Understanding a constantly evolving media landscape is not the work of a moment, nor is it straightforward making sense of shifting consumption habits in today’s increasingly connected, omni-platform world. With a growing number of rights holders, broadcasters and distribution platforms clamouring for rights, reach and revenues, working out how best to value and optimise content can be an altogether daunting task.
Enter Octagon. Earlier this month the international sports marketing agency, which is owned by advertising giant Interpublic Group (IPG), announced the creation of its new global media rights advisory practice, Octagon Media Rights Consulting. Operating out of Octagon’s New York office, the new unit is headed up by Daniel Cohen, an experienced media executive who most recently served as MP & Silva’s senior vice president of Americas, and who is now reporting to the company’s chief strategy officer, Simon Wardle.
At a time when the world of sports media is undergoing profound change, the division has been set up to provide strategic consultation to major domestic and international rights holders, as well as broadcasters, nascent distribution platforms and the sports investment community. Drawing on Octagon’s worldwide network of 50 offices and technology provided by its sister company Futures Sport + Entertainment, the international research and consulting business, Octagon Media Rights Consulting will ‘advise clients on the valuation and optimisation of content assets across linear TV, digital and over-the-top (OTT) platforms’.
A fortnight after this month's launch, which marks Octagon’s return to the media rights sector after a decade-long hiatus, SportsPro caught up with Cohen and Wardle to discuss their ambitions for the new unit, the shifting nature of the global sports rights marketplace, and the trends and opportunities to come.
SportsPro: Why is now an opportune moment for Octagon to launch a global media rights consulting practice?
SW: Life is getting complicated. Through our traditional corporate consulting experience we know that brands are struggling to keep up with what is an incredibly rapidly evolving media landscape, and I think the same is true of rights holders and, to a large degree, the media industry.
You just need to look at what the NFL is doing with their Thursday night games to see that they’re using the real world as their test laboratory to try and figure out what is happening and how fans are feeding their passion in this world of choice in which we live.
It seemed a natural extension of our corporate consulting experience to integrate our sports marketing expertise with some media expertise, which is why we brought Daniel on board to head up this practice, and then also fold in some of the unique and rich media data that we have available to us by being part of the IPG group.
In addition to my role as chief strategy officer at Octagon, I’m also president of Futures Sport + Entertainment. Organically, Futures has received a number of requests from rights holders that they work with, trying to help them understand the value of their content and how best to package their content across a world that’s increasingly less linear broadcast-centric and increasingly cross-platform.
I think there are a number of market factors, all of which appear to be very dynamic and exponentially increasing in terms of options available, no matter where you are in the sports media ecosystem. It seemed like a natural opportunity to help bring method to some of that madness.
What are the nuts and bolts of the practice, in terms of personnel, structure, geography, projected growth in client base, etc?
SW: Clearly Octagon’s consulting business has been focused very much on sports marketing and corporate consulting from a sponsorship perspective, which is why we felt it was important to get an industry veteran in who has a deep understanding of media, both from a linear broadcast but also an emerging digital and various new and formulating distribution platforms. That was the reason for hiring Daniel.
We’re also bringing on a lead analyst, working with Daniel, in the next two or three weeks, who has extensive experience in the digital sports distribution world. As we continue to evolve the practice, it will be to some degree shaped by where we get traction within the industry in terms of what types of expertise we need to bring to the practice to build on the existing data and analytics and industry perspective we will have.
I really understood what these leagues and rights holders were looking for, which is more data, more technology, more analysis.
You’ve identified numerous types of stakeholders as prospective clients, but you haven’t mentioned any names. Are you able to say who you’re working with initially?
SW: This wasn't a practice that we launched with a couple clients in hand; this was very much a practice that we launched based on this sense that there was a need in the market. It’s interesting that we started literally from square one, and in about two and a half weeks the conversations that we’ve been having and are progressing are illustrative of the different types of stakeholders that potentially will be interested in taking advantage of our services.
Just within the past week and a half we’ve been having discussions with Asian investments bankers, with a Latin American league, a European telco, and a Caribbean OTT offering. Those are some of the enquiries that have come in as a result of people who want to learn what we’re doing and how we can help them. It’s been gratifying that the last two weeks have indeed generated interest across what we felt was a wide portfolio of potential clients for this practice.
Daniel, how would you reflect on those discussions over the past couple of weeks, and what particularly attracted you to this role?
DC: A lot of things. Firstly, in all honesty - and not to sugarcoat it - it started with the people. Anytime that you’re going to be looking at a heavy slog like launching a new business unit or a new business, you have to make sure that you’re in the trenches with the right people. And that those people also not only are smart, adequate and complimentary, but also that they’re committed and good people to be around.
That was number one for me and then from a commercial perspective, coming from a space where buying and selling media rights is a core focus, now shifting that core focus to the advisory side of the media rights landscape, I really understood what these leagues and rights holders were looking for, which is more data, more technology, more analysis.
We’ve certainly shifted from the days of, 'I’m going to hire my pal who has a friend at a linear broadcast platform and we’ll get a deal done.' Now you really have leagues and teams with very adequate professionals who can interpret data and analytics, and actually want to roll up their sleeves and do a bit on their own but also see the value of bringing on the trained experts to help them learn how to do this piece of the business.
It’s certainly not an afterthought now; it’s probably a conversation lead. When you look at the strength of a company like Octagon, as Simon mentioned before, IPG and its holdings - companies like Futures that invest the proprietary data and research and analytics, and a global team dedicated to the business - really is unmatched if you look at the other agencies or the other individuals that are in this media consulting space.
That was a key differentiator for me, [and also] the fact that Octagon has a really strong and emerging group in content creation and production. That was probably built out of a necessity for sponsors to want to activate through video content and digital content and VR content.
It would be nice to talk to these rights holders and say, first of all, ’Hey, I think you have a gap in some of your offerings. You could be offering more of this type of content, whether that be long-form or shoulder programming or short, virally-made social. We can help you make that and produce that content for you, just as another nice-to-have if that were ever in need.’
The global network: there are 800 employees at Octagon across more than 50 offices in 20 countries. The network that Octagon possesses is truly global and really well connected, and I think that will help the exposure piece, trying to increase exposure, not just revenue, for these content creators.
To what extent will there be crossover between this new media rights consulting unit and Octagon’s athlete management business, particularly given the majority of top athletes have long considered themselves content creators?
SW: Clearly social media and the ability for athletes to go direct to consumers is part of this rapidly evolving media landscape. I think one of the key things for this practice is to help both rights holders and media companies understand exactly how fans are using these different content distribution platforms to feed their passions and connect with the things they care passionately about, be it leagues, teams or increasingly the athletes through social media.
It’s definitely going to be a part of the suite of services that we offer, sharing those insights with our athletes and personalities.
Eventually you’ll start to see assimilation between the different offerings because the market will just dictate which ones survive and which ones don’t.
We’re seeing the streaming market, particularly in the US, becoming increasingly crowded, with many of the major media companies - CBS, NBC, Disney, Turner, etc - investing greater resources in OTT platforms and new players entering the space. Is this trend unique to the US, where cord-cutting continues to take hold, or are these plays illustrative of where media is heading on a global level?
DC: What’s really exciting about this new business unit is we’re not going to be fenced in by any specific geography. Each region and each country watch, interact and engage with sports content in different ways. You’re right, it is becoming quite a complex and congested space with the direct-to-consumer OTTs, the skinny bundles that are being offered.
In the US marketplace in particular, you’re going to see this arms race continue, I think, for the next three to five years. Eventually you’ll start to see then assimilation between the different offerings because the market will just dictate which ones survive and which ones don’t.
I’m equally interested in some of the emerging markets that you start to see the connectivity increase. You watch pay-TV grow, you watch broadband connectivity grow, and when you see the two growing - or even just one of the two - you’re going to see a shift in the consumption habits.
For example, if you look at Mexico, I think they just launched their first-ever ‘Netflix of sports’, Sportflix. You’re seeing Claro, who were a digital-first entrant, buy up all of the Olympic rights, which was quite controversial and shook up the market just a few years ago.
You look at Eleven Sports, as an example, just to give a plug to a former MP & Silva guy, Andrea Radrizzani. It’s been fascinating that in some markets he’s gone linear-first, in some markets he’s gone digital-first, and a lot of that is based on availability but also just the data behind that. In Italy, for example, it’s a digital-only offering and they’re winning some really interesting rights.
I think the formatting of content is also going to shift. You’re seeing a generation that has a propensity to watch just as much but also many different things in different forms. It is a really interesting time for all these different offerings to come out because now it’s about being everywhere, anytime, it’s all about mobile first, and then it’s about formatting that content and speaking to the audience in the way that they want to watch it.
What do you make of this oft-talked about notion of a ‘Netflix of sports’ - one single sports streaming service for the global marketplace? Perform’s DAZN service appears to have come closer than anybody to creating one, but only in a handful of markets and with limited sets of rights. Given the increasingly fragmented, localised and contractually entwined nature of the live sports rights marketplace, is a truly global Netflix-style offering for sport a realistic proposition or is it, in reality, a pipe dream?
DC: Firstly, I always find it funny that everyone calls it the ‘Netflix of sports’ when it’s really not Netflix. Netflix is only VOD. I’m so impressed with the DAZN group and how aggressively they’ve entered the market, but if Netflix were to enter the live streaming market then yes, they could definitely call it the ‘Netflix of sports’.
I’m bullish on it, personally, because you see the hoards of cash that Facebook has, for example. Their current model would not withstand a sustainable long-term rights cycle. Show me a linear channel that’s ever been an ad-supported business and succeeded; you need to be based on the foundational element of subscribers.
Perhaps Facebook is moving in that direction but I think the model that DAZN and others have created, where it’s a sub-let, ad-supported model, is truly the best way to move forward with a digital offering. Now, I say that and Facebook could go out and get World Cup rights, and so everyone would go watch it, they’ll be able to charge a ridiculous amount on the ad side and they’ll probably be sustainable.
So it’s a mixture, right: you have to have the right content that drives audience, coupled with the right business model that puts you in a long-term and sustainable future path.
I think you’re going to see a lot of new technology emerge that really puts the fan in a new seat, and that seat is not necessarily in the stadium.
Is finding that viable means of monetisation the key to all of this? It’s perhaps notable that many of the soon-to-launch OTT services in the US have yet to reveal their pricing plans. Beyond the actual content on offer, is pricing ultimately going to be the determining factor in the success of these direct to consumer offerings?
DC: My thoughts on that are it’s content first, pricing second. Content, if it’s worth anything and it has a large enough following, people will pay for it. Then you get to the point of, well what is the threshold that people are willing to pay?
Already what you’ve seen is the market has created the spectrum of cost, so nothing is really less than US$4.99, US$5.99 a month and nothing is really greater than US$12.99, US$14.99 at the higher end. So you know already where the spectrum is, where you have to fall in, and now a lot of these newly launched, yet-to-be-priced products are going out and testing the market on advertisers and doing some of their own research and surveys to see what the market can bear. That will ultimately lead them to what that price can be.
Lastly, what trends and/or companies are you watching with interest right now in sports media? And you’re not allowed to say Amazon…
SW: I think it’s interesting, there was the Tencent news today about their NFL distribution. The world is getting smaller and technology is enabling that access, which has historically held back sports interest as we start thinking about sport as a global platform and the importance of live sports.
It could be interesting to see some of these overseas players potentially using live sports as a beachhead into the US market or the UK market or European markets. You just have to look back 15 or 20 years to see what Rupert Murdoch did on the back on the power of live sports to drive subscriptions, and I would imagine that we’re going to probably see something similar in the future.
DC: I completely agree with Simon. From a distributor standpoint, everything Simon said makes sense. It’s really interesting to see Apple come out the other day and say - it’s not in sport - but they are going to make a billion-dollar commitment to programming. What Google may or may not do has always been fun to watch.
I think when you’re flipping it and you’re looking at the consumption side of things, I think the interactivity that the next generation of fan is going to want, and also come to expect, is pretty interesting. So looking at AR and VR is really interesting, some of these companies, whether it be Oculus or Livelike, that are doing things in the VR space. There are new leagues now being launched where fans can make the decision on whether or not a player should sit, start, pass, run. That might be an extreme but I think you’re going to see a lot of new technology emerge that really puts the fan in a new seat, and that seat is not necessarily in the stadium.
Personally, as a fan but also as someone in the industry, I’m really excited to see how these new technologies come and change the way that fans watch and interact with their favourite sports.
Cohen and Wardle were speaking to SportsPro's Americas editor, Michael Long.