Sport: linear TV’s last bastion
Only a handful of sports reap the benefits of broadcasters’ competing efforts to secure increasingly pricey TV rights. Ill-suited to large-scale OTT distribution, sport is moving only gradually to online services, initially through services developed by TV channels, despite several attempts by internet heavyweights. A few powerful sport leagues have, however, sketched out a B2C strategy for online sportscasting.
Sports media rights: the big winners of the content battle
The global sports media rights market is estimated to be worth more than 44 billion EUR. It is one of the prime beneficiaries of the battle for premium content being waged between TV channels, telcos and OTT platforms. It is nevertheless an extremely concentrated market. Only a small handful of sporting events and championships are capable of attracting a massive audience, with the highest bids going to the leading US leagues, the top national football championships in Europe, and international (global and European) football championships. This battle for premium content has driven the price that broadcasters are will to pay for TV and OTT rights through the roof: +180% for the latest sale of NBA rights, and +72% for Bundesliga rights in Germany, for instance.
Handful of sports account for majority of spending on TV rights
TV rights for the main sporting events, and increase from previous contracts
Traditional broadcasters losing steam
Sport had long provided the ballast for the development of popular premium channels like Sky in the UK, Canal+ in France and ESPN in the United States. After having had to contend with competition from new, low-cost sport channels, such as BeIN Sports, these veteran channels are now having to compete with OTT players who have been impinging on their turf more and more since 2015. Amazon also secured the rights to football matches in the UK and in Germany, while Facebook is working to increase its foothold in Asia by acquiring media rights to sports (including to La Liga) in the region. One new entrant, DAZN, an international multi-sport OTT platform that launched in 2016, now operates in nine countries.
Decreasing subscriber numbers for the top sport channels
Number of subscribers to the major sports TV channels in the US, UK and France
A B2C strategy for rights owners?
Although still hugely popular, sport appears to be less of a draw than it once was: audiences for major sporting events like the Super Bowl and the Olympic Games are starting to shrink, while the top sport channels are seeing their subscriber numbers drop. Already in the UK, the latest negotiations for TV rights for Premier League football resulted in a 10% decrease. If a portion of sports fans have signed up for channels’ OTT services (ESPN+, Sky Sports Pass), the major leagues and federations may attempt to distribute matches and competitions themselves, directly on their own OTT platforms, as a way to reach a new, younger and more international audience, and to lessen their dependence on TV rights. This is already the path that American leagues and Italy’s Serie A league have taken, while Spain’s La Liga and the UEFA are laying the groundwork to follow suit.
Will OTT be a boon for less popular sports?
Pros and cons of OTT distribution for sports rights holders
DAZN, the Netflix of sport?
Launched in August 2016 in German-speaking markets and in Japan, DAZN has since expanded its footprint to five more markets (Canada, the US, Italy, Spain and Brazil) and plans to bringing the total to 20 in 2022. To achieve this, DAZN will need to:
- Grow its subscriber numbers very quickly, to amortise content costs. This will need to go by way of both live OTT distribution to subscribers and through partnerships with distributors.
- Assume recurring losses over the coming years.
- Win its bet on a revolution in how people watch sports – i.e. more and more binge watching.
- Steadily upgrade to premium content, as Netflix has done, to guarantee future gains and a stable subscriber base over time.
- Solve the technical challenges of large-scale, live OTT video streaming on the Internet.
- Hold its own against the Internet giants who could upset the market, as their recent forays into the video and music sectors have done.