegal streaming continues to siphon off a substantial share of viewers, future bidders may either reduce the size of their offers or demand new contractual protections. This affects league revenues directly, since media-rights money determines team payrolls, revenue sharing, and long-term financial planning. Fragmented rights already make it challenging for national networks, regional sports networks (RSNs), and digital services to maintain stable subscription bases. Illegal streaming accelerates this instability.

On the consumer side, an analysis shows that fans may need to pay about $250 extra per year on top of a cable subscription to access all national NBA games through Prime Video and Peacock. 

High legal costs create an incentive for viewers, especially younger or lower-income fans, to shift to illegal alternatives, undermining broadcasters’ pricing power. Illegal sports streaming reflects a clear market failure because the legal market does not provide access in a way that aligns with consumer preferences, willingness to pay, or efficient allocation. Exclusive licensing fragments complementary goods across regional networks, national broadcasters, and league-wide services. The NFL portrays this perfectly. To access all NFL games, football fans need a combination of local services, national broadcasts, and an additional Sunday Ticket package. This forces consumers to purchase several incomplete bundles to follow a single team or league. Surveys show about 60% of dedicated sports fans rely on both cable and streaming services because no single provider offers full access. When complementary goods are separated and priced individually, the combined legal cost rises above what many consumers are willing to pay, reducing consumer surplus and leaving demand unmet. 

This structure pushes the legal market price above equilibrium levels. Consumers who would purchase a unified and reasonably priced bundle instead face multiple subscriptions, blackout rules, and inconsistent coverage. Because the marginal cost of serving an additional legal viewer is close to zero, the fragmented and high-priced structure creates deadweight loss: consumers who value the product are priced out. Illegal streaming fills this gap by offering a complete, bundled product at a price of zero, restoring access that the legal market fails to provide. The existence of a large black market supplying the product more efficiently than the legal market indicates that the legal market is not operating at a welfare-maximising level. The current model generates deadweight loss because consumers with positive willingness-to-pay for sports content are priced out of the legal market. Illegal streaming partially restores consumer surplus, but in a way that produces negative externalities for producers. The market therefore fails on both efficiency and equity dimensions.

The long-term consequences reflect this failure. Broadcasters pay billions for rights based on assumptions of exclusivity and monetisable viewership, but piracy siphons off a significant share of the audience, weakening the foundation of rights deals. High enforcement costs, declining regional network stability, and erosion of live-content scarcity further reduce the system’s efficiency. Illegal streaming therefore emerges not as an isolated legal issue but as evidence that the current sports broadcasting model fails to deliver an efficient, accessible, and appropriately priced product.

I believe that initially, most viewers would not have relied on illegal straming sites. However, with the difficulties in access, many viewers were pushed toward illegal streaming sites. Once users become accustomed to these platforms, the shift is difficult to reverse.