We have all heard by now how the pandemic has accelerated the transformation of many industries, and unsurprisingly the sports over-the-top (OTT) and streaming world is no exception.
Digital transformation is an unrelenting process. It’s one of the reasons we launched the StreamTime Podcast last month and even the OTT Summit four years ago – to start working through what’s next for our industry after a period in which we’ve seen, learnt and experienced so much.
Ahead of this year’s edition of the summit, here are 15 things (I think) we’ve learnt about the future of sports broadcasting and consumption:
1. It turns out the ‘big boys’ weren’t hiding in a ditch somewhere waiting for all these new streaming players to flood the market and steal market share (sorry, DAZN). In the past 18 months alone, near on every major US broadcaster has launched an OTT platform, or acquired one. Every day looks more like business as usual, just on a slightly different medium.
2. To everyone’s shock, the Netflix business model isn’t the one of the future. There are next to no examples I’m aware of in our industry that have ‘made this work’. It looks like the roadmap to success is simple yet much more complicated: a) you must have a diversified business model built around driving overall ARPU, b) a hybrid subscription and advertising model, and c) incorporate it into a much wider digital strategy. It’s not the silver bullet that was hoped, at least not yet.
3. Going DTC (or the threat of) is now a key negotiating tactic for tier one sports. Several soccer leagues are using the threat of going OTT and launching in select markets as a key negotiation tool, and it’s working. Andreas Heyden, the chief executive of DFL Digital Sports, the Bundesliga’s digital arm, talks about it on this episode of the StreamTime Podcast where the Bundesliga has built a platform that is ready to roll out in any market, as and when the numbers don’t incentivise the league enough to do a deal with the domestic broadcaster. In simple terms, it just adds another potential competitor to drive up rights values. Even leagues like the Israeli Premier League have put this into practice successfully.
The DFL’s Andreas Heyden recently told the StreamTime Podcast that the Bundesliga Pass can be launched in any given territory “within weeks”
4. Tier one sports are still the holy grail for major broadcasters, particularly in the US, where National Football League (NFL) games account for 23 of the top 25 shows, and about half of the top 100 are sports. The ratings dip we saw during the pandemic, which sparked all sorts of fear and doom mongering, may have been exacerbated courtesy of some flawed ratings reporting.
5. The problem with live sports? It doesn’t keep fans long term. They’re quite prepared to churn once their live events of choice are on a break. It turns out using events to market and sell can also lead to people leaving in similar fashion. During an interview at our OTT Summit USA event in March, FuboTV chief executive David Gandler told me that their business motto is ‘come for the sports, stay for the entertainment’. This trend is consistent with the entire OTT subscription landscape and supplementing live sports with alternative content is critical to keep subscribers for the long term.
6. Going DTC isn’t necessarily the only way. This year the industry was caught by surprise when the WWE agreed a five-year, US$1 billion deal with NBC to shutdown its OTT app in the US and move it to Peacock, NBC’s new streaming service. The PGA Tour made a similar move in 2020, shifting its PGA Tour Live platform into ESPN+. Whilst we’re all hearing the importance of the value of first-party data, it turns out everything has a price, even if it means tearing down an audience or platform you’ve spent a decade building.
7. OTT-first broadcasters are having to go linear to make the rights pay, and to get deals done, just as we’ve seen with DAZN in Germany and Eleven Sports in Poland. This is for a variety of reasons. Sometimes it’s an opportunity, sometimes their hand is forced by the rights owner, the consumer, or even government. Whatever the reason, having to broadcast additionally on linear means significantly more costs and slows down consumer migration to streaming.
8. An OTT platform needs to be part of a complete DTC offering. It can’t just be a standalone product. It won’t drive enough value for the platform owner or fans to scale. And your user journey to get people to the platform is just as important. The famous quote from the 1989 film Field of Dreams, “If you build it, they will come”, does not work in OTT, at least not in isolation. Buying lots of live rights will never be enough.
9. It’s still very hard to deliver live, top-tier sports at scale with no issues. Just ask DAZN and their challenges with Serie A in Italy. Sometimes it’s in the broadcaster’s control, and other times it’s a result of the infrastructure they’re trying to serve on. Massive progress has been made, but it’s still a work in progress – that is, until 5G is rolled out and solves all our problems, right?
DAZN has had a difficult start to life as Serie A’s main domestic broadcaster
10. Costs are dropping and the technology to deliver content is improving fast, even if there remain plenty of challenges around the broadcast. Barriers to entry are a fraction of what they were two years ago, but this of course comes with some risks. Move too slowly and you waste an opportunity to build a relationship and capture data on your fanbase. Move too quickly and you risk having to start again if the strategy isn’t mapped out properly. And we’ve seen plenty of iterations of OTT platforms hitting the market because of this very reason.
11. It’s safe to say we’ve reached a tipping point with streaming where the experience is better than linear. Whether it’s second screen, immersive single screen, virtual reality (VR) experiences or just the good old lean back and watch – OTT now has it all, with latency at a point where the only people really complaining about it are the data and betting companies themselves.
12. Social media has found its place, acting as the foundational piece at the top of the audience funnel, using short-form content to drive fans to owned and operated platforms. It can even act as a nice revenue generator for sports with niche audiences and limited budgets. But will it make a serious return into the major leagues rights tug-of-war they left as quickly as they came? Not likely. Another angle to look at it – will they become the future alternative to linear once monetisation improves? I spoke to Rob Shaw, Director of Sports Media and League Partnerships at Facebook (Meta) on the StreamTime Podcast and he predicts major leagues may have a tough decision to make in a few years in the search for those scaled audiences as opposed to the paywall protected worlds in which many of them house their content. Time will tell if Shaw’s suggestion (or hope) comes to fruition, but the signs aren’t there that it’s coming anytime soon.
13. Piracy is the greatest threat to this fragmented sports rights market we live in, yet the area sports executives least want to talk about. The only way piracy can be slowed down or impeded is a) through a huge change in the legal framework that polices piracy or b) by a disruptive aggregator-style offering hitting the market, in the same way Spotify played to the music industry. I wrote about it previously here. Both seem to be a long way from happening, and right now, whilst there’s loads of technological innovations helping fight the good fight, few signs are directing us to a point where piracy stops impacting the sports broadcasting world.
14. The industry’s newest silver bullet is being powered by blockchain, courtesy of terms like non-fungible tokens (NFTs), crypto and fan tokens, which were largely foreign to many before the pandemic. Businesses like Dapper Labs, Sorare and Socios are setting the industry alight with their billion-dollar valuations. DTC strategies are being rewritten, and platforms are being rebuilt as you read this. Will they all work? In general, the concept links with point two on a diversified business model, and a new way to heighten audience engagement. So what’s not to like? Well, potentially quite a lot if you listen to critics across the industry, but I do know that tech companies and platform owners are working frantically to take advantage of the excitement.
15. Amazon has not so quietly built the perfect offering for sports, courtesy of the platform and engagement Twitch provides as a complement to their more traditional Prime Video offering. If you want the reach and to build audience, Twitch is your play. Want the cash and have something to offer? Amazon will happily talk. Since the pandemic, Amazon has made more rights deals in more markets than anyone. When I spoke to Marie Donoghue, vice president of global sports video at Amazon, at last year’s OTT Summit, she painted a rather simple picture: they’re just testing and seeing what works. And if the industry can take anything from the moves Amazon is making, its doubling down on Thursday Night Football via a US$1.2 billion deal proves once again that sports is still the premier form of entertainment, and that the company’s journey into sports rights has only just begun.
Nick Meacham is managing director of SportsPro and host of the StreamTime Podcast. Follow Nick on Twitter @SportsProNick, find him on LinkedIn, or listen to the podcast here.