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In a media landscape of rapid change and dire predictions live sports offer a measure of relative certainty. Consumer appetite is arguably at an all-time high. Almost half of us spent more time watching live sports content last year than we did the year before, reports Accenture. Advertising-led streaming services lead the march to profitability and sports offer the most predictable audience. It’s why rights remain in high demand as streamers and broadcasters compete for the most valuable content on the planet.
Netflix’ global deal to air live NFL matches for the next
three Christmases should be seen in this light. Sports remain light among the
platform’s library but it has made repeat recent moves to test the appetite for
live events. This includes November’s inaugural Netflix Cup - which pitted
leading golfers against F1 drivers; and the clash between boxer Mike Tyson and social media star Jake Paul coming in July. Earlier
this year the company paid more than $5 billion to be the home of WWE which it
is billing as “sports entertainment.”
Tellingly, Netflix bosses have said live programming creates “cultural moments” relevant not only to
viewers, but to advertisers, a new revenue stream that Netflix hopes to scale.
That’s the same as the “watercooler moments” that
broadcasters have long used to differentiate their one time monopoly of mass appeal
sports events from OTT competition.
At a recent earnings call Netflix joint CEO Ted Sarandos said,
“Our North Star is to grow engagement, revenue and profit, and if we find
opportunities we will do that across an increasingly wide variety of quality
entertainment… including sports.”
Bloomberg reported that Netflix is paying less than $150
million for each NFL game, which is less than it spends on original movies like
The Gray Man but with the advantage of a built-in audience to targets
ads to.
The company's huge content repository can also help retain
viewers who might have subscribed just for live sports, according to Parrot
Analytics strategist Brandon Katz.
That may give Netflix an edge but it is far from the only
streamer widening their live portfolio to stem churn with the stickiness and
appointment to view of live sports.
Amazon Prime Video already streams NFL games and YouTube has
paid around $14 billion to stream NFL Sunday games until 2029. AppleTV is in
year two of a ten-year $2.5 billion deal to stream MLS games.
The NBA is the next major US sports property up for grabs.
The current deal with Disney and Warner Bros. Discovery expires after the
2024–25 season and valuations for rights run as high as $8 billion a year.
That’s because, with over 32 billion views across
social media last season the NBA has a proven ability to secure valuable
younger demographics. Moreover, the league performs far better overseas than
even the NFL which is why Ampere Analysis has dubbed it “America’s most
globally relevant sports property.”
For legacy media like Warner.Bros Discovery, Disney and Fox
which are allying to create uber-sports streamer Venu,
live sports is seen as near as surefire way as it’s possible to get in
retaining and growing subscribers.
There’s a pronounced halo effect for streaming platforms
that offer live sports. Ampere
Analysis picked up on this with startling data that showed all streaming
platforms with NFL rights grew their monthly viewers 4% more between Q3 2023
and Q1 2024, over other SVOD platforms. Paramount+, which had rights to Super
Bowl LVIII, saw the biggest boost, with its overall monthly viewer base growing
22% in the six months to February 2024.
The data showed how important tier 1 sports rights can be to
streaming platforms. Ampere analyst Minal Modha, said, “As streamers try to
diversify revenue streams through advertising, live sports will play a bigger
role in helping to guarantee large audiences, thereby pushing up advertising
value.”
NBCU will be hoping its SVOD platform Peacock exhibits the
same boost when streaming the Paris Olympics this Summer.
Over a quarter of all SVOD subscribers will sign up to a new
streaming service just to watch the Games from Paris, according to research
from Bango. Its report also found that a vast majority (87%) of those
paying for sports VOD subscriptions want a single platform to centralise all of
their sports interests into one place.
“As some of the highest value customers in the subscription
service market, sports fans are a lucrative audience worth acquiring and
retaining. But with higher costs come higher expectations, and there’s only so
far that subscribers can be pushed before they hit the unsubscribe button,” the
report advised.
Adam Silver, who heads negotiations for rights for the NBA, has
said there will be more changes in media technology over the next five
years than there has been in the last thirty years. In particular, fans will be
increasingly able to tailor their viewing via personalisation.
“To the extent you want to follow a particular player, you
want more data as you’re watching the game, you want to be chatting with your
friends or part of a larger conversation with experts,” Silver said. “All of
those things are beginning to happen now in sports, but I feel like we’re just
scratching the surface.”
Another sign of
the heated demand for sports is that piracy is growing
at its fastest rate since 2018, according to research
published by consultants Kearney in January.
Last week’s Fury vs Usyk became one of the most illegally
streamed sports events in history with 20 million viewers illegally streaming
the fight costing broadcasters an estimated £95
million.
Kearney advised rights
holders to distinguish themselves from illegal free live streams by offering
additional viewer experiences, such as interactive features.
Mega-events at a crossroads
Huge sports events themselves such as the Olympics, the ICC
Cricket World Cup, Rugby World Cup, and FIFA World Cup, also need to make big
decisions if they are to remain viable.
A report
by Deloitte last month noted that while such events can bring people
together “in global solidarity and fair play” their complexity and cost “may be
reaching a breaking point.”
Though these goals appear to be at odds, technology
integration and digitalisation may be key to achieving both objectives
concurrently, said Deloitte, pointing to the Paris Olympics as a potential
blueprint.
The most significant challenge to bidding for, and hosting,
sports mega-events is cost. Such events have a long history of “overspending
and building waste that is often seen as unsustainable, both economically and
ecologically,” Deloitte noted.
The cost of the Tokyo Olympics 2021 was US$13 billion, while
Qatar spent roughly US$200 billion preparing to host the FIFA World Cup in
2022.
By comparison, the current estimate for the capex associated
with Paris is around US$4 billion, split half and half between private and
public finance.
Among other efforts the Paris Games will use primarily
preexisting or temporary venues for competition, keeping costs down and
limiting the event’s overall carbon footprint.
New builds—like the athlete village and an aquatics
centre—in Saint-Denis, just outside the capital, stand to benefit from the
facilities and housing long term.
On the production side, Paris will be the first Olympics
where Cloud is the main distribution method. Alibaba, the Chinese group
partnered with Olympic Broadcaster Services, anticipate that physical space at
the IBC will be reduced by 13% from Tokyo, and power consumption will be 44%
less. OBS had seen a 279% increase in bookings by rights holders for cloud
services over 2020.
Yet cutting cost mustn’t come at the expense of the fan
experience if such events are going to last.
Getting spectators involved is a key recommendation from the
IOC—one that the Paris Games is honouring with a mass
participation Olympic marathon.
Technology is expected to play a key role in this objective,
too: “Digitalisation can help make these experiences accessible to fans, both
in the crowd and at home, with enhanced and expanded broadcast coverage,
athlete performance data displayed in real time, and “digital twins” of major
Olympic venues,” said Deloitte.
Future events should build on this by investing in digital
experiences that will draw a crowd—both in venue and at home. Deloitte points
to virtual experiences in venues and expects AI integrations to become
commonplace—"revolutionising sports broadcasting, amplifying digital
engagement and campaigns, and improving how mega-events are planned and
organised.”
But questions remain: How can these experiences that bring
global audiences together be replicated, with minimal costs and complexity? And
how can technological capabilities make these efforts a reality?
“If successful, the Paris Games may illustrate a new model
for the future,” said Deloitte. “Potential host countries and organising
committees around the world will be watching.”
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