The State of Live Streaming 2022

Streaming Media

Sports began 2021 in bubbles and ended it with crowds packed back into arenas, but the march toward streaming continues unabated. According to Strategy Analytics, OTT revenues will surpass those of pay TV for the first time in 2024. Much of the momentum will come from live TV, and sports in particular, with rightsholders expanding on current direct-to-consumer (DTC or D2C) experimentation by placing more of their properties online.

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Live was always huge, and it continues to grow. In 2021, about 57.5 million viewers in the U.S. watched digital live sports content at least once a month. This figure is projected to increase to more than 90 million by 2025, according to Statista.

Unlike recorded entertainment, where streaming is now an established market, live OTT is relatively nascent, but has reached a tipping point. Over the next decade, growth will be as explosive as it has been for films and episodic content.

"The DTC model is emerging as the new standard to deliver sport," says Gareth Capon, CEO of Grabyo. "The industry is moving, albeit carefully, towards federations and leagues taking more control of media rights deals and creating DTC platforms to do so."

There is little doubt that an accelerated switch to streaming is underway and that this is probably happening more rapidly in the U.S. than in any other market. Most rightsholders, though, have already been tapping into that technology for the better part of a decade by distributing clips and other short-form content on third-party social media platforms such as YouTube, Facebook, and Twitter.

"While D2C in sports feels relatively emergent, it's important to recognize that there have been many globally successful models in place for some time," says Steve Russell, chief product officer for Red Bee Media. "So, what is new? My sense is that the risk-reward balance has tipped. More consumers are willing and able to access and pay for D2C offerings, and, simultaneously, the bar has been lowered in terms of time, risk, and cost to get a service to market."

All of the sports rightsholders interviewed by MediaKind for its "2021 Sports D2C Forecast" study see streaming as an essential part of their distribution strategy for live sports. "The proportion of its content that any rights holder makes available via streaming will continue to expand dramatically," MediaKind concludes. "No sports body [can] afford to be in a position where all the valuable data about its supporter base [that] is in the hands of a third party [is] omitted."

However, for premium sports at least, the traditional broadcast market continues to deliver substantial revenue—often their biggest revenue stream—that is guaranteed for years in advance. This means most major sports right now still define their DTC platform as complementary to broadcast coverage.

Sports Video Rights Shift to Streaming, but Are Weighted to TV

According to SportBusiness' "Global Media Report 2021," global sports media rights revenue was $52.1 billion in 2021, an increase of just less than 16% on 2020's COVID-impacted total. This income is also approximately $1.1 billion more than 2019's total of $50.9 billion, which emphasizes the resurgence of the industry. Yet according to the report, traditional broadcast deals still drive the vast majority of that income. So the question facing sports is what role DTC should play in this new world.

"Given the importance of linear media rights revenue in professional sports economics, it is likely to be a decade or more before reaching the inflection point at which a D2C service is used as the primary distribution platform by the majority of rightsholders," MediaKind reports. The NFL's $110 billion deal signed in March 2021 to keep the bulk of its games with CBS, ESPN, Fox, and NBC until 2033 is a case in point. It's likely that the traditional broadcasters will simulcast live games on TV and digital platforms Paramount+, ESPN+, Tubi, and Peacock. In addition, Thursday Night Football will be exclusive to Amazon Prime Video in the NFL's first-ever all-digital package for which the streamer paid $1 billion per year, according to CNBC.

"We now have a decade of visibility into who our broadcast partners are going to be and how our fans are going to be able to watch games," Blake Stuchin, VP of digital media business development for the NFL, told the StreamTime Podcast. "The [pay-TV] ecosystem is going to remain the primary reach vehicle and revenue driver for the NFL for years to come. It's been that way for decades, and we think that's still going to continue to be a really important way for our fans to watch games.

"Digital distribution is an increasingly important part of that mix, and each of our partners has their own streaming solution," said Stuchin. "You'll see them increasingly put games on those platforms, and then there is of course Amazon, which as a digital-first company will have games on Prime Video and Twitch."

The NBA's broadcast rights (with ABC/ESPN and TNT) expire after the 2024–2025 season, and the league is already making noises about tripling its current $24 billion package in part to fuel a salary cap that could jump to $171 million, reports Forbes.

In May 2021, MLB agreed to a new 7-year broadcast deal with ESPN (ending in 2028) worth $3.85 billion, or $550 million per year. Once again, ESPN is likely to simulcast on ESPN+, including the marquee Sunday night package, but the number of its exclusive regular season games was reduced dramatically from 90 to 30, and the network decided not to bid for midweek games. MLB is reportedly seeking a digital partner for this package.

Making Sports Video Personal

Both broadcasters and sports rightsholders share the same aim in wanting to extend reach to a younger audience, with digital initiatives seen as an essential strategy. Look out then in 2022 for the launch of an ambitious new personalized streaming service from the NBA. As outlined by NBA execs during a Fast Company Agenda 2022 event, this service will bring the game even closer to fans, including virtual ads and biometrics. The platform, which is powered by Micro­soft Azure, will encompass more than just live and on-demand game broadcasts. It will also offer fans different ways to access the NBA's vast array of player data and historical video archives, and it will incorporate elements from the NBA's esports and fantasy leagues, along with merchandise and ticketing.

The platform will also make use of 3D spatial data on player and ball movements from camera arrays installed in arenas by Second Spectrum, a tracking provider for the NBA and other sports leagues. Matt Wolf, the NBA's head of global strategy and innovation, says the league is even doing biometric testing with fans to see how their bodies respond to different plays and determine what "excites" them, as reported by Fast Company. The league can then align these moments with the Second Spectrum data to understand what, precisely, drives fan engagement—and use those insights to adjust the viewing experience, pull highlights for social media, and even "tailor the game design itself," according to Wolf. "There is a segment of fans that wants a much deeper connection to the stats in our game," he adds. "We're now able to deliver to fans, in a very visual way, a new way of thinking about the game that's beyond the traditional box score."

The NFL is also making noises about offering "personalized versions of a game to offer a different experience or a complementary one," said Stuchin on the StreamTime Podcast.

MLB, the most advanced of the major leagues in terms of digital, is now using Adobe's cloud-based tools to deepen the digital experience for fans and to make its backend operations more efficient. These tools will allow MLB to customize promotions, ballpark information, and notifications to individual fans. Some fans will receive free trials or offers for MLB.TV so they can watch at home.

"MLB has long been a global leader in digital experiences among sports leagues, with a fan-first orientation across the web, mobile apps, and social media," says Anil Chakravarthy, EVP and general manager of Adobe's digital experience business and worldwide field operation. "The expansion of the partnership will allow MLB to bring some truly personalized experiences to fans, made possible by millions of fan profiles built in real-time."

Formula 1 and the NHL plan on making far greater use of live race/game data to deliver immersive fan experiences in concert with Amazon Web Services (AWS). The NHL is doing so using AWS Elemental Link UHD, an HEVC encoder that connects six-to-eight 4K cameras in NHL arenas to AWS Elemental MediaLive for video processing in the Amazon cloud. Using this data, the NHL can read the speed of players in real time. By adding a camera at ice level to track certain players, it can match the data to the video and demonstrate to the fans exactly what skating 15 mph or 22 mph is like and bring that story to life.

Other applications include a sportsbook. According to Dave Lehanski, EVP of business development and innovation for the NHL, there is no better opportunity "for a fan to get real-time data on a game with which to make betting decisions or to view the outcome of bets they made in real time."

The Convergence of Streaming and Sports Betting

This activity is occurring against the backdrop of wider opportunities for secondary monetization that are still largely untapped, according to the MediaKind report. Its key takeaway is that "at present, very few rights-holders are embedding secondary monetization verticals—like betting, ticketing, and merchandising—within their D2C services, whether pay or free."

The spectrum of "gamification" ranges from free-to-play fantasy and casual games to in-play betting and gambling for live sports. More extreme examples, such as the Fan Controlled Football (FCF) league, which played its first season in 2021, give fans a stake in the outcome of the live event. Conceived as a merger of e­sports and football, FCF's indoor tournament format puts fans in charge of every decision, from making the rules and picking teams down to choosing the colors of the players' uniforms. Voting is done through a mobile app. Games were streamed on Twitch and VENN, attracting more than 2 million viewers for the playoffs, with a second season due in spring 2022.

Since deregulation in the U.S., there's been a huge spike in gambling revenue for sports, which is already valued north of $200 billion worldwide. "All major sports bodies in the [U.S.] are currently developing services that will enable fans to place bets around the live content they are streaming on their internet platforms," according to the MediaKind report. "The dilemma for rights-holders is whether to put these features on their main website or behind a paywall where the engaged hardcore fans will reside."

Many sports governing bodies still refuse to embrace betting services for reasons of integrity and because of social concerns about gambling, but the MediaKind report predicts we'll see an explosion in revenues for sports betting, with fantasy and gaming applications increasingly integrated into sports content platforms. It cites the NCAA's March Madness Bracket Challenge as providing "an attractive template for how something like predictor games can become integral to a D2C service, and arguably its main attraction."

Competing sportsbooks include FanDuel, DraftKings, BetMGM, and Caesars Sportsbook, which launched in August 2021. Sports broadcasters are not being left behind. The Wall Street Journal reports that ESPN is seeking to license its brand to sports betting companies, with a price tag of at least $3 billion over the next several years.

All of the leading U.S. sports leagues and broadcasters are also trying to work out the most effective strategy for partnerships. In July 2021, MLB began to operate live streaming of games on the DraftKings app to give fans one free, live game per week, while the NHL and NBA have agreements with other sports betting companies for live broadcast offerings.

Dan Pozner, NBC Sports' director of gambling content, says that his chief focus will be on the development of betting-centric alt-telecasts of live sports for fans who want to watch a game and have the TV presentation with their same betting perspective, along with graphics and commentary. "The eventual next step is likely the convergence of the bet-placing and viewing experiences," Pozner predicts.

fuboTV Shoots for Global Domination

Live-streaming subscription video-on-demand (SVOD) service fuboTV is among the most aggressive in the space. It has launched its own sports betting product (Fubo Sportsbook) as a lynchpin of "a holistic and hyper-personalized betting experience," according to co-founder and CEO David Gandler in a Q2 2021 earnings call. "The launch of our own sportsbook is an important driver of the strategy as we aim to develop a flywheel, turning passive viewers into active participants, defining a new category of interactive sports-entertainment television."

fuboTV's stated business strategy recognizes the intersection of three business trends, according to Gandler: "the secular decline of traditional television, the shift of TV ad dollars to connected devices, and online sports wagering, a market opportunity which we believe complements our sports-first live TV streaming platform."

The fuboTV app has a Watching Now feature that uses data from its streaming service to sync the wagering app with what a user is watching on fuboTV. "Leveraging fuboTV's first-party user behavior data to understand consumers' viewing preferences and recommend relevant bets, the company intends to turn passive viewers into active, engaged participants," fuboTV notes in a press release about Fubo Sportsbook. This marks "an industry-first integration."

There is a lot of investor excitement about the New York-based firm, which has quickly amassed more than 1 million paid subscribers and an enviable average revenue per user (ARPU) of $75. It built its sportsbook by acquiring betting platforms Balto Sports and Vigtory and plans to use computer vision technology from Indian startup Edisn.ai to create a more interactive and immersive live-TV experience "through better play-by-play identification and frame-accurate video-data synchronization," according to the press release.

The vMVPD bills itself as a cable replacement service and offers more than of 100 channels in different markets, including major league sports games. In a November 2021 podcast for SportsPro, Gandler said, "DTC is really hard; it's a grueling business. The fact that all streaming companies talk about global subscribers tells you it's very difficult to launch and develop in the U.S. It's highly unlikely that these businesses will be successful, and there'll be a point in time when analysts and investors will say ‘enough is enough—show me the profits.'"

Gandler added, "The best businesses in the world are aggregators. We're taking our time being smart, and I think in the next 5 to 7 years, this is going to be a pretty large business. I'm a very simple guy with a one-track mind: global domination."

Stability at Scale Is Crucial

As streaming becomes the primary means of content delivery, glitches in the live OTT fabric must be addressed. Or, at least, rightsholders need to be assured that their valued content is going to be served to the scale, quality, and latency of broadcast.

"Despite tremendous technological advances, there is still concern among many rights-holders about how a streaming service would stand up when faced with a high volume of concurrent live streams," Media­Kind states in its report. For those sports rightsholders surveyed, the stability and scalability of a platform remained fundamental. Ultra-low (sub-1-second) latency will also be critical for the adoption of betting services, according to MediaKind, and could be powered by edge compute and 5G connectivity.

COVID has undoubtedly shifted the perception and adoption of IP and cloud as viable technical solutions where on-premise video workflows once held sway. The spin-up/spin-down nature of cloud-based delivery infrastructure means it can offer a unique level of flexibility. Users can set up an environment for a day or a one-off event with minimal overhead and then scale as needed. Unlike traditional broadcast infrastructure, IP solutions are adaptable environments that often don't require proprietary hardware. Therefore, proof of concept can be achieved with minimal outlay and low commitment from potential customers.

Speaking to an audience of sports technologists at SVG Europe's Sport Production & Technology Summit 2021, Net Insight CTO Per Lindgren said, "In the move to cloud, we need reliability, quality, and security, as well as better synchronization of data, video, and audio. But I think the bigger shift is not one of technology, but one more related to business models. Vendors have to offer more flexibility on price and move towards software-as-a-service business models because that is what customers want."

The point is that this is not confined to major league sports, but is applicable to any sport and any broadcaster as never before. Cloud and OTT have reduced barriers to live production by eliminating the need to contribute video over traditional satellite or fiber, while enabling staff such as directors, switchers, and camera operators to work at a central location or from home with little impact on their workflow and no noticeable effect on the quality of the end-user experience.

Grabyo's Capon believes smaller rightsholders will move to this model first, "as the revenues for tier-two sports properties will decline more precipitously in the broadcast market than the leading properties such as the UEFA [Union of European Football Associations] and the NFL."

Scaling 8K OTT

Finally, Intel, Japanese broadcaster NHK, and Brazilian broadcaster GloboTV announced plans to stream high frame rate, High Dynamic Range (HDR) 8K, and even 16K, at the Paris Olympics in 2024. "We are way beyond proof of concept," says Ravindra Velhal, global content technology strategist and 8K lead at Intel, in an Intel-sponsored article for VentureBeat.

Following tests conducted at the Tokyo Games in 2021, Intel affirmed that 8K live streaming at scale can be done. Delivery to the open internet is managed using Real-Time Transport Protocol (RTP) and TLS or RTP and HTTP Live Streaming (HLS). The round-trip latency from venue to screen of the 50Gbps input signal encoded to produce a 200–250Mbps contribution and 80Mbps distribution signal for OTT was just 200–400 milliseconds.

Velhal concedes that, right now, the ISP cannot handle distribution of more than 100Mbps. "Basically, we're delivering 8K on the existing 4K infrastructure," he says, although he predicts that this issue will be resolved in 2 years. "For the Paris 2024 Summer Olympic Games, Intel technologies will continue to push pixel frontiers to even live 16K, multiple 8K TV channels or 8K with 120 frames per second over 5G.

"The work we're doing is the future of Olympic broad­casting, the future of sports broadcasting, and the future of live entertainment broadcasting," Velhal adds. "We are preparing the world for the democratization of 8K using open Internet."

[Editor's note: This article first appeared in the 2022 Streaming Media Industry Sourcebook.