THE RISE OF THE OTT BROADCAST IN SPORT
With major TV deals expiring could we begin to see OTT services establishing themselves further amongst the more traditional broadcast channels?
Over recent years, the way fans have been able to consume and experience live sports has rapidly developed. According to Digital Sport, we are seeing sports ratings across traditional TV and linear services fall; not because there has been a decrease in active audience figures, but due to the changing medium, platform and format of live sports streaming.
The driving force behind this development seems to be the rise of ‘Over The Top’ (OTT) mobile and social video alternatives. OTT is providing an engine for growth, with sports fans becoming inundated with a growing variety of viewing options and services to consume live sport. Social media sites such as Netflix, Facebook, YouTube, Twitter and Amazon Prime are providing consumers with additional live streaming channels, that are available on multiple devices, and many don’t require a costly cable or satellite package.
With major TV deals expiring, there is a big question mark as to whether this will provide a window of opportunity for OTT to establish themselves as major players in the world of live sport-broadcasting.
When considering the easy access to these OTT platforms, we can see why this development is being linked as a contributing factor towards the downward trend in satellite subscriptions. While OTT has been an important development for companies focusing on niche and emerging sports, both Facebook and Twitter have actively been pursuing sports rights with the aim of bringing more premium live sports to their respective platforms in 2018. Unlike most of their OTT competitors, neither Facebook or Twitter support subscription services, with both relying on advertising as a means of generating income and revenue.
Chris Russo, of Media and Technology Group, predicted that with major TV broadcast contracts for sports leagues expiring, we would likely see the addition of OTT services bidding for sports rights alongside the more traditional TV broadcasters such as Sky and BT. This was evident when the Premier League released their new broadcast packages for the upcoming seasons. Although Sky and BT have signed up to the more attractive rights packages on offer, which include the high-profile matches, there are still two packages up for grabs. While it is not yet confirmed that any OTT services have bid for the outstanding packages, they are in the mix, which only highlights their ambition to seize the opportunity and establish a foothold in live broadcasting.
Two important questions that will determine whether the OTT service will be a success in the sports broadcasting world are: 1) Will their format of live sports streaming be appealing to the consumer, and 2) Is their commercial model viable?
The OTT broadcast format for live sport will provide viewers with a new way of sports consumption. Whether this form of broadcasting will become more popular than the traditional means is yet to be seen. That said, figures obtained by comScore in the U.S., have suggested that 51 million U.S. households and more than 54% of households with Wi-Fi, now engage in OTT streaming.
Also worth noting is that on the 25th October 2015, the U.S. saw its first live NFL game streamed worldwide via an exclusive digital distribution deal with Yahoo. The broadcast drew 15.2 million unique viewers, 33.6 million video streams and over 460 million total minutes of video content consumed. This amounts to a larger audience than that of the average Monday Night Football broadcast and a little less than the usual Thursday Night Football. This worldwide broadcast drew in one-third of its audiences from outside of the U.S. which greatly enhanced its global reach, with Yahoo receiving positive feedback from both their viewers and the NFL.
In 2017, we also saw Twitter win the rights to live stream 10 Thursday Night NFL games in a bid to give the NFL network an international reach via Twitter’s then 800 million worldwide users. However, their 2 million viewers did not compare to the 48 million who watched on TV, with many feeling that the experience of seeing live tweets alongside the game distracted from their overall experience. The deal has now been taken on by Amazon, after a reported $50 million deal was agreed, which has drawn 18.4 million viewers over 224 countries and has started to boost the overall consumption of the Thursday Night Games by 2.5% – a small but growing asset for the NFL band.
The reality is that a lot of consumers are now spending more and more time on OTT platforms which has led to the traditional TV broadcast channels such as Eurosport, Fox Sport and BT Sport partnering with or developing their own form of OTT services.
Broadcasters are beginning to understand that in order to reach and engage with their audience they need to innovate. Fox Sport has recently partnered with Facebook to stream a selection of UEFA Champions League fixtures in the U.S. Whilst broadcasters such as Eurosport and BT Sport have developed their own OTT platforms, included in their consumers subscriptions, via ‘Eurosport Player’ and ‘Live on BT Sport’.
So, with traditional broadcasters evolving their models to defend against the new players in the live sport market, will the stand-alone OTT services be able to establish themselves in this market? The key challenge facing OTT is how they now differentiate their product and convince the modern-day consumers to abandon ‘traditional’ means of viewing in favour of their new approach – the impact of this is still yet to be seen.
OTT services offer an engaging worldwide viewing platform for live sport. Social sites such as Twitter provide an innovative format to engage audiences through short and engaging video content. This is delivered through their social platform, with the aim to entice viewers towards the rights holders’ live stream on their own digital platform. A great example of this service is provided by the likes of the WTA and Tennis TV. They regularly post clips and highlights on Twitter of matches taking place on the tour with a link to their OTT package for followers to subscribe to and watch in full.
It is also interesting to note that Rights Holders such as Formula 1 and the ITF are planning to launch their own OTT platforms for live streaming of events. A potential knock on effect of this development could see traditional broadcast channels faced with issues of having less sporting content available buy. If a major sports league such as the Premier League were to adopt a similar approach, the amount of live content available to TV broadcasters such as Sky and BT would be greatly reduced and may well result in a reduced renewal rate for their sports package. After all, the inflated rights deals for Premier League Football are directly correlated to the value of customer retention.
However, with no confirmed plans for the above in place and with traditional and more established broadcasters evolving their current model of broadcasting, it may be the commercial model adopted by these OTT services that will determine the impact the likes of Facebook and Amazon Prime can ultimately have.
Compared to major sports broadcasters, OTT services have reduced subscription fees that are absent of the highly priced fixed-term contracts, whilst Facebook and Twitter are free to access and rely on advertising. Amazon are increasing their investment into video streaming throughout 2018 in a bid to drive the conversion of free Amazon Prime trials, higher membership renewals and an overall higher engagement level. Their new live channels are available as an upgrade to their current Prime members who can add unbundled channels for as little as £6.99 per month.
However, the reduced OTT subscriptions fees and reliance on advertisements begs the question of whether their commercial models will allow them to genuinely compete with the giants of sports broadcasting in a way that will enable them to challenge for future broadcast rights. This was highlighted in 2017 when Facebook launched, but narrowly missed out with a $600 million bid for the IPL cricket broadcast rights.
While many may view OTT distribution as a ‘work in progress’, there is no doubt that the new and emerging broadcast platforms are making waves and disrupting the existing commercial model for sports broadcasting. The lure of a ‘new-age’ multi-channel pay-tv service is proving increasingly popular, with online platforms offering access to prime sports viewing with customised pricing selection, attractive add-ons and no fixed-term contracts. There appears to be an acceleration in the growth of online streaming, attributed to younger viewers who may have never enrolled in a cable subscription before. Consequently, this raises the question – will we soon begin to see this surging new media overtake the traditional sports distribution channels, and will this lead to a full re-assessment of how we all consume sports content? Only time will tell.