The National Basketball Association (“NBA”) has partnered with NextVR, a leading broadcaster of live events in virtual reality, to offer fans an immersive game-watching experience that allows them to feel like they have front row seats from the comfort of their own home. Launched for the 2016/17 season, the NBA is the first major American sports league to offer a series of scheduled games via this distribution method. In order to tune in to the limited selection of games, fans must obtain compatible VR-enabled hardware – the NBA VR broadcasts currently work on the Samsung Gear and Google Daydream View –, download the NextVR app, and purchase a subscription or single-game via NBA League Pass. While the initiative is still limited in scale and subject to technical resolution and blackout issues, initial reviews of the experience are positive. If the NBA can get the VR formula right, it has the opportunity to add additional revenue streams to its current profit formula in the form of content and advertising sales that can potentially stem the losses caused by cable subscription declines.
Compared to other sports, basketball is uniquely positioned to translate nicely to a VR experience. Basketball courts represent one of the smaller playing areas compared to other major sports like American football and soccer and the ten players are typically concentrated in the same 50% of the court at any given time, meaning that it is easier to capture all the action with VR-enabled equipment. Additionally, the NBA is the only professional American sport in which some fans sit right on the playing surface as opposed to being restricted by glass (i.e. in the NHL) or fences (i.e. in the MLB), translating to an unparalleled experience in which you see every play and hear every whistle. Thus, courtside seats are some of the most sought-after tickets in sports and entertainment, with an average face value of ~$2,500, increasing to an absurd $60,000 for some playoff games.  Finally, seeing these seven-foot-plus specimens up close is truly incredible when compared to professional soccer, baseball, and football players who average 6’1”, 5’11”, and 6’1”, respectively.
Therefore, experiencing an NBA game from a virtual courtside seat is a uniquely compelling value proposition for fans. It allows them to feel like they are in an NBA game regardless of whether they are out of town or cannot afford an expensive seat. By producing the VR product in a similar way games are currently produced for 2D viewing, VR fans do not miss any of the content they are used to in terms of commentating, player statistics, replays, and clock tracking. Additionally, because of NextVR’s unique technology, “the players are lifelike, and the edges of the video don’t distort.” These factors create immense value for the discerning NBA fan. To summarize in the words of one reporter, “I wasn’t sitting in a posh courtside seat at Madison Square Garden, with Anthony’s derriere obstructing my view—though I may as well have been.”
The NBA’s main revenue source for VR games is consumers’ NBA League Pass subscriptions for $200 per season or a-la-carte game purchases for $7 each. Viewership figures have not been disclosed but are likely quite small at this point. Thus, more than dollars, the NBA’s main payoff for this initiative in the near term is solidifying a reputation for cutting edge content distribution and gaining the chance to test this form of content distribution with fans. If broader VR technology adoption continues to grow, the NBA will be in a strong position to monetize via game access fees and advertising. If this segment reaches big enough scale, the NBA could even consider selling its digital VR rights to a third-party distributor, like what the league currently does with its television rights.
In the short term, the NBA’s VR capabilities are currently limited by the pace of technological improvements. The resolution is not perfect which may adversely impact fans’ interest in watching via this medium. Additionally, it is unknown whether watching an entire two-hour game via VR is either healthy or enjoyable for one’s brain.
Assuming these obstacles are eventually overcome, the NBA has the opportunity expand its VR offering beyond one game per week. It could even offer broader content than just games, such as behind-the-scenes practice access or virtual tickets to the all-star game. More than increasing the content offered on the VR platform, advancements in this field could also allow the NBA to increase its global audience. Avid NBA fans exist across the world, particularly in China, and once the NBA VR offering is refined, the league could sell virtual season tickets to monetize games beyond the ~20,000 stadium seat tickets.
Finally, one of the core arguments against VR experiences is that the joy of attending an event lies in sharing it with friends. This point is well taken – how many times have you bought a single ticket to a game rather than attended with a buddy or partner? Thus, I would recommend that the NBA, in partnership with NextVR, consider building in some sort of chat or community function into the VR viewing experience. This would increase the stickiness of the platform and potentially drive network effects such that fans whose friends are viewing NBA VR content feel compelled to do so as well.