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- Netflix and Spotify models have changed consumer expectations
- Big tech will not save the day for rights holders, says Ramcke
Rights holders must “redefine their product and value proposition” if their content is going to remain commercially attractive, according to Onefootball’s commercial streaming lead.
Speaking during the latest edition of SportsPro’s Insider Series, Yannick Ramcke pointed to two major threats to the value of sports rights fees: increased competition in the digital space from other entertainment platforms and lower consumer expectation on price points.
He also warned that an acceleration in cord-cutting during the coronavirus pandemic could lead to a deflation in the sector.
“I truly think that a lot of hypotheses for the future in terms of a flattening sports rights market have been true before the pandemic and hold true now,” Ramcke said. “I really do see two major threats in terms of deflationary pressure on the rights fees that are going to be paid going forward.
“The first is the enormous abundance of competition in the digital space – everyone is fighting for the consumer’s attention in the first place, and hopefully monetisation and a part of their wallet in the second step.”
Adding: “The second threat to revenue that can be generated is the monetisation gap between traditional TV and OTT. We have seen OTT competitors like Spotify and Netflix redefine the value for money proposition and what the modern consumer is expecting [to get] for their money.
“Sport certainly has to get used to the new reality: that they might not capture the majority of disposable income of a consumer, especially young ones, and will have to come up with new offerings that are attractive to younger consumers and hopefully in the long run come close to the profitability of the distribution model that supported growth in media rights and revenue in the past.”
With sports broadcasters feeling the squeeze of having to reimburse subscriptions during the lockdown, as well as seeing a downturn in advertising spend, Ramcke also offered a word of caution for rights holders hoping that “big tech” will step in to offer the competition needed to maintain current broadcast revenues.
“I think the profitability is there,” Ramcke said, “but I think the big question is whether this profitability will trickle down to sports in the end and will the leagues benefit from [big tech] profits further down the road and at the end of the value chain?
“I think that is still a big question and I would also question whether big tech will be a catalyst for rights fees in terms of direct rights acquisition.
“I do see them rather in the position of the aggregator and distributor, but the actual party who is buying the rights from the sports property … I don’t see them being the huge beneficiaries of the developments that goes with big tech distribution, bundling, scaling, etc.”
Rights holders must “redefine their product and value proposition” if their content is going to remain commercially attractive, according to Onefootball’s commercial streaming lead.
Speaking during the latest edition of SportsPro’s Insider Series, Yannick Ramcke pointed to two major threats to the value of sports rights fees: increased competition in the digital space from other entertainment platforms and lower consumer expectation on price points.
He also warned that an acceleration in cord-cutting during the coronavirus pandemic could lead to a deflation in the sector.
“I truly think that a lot of hypotheses for the future in terms of a flattening sports rights market have been true before the pandemic and hold true now,” Ramcke said. “I really do see two major threats in terms of deflationary pressure on the rights fees that are going to be paid going forward.
“The first is the enormous abundance of competition in the digital space – everyone is fighting for the consumer’s attention in the first place, and hopefully monetisation and a part of their wallet in the second step.”
Adding: “The second threat to revenue that can be generated is the monetisation gap between traditional TV and OTT. We have seen OTT competitors like Spotify and Netflix redefine the value for money proposition and what the modern consumer is expecting [to get] for their money.
“Sport certainly has to get used to the new reality: that they might not capture the majority of disposable income of a consumer, especially young ones, and will have to come up with new offerings that are attractive to younger consumers and hopefully in the long run come close to the profitability of the distribution model that supported growth in media rights and revenue in the past.”
With sports broadcasters feeling the squeeze of having to reimburse subscriptions during the lockdown, as well as seeing a downturn in advertising spend, Ramcke also offered a word of caution for rights holders hoping that “big tech” will step in to offer the competition needed to maintain current broadcast revenues.
“I think the profitability is there,” Ramcke said, “but I think the big question is whether this profitability will trickle down to sports in the end and will the leagues benefit from [big tech] profits further down the road and at the end of the value chain?
“I think that is still a big question and I would also question whether big tech will be a catalyst for rights fees in terms of direct rights acquisition.
“I do see them rather in the position of the aggregator and distributor, but the actual party who is buying the rights from the sports property … I don’t see them being the huge beneficiaries of the developments that goes with big tech distribution, bundling, scaling, etc.”
