Live and direct: A look across the OTT landscape

Silicon Valley tech giants, traditional media powerhouses, virtual MVPDs, rights holders, budding startups dubbed the ‘Netflix of sports’ – all are jostling for position in a booming OTT streaming sector that is redefining the way sport is distributed and consumed.

Live and direct: A look across the OTT landscape

The rapid and continuing emergence of new over-the-top (OTT) distribution platforms has given rise to an increasingly crowded streaming market, one that is growing larger and yet undoubtedly more intricate by the day.

Across the global landscape of sports media, an already fragmented picture is becoming progressively more pixelated, even if the consumption trends, technological advancements and wider market forces that produce it remain abundantly clear.

Keeping up with the dizzying pace of developments in the global OTT space can be a challenge, to say the least. With viewers shifting in their droves away from pay-TV to digital platforms, a slew of entities have taken to offering video services direct to the end consumer via the internet. Nascent operators now compete with more established players, carving out a competitive advantage by targeting niche sports or underserved demographics. They in turn compete with deep-pocketed media and tech giants, ensuring that the battle lines span multiple markets, devices, platforms, and sports.

Further scrambling the picture is the fact that many OTT services remain a work in progress. Such is the budding nature of the streaming sector as a whole, operators are constantly adding new channels and programming as they license more content, building out their respective offerings whilst securing distribution for their services on more and more devices all the time.

Disney-owned ESPN is set to launch its own OTT service early next year

Disney’s big play sets up US game

These new dynamics are disrupting the media landscapes of many countries and regions, but nowhere is the burgeoning OTT market more voracious than in North America, where the widely publicised pressures weighing upon the traditional cable bundle are aptly encapsulated in the recent moves made by The Walt Disney Company. As the owner of ESPN, America’s most watched and yet most expensive cable channel, the pioneering media conglomerate has long been seen as a microcosm of the pay-TV industry at large.

Forced to adapt to mounting cable subscriber losses and programming costs, coupled with concurrent drops in advertising and affiliate revenues, Disney is investing heavily in OTT content delivery. The company’s major strategic shift into the competitive digital space – headlined by its recent acquisition of BAMTech, the live streaming specialist spun off from Major League Baseball Advanced Media (MLBAM), and the impending launch of new OTT sports and entertainment offerings next year – is in line with a more ambitious strategy in that sector at the House of Mouse, and there can be no denying where Disney’s priorities now lie.

“You have to be willing to either create or experience some disruption as we migrate from what has been a more traditionally distributed world to a more modern, non-traditional distribution world,” Bob Iger, Disney’s chairman and chief executive, said earlier this year. “Some of that we’re going to end up doing to ourselves. We understand that there’s disruption but we believe we have to be a disruptor, too.”

Having paid a further US$1.58 billion to increase its stake in BAMTech to 75 per cent in August, Disney plans to launch its new ESPN-branded OTT offering in early 2018. Powered by BAMTech’s proprietary streaming technology, the service will include around 10,000 live events each year that aren’t offered on ESPN’s linear channels, including sport-specific content from partners such as Major League Baseball (MLB), the National Hockey League (NHL), and Major League Soccer (MLS). It has also been confirmed that Grand Slam tennis and college sports will be available on the service, which will be offered through an updated version of the current ESPN app.

Disney’s shift has come amid similar plays by its main domestic rivals, with 21st Century Fox, NBCUniversal, CBS and Turner Broadcasting System all jostling for position in an OTT sports sector undergoing rampant expansion. Like Disney, each of those companies is plotting the launch of new or enhanced sports streaming apps and services in the near future, all while making their content available outside of traditional cable packages on other internet-based platforms, some of which they have already invested in.

Yet the OTT battleground has advanced to encompass back-end as well as front-end services. In January, for example, Turner and NBC formed a new joint streaming venture in a bid to challenge the market dominance of BAMTech. The two companies are now pooling the resources of Turner’s iStreamPlanet and NBC’s Playmaker Media, creating a combined offering that is helping league and network clients build out their OTT and video-on-demand services.

The NFL is collaborating with OverTier to expand its Game Pass offering in Europe

Emerging forces and MVPDs

A similar situation is found across the Atlantic. As the worlds of OTT and broadcast converge, media companies and established telcos have begun to take a holistic view of the customer proposition in an effort to create a seamless experience for viewers across all devices. In the UK, for instance, pay-TV broadcasters Sky Sports and BT Sport have reshaped their offerings in response to dramatic changes in consumption, with the former now offering standalone single-sport channels and the latter embarking on an OTT distribution strategy that closely aligns live linear TV with social media in a bid to amplify its content.

Elsewhere, Eurosport owner Discovery Communications has teamed up with BAMTech to create BAMTech Europe, a new joint venture that will focus on delivering back-end streaming technology to rights holders, broadcasters and the operators of OTT platforms across Europe. The company’s first partner is Eurosport Digital, the unit which oversees Eurosport Player, a subscription-based direct-to-viewer channel.

But the ongoing assault on the OTT market is, of course, coming from many sides, not only from the big-beast media companies. Further down the broadcasting food chain, emergent services that aggregate content from multiple in-demand networks in the manner of a traditional cable provider have come to the fore. These so-called ‘virtual MVPDs’ have ridden a wave of shifting consumption patterns to enjoy a surge in popularity, and their disruptive impact in North America, which is estimated to command more than 85 per cent of the global OTT market, cannot be overstated.

The EFL’s iFollow platform allows British soccer fans to keep in touch with their team from around the world

If Netflix and its chief rival Amazon have spearheaded the global SVOD revolution, building their successful on-demand streaming businesses chiefly on movies and entertainment, the likes of Hulu, Sony PlayStation Vue, Dish Network’s Sling TV, AT&T’s DirecTV Now and have collectively shaken up the sports media landscape in the US by offering so-called ‘skinny bundles’ that enable consumers to purchase programming on an a la carte basis, thereby stripping out any unwanted channels.

At first glance, these new-age virtual MVPDs resemble long-established, multi-channel pay-TV service providers but their value propositions – underpinned by no fixed-term contracts, careful pricing options and myriad optional add-ons – have fostered an acceleration in uptake. That is a trend that is at once both cause and consequence of the twin phenomena known as ‘cord-cutters’ – households that are dropping their cable subscriptions – and ‘cord-nevers’ – typically younger viewers who have never had cable subscriptions and prefer to piece their premium entertainment together from online services.

As these new services gain traction along with the broader trends that are fuelling their growth, it is clear that the traditional sports broadcasting paradigm has shifted and the certainties of old are being challenged all the time. This is perhaps best illustrated in the creation and continued emergence of Hulu, a virtual MVPD which enjoys the backing of some of America’s most powerful traditional media companies. Part-owned by Disney, 21st Century Fox, Comcast and Turner parent Time Warner, Hulu represents the first and most significant play by America’s leading TV programmers to sell subscription content directly to viewers whilst simultaneously competing with their usual customers, namely the pay-TV distributors.

Hulu’s Live TV service launched in May and now provides streams of more than 50 live and on-demand TV channels covering sports, news and entertainment. Its sports programming comes in the form of HBO’s Showtime, the Red Bull Signature Series, feature-length documentaries, and a range of other content licensed from its various media backers, such as NFL football feeds provided by ESPN, NBC, CBS and Fox.

The Olympic Channel was launched a year ago to build a year-round presence for the Games and dozens of federations have since signed up as content partners

Rights holders take back control

Like other new entrants in the multi-channel marketplace, Hulu offers both rights holders and consumers additional options when it comes to content distribution and consumption. Yet it is also true that rights holders themselves have grown more digitally minded in line with the sports industry’s broader shift towards OTT.

From leagues and federations to individual clubs, the majority of sports organisations now recognise that operating a dedicated OTT service harbours a multitude of benefits, enabling them to carve out greater value from their rights, create new commercial inventory, capture more first-hand consumer data, and better serve their respective audiences through revolutionary technologies. It is that industry-wide acknowledgement that has engendered a proliferation in branded OTT offerings across pretty well every level of the sporting ecosystem.

The International Olympic Committee (IOC), for example, has established the Olympic Channel as a means of engaging audiences, particularly those within a younger demographic, between Games. The number of international federations signed up to create content for the service currently stands at 57 while distribution and production partnerships have been signed with broadcasters in various markets, although there is no one-size-fits-all strategy for every region.

In the US, for example, the service is now offered as a 24/7 linear channel in partnership with Games broadcaster NBC, with BeIN Sports setting up a similar offering in the Middle East and North Africa. Across Europe, Olympic Channel content is being delivered via a more integrated, cross-branded editorial approach that draws on the reach and expertise of incoming Olympic TV partner Eurosport and Discovery.

Meanwhile the Women’s Tennis Association (WTA), the European Handball Federation (EHF), the English Football League (EFL) and Fina, the global governing body for aquatic sports, have all recently added their names to the growing list of organisations to launch their own OTT platforms, setting up the Perform-powered WTA TV, the Sportradar-backed ehfTV, the NeuLion-built iFollow service and the Deltatre-supported FINAtv respectively. All of those platforms are intended to flesh out the coverage available through traditional broadcasters, reaching underserved fans and those in underserved markets while also establishing a more direct relationship with a fragmented global audience.

The National Football League’s (NFL) Game Pass subscription service has fulfilled a similar function within the US in recent years. That is now being aggressively expanded throughout Europe under the auspices of OverTier, a joint venture created by Bruin Sports Capital and WPP. 

Among clubs, too, a similar shift is taking place – in February, for instance, Premier League giants Manchester United underlined their global appeal and an already sophisticated media mindset by rolling out their MUTV app as an OTT subscription service in 165 countries around the world.

For the giants of tech and social media, meanwhile, the streaming of premium live sport has become a key differentiator, not least since each company remains intent on positioning video at the heart of their businesses. Indeed, some of the biggest and most powerful players in the digital media space have stepped up their pursuit of the compelling, advertiser-friendly, appointment-to-view programming sport provides, albeit by employing ostensibly differing approaches.

The WTA, in partnership with Perform, has launched its own in-house OTT service

The tech giants circle

Having been tooling up its video capabilities with an eye on sport for some time, Amazon’s long-awaited move into live streaming came in April, when it acquired the global rights to the NFL’s Thursday night games for the current season. Since then, the Seattle-based firm has taken the global rights to the new ATP NextGen tournament for elite young men’s tennis players, reportedly secured UK rights to the ATP World Tour, added Discovery’s Eurosport Player to its new Amazon Channels streaming platform, and picked up the audio rights to Bundesliga soccer in Germany.

To date, Amazon has kept its sports streaming cards close to its chest. Earlier this year, for example, it purchased an invitation to tender for cricket’s Indian Premier League (IPL) but then sat out a bidding race that eventually saw Star India pay just over US$2.5 billion for the full package of global rights over five years.

But it is clear that the company will be – and indeed already is – a force to be reckoned with across the entire OTT value chain. As well as licensing content directly from rights holders – rumours of a long-mooted, potentially landscape-altering bid for live Premier League rights in the UK continue to swirl ahead of the award of a new three-year cycle early next year – it also provides access to hundreds of linear channels and other OTT offerings through its Amazon Fire TV service, Fire tablets and Prime Video app.

Clearly, Amazon is only beginning to scratch the surface when it comes to its OTT capabilities. The company’s scope is arguably unmatched across e-commerce and retail, cloud computing and data measurement, and how live sports streaming fits within its sprawling array of services will be closely monitored in the months to come.

“We’re definitely looking at opportunities that make sense for us that we think our customers would love,” Rich Au, the director of Amazon Channels in the US, said recently. “What I’ll say is, don’t believe everything you read, unfortunately. But it’s an exciting space for us because we feel like we can help grow sports with many of the opportunities we’re looking at.”

Elsewhere Facebook has aggressively stepped up its pursuit of live and on-demand sports rights as a way of building out its new Watch video feature, which it rolled out to a limited number of US users in August, and further growing its lucrative advertising business. Sports programming available upon Watch’s launch included MLB games, WNBA All-Access, streams of Mexican soccer’s Liga MX, and Golden State Warriors’ ‘Championship Rewind’, a documentary that looks back at the team’s championship-winning 2016/17 NBA season. Unlike Amazon, Facebook did show its hand in the recent IPL contest, bidding Rs3,900 crore (US$608.6 million) for the digital rights to the tournament.

Amazon has made a strong play in men’s tennis, taking the global rights to the new ATP NextGen tournament as well as, reportedly, the UK rights to the ATP World Tour

Like Facebook, Twitter has long viewed itself as a ‘video-first’ platform, which has inevitably led it towards sport in similar fashion, while Google’s YouTube TV – a US$35-a-month, MVPD-style subscription service – hit the US market in April with an initial batch of sports programming from the likes of ESPN and NBC, as well as optional add-on networks such as Showtime and Fox Soccer Plus.

Generally speaking, these tech players have both the will and the financial means to disrupt the media landscape in virtually any market they please, but they are not alone. Other well-heeled, digitally native streaming startups are approaching the OTT market from an international vantage point.

Multi-sport services like Perform Group’s DAZN and Eleven Sports, established in 2015 by MP & Silva co-founder Andrea Radrizzani, have entered select markets around the world, taking a deliberately localised approach to rights acquisitions, production and distribution as they join the race to become the ‘Netflix of sports’. Another player taking a similar approach is Sportsfix, a subsidiary of the Total Sports Asia (TSA) agency whose service went live in July and now delivers live streams of lower-tier sports to mobile users across south-east Asia.

As each of these services vies for a foothold in the marketplace, it is clear that the booming OTT sports industry remains some way off consolidation. It is clear, too, that the chosen strategies and geographies and business models vary greatly from one service to the next, but what unites them all is a simple conviction: the landscape of sports media is changing, and a market in flux is one ripe for exploitation.

This feature initially appeared in issue 96 of SportsPro Magazine. Click here to find out more information, to subscribe, or to purchase back issues.