How many sports leagues could go direct-to-consumer (D2C) immediately, pondered the Faultline news desk last week, if push came to shove overnight? The short answer is ‘nearly all,’ but the longer one highlights the clash between legacy viewing markets and the expectation of content ubiquity that OTT services have brought to the table.
The spark behind this quick canvas was news that the Edmonton Oilers had become the fourteenth team in the NHL to launch a video app. Digging deeper, the app is not the exclusive home to all the Oilers games in a season, and still defers to the local pay TV rights deals – but has repatriated live content from YouTube and Twitter.
Sports generally have an existential concern with passing the torch from one generation of fans to the next. Families have traditionally facilitated this organic audience driver, but crossover marketing and experiments with new technologies are common, as are reports of younger consumers’ waning interest. The NFL’s Super Bowl half-time show is perhaps the best example of trying to draw in new blood via a musical super star, and the NFL’s embracing of YouTube as an outreach tool appears to have been a resounding success.
However, when an intrigued viewer attempts to watch a live game, perhaps after a social media advert or prompt arrived at just the right time, they are thrown back into the stone age of blackouts and viewing markets. These look increasingly archaic, given technological progress, and are a roadblock to OTT-native viewers.
Looking at this from the legacy perspective also presents a few difficult questions. Why can’t an old-timer with a smart TV fire up an app to watch their favorite sports, instead of juggling pay TV subscriptions that bounce between broadcasters? The answer, generally, is one of conservatism – that this is how it has been done historically, and so it should remain. This does not jive with a modern audience, nor one where sports leagues are turning to technology to try and win over new potential fans.
We chose to zoom in on Canada and the US, and then the international option, across the sports leagues, due to the dominance of the big four leagues on the global market for sports rights. In terms of app availability, the NBA has scored better on the branding front, with all its OTT offerings sharing the same NBA League Pass name. Much the same can be said of the MLB, with the MLB.TV service, although it also relies on a DAZN partnership in Canada.
The NHL is perhaps the worst of the big-four, in terms of branding, but the NFL is only slightly better. It differs from the NBA, NHL, and MLB by not including a native Canadian team, although both Canadian entries in the NBA and MLB are only found in Toronto.
The NFL’s rights deals might be the most individually complex, but its streaming options have gotten a lot simpler in recent years. If you are outside the US and Canada, you can use NFL GamePass. If you are inside the US, but out-of-market, then NFL+ is the answer (which is the new consolidated home for a few different approaches, including the mobile deals and the old domestic GamePass service). In Canada, DAZN is the partner for the out-of-market games.
As for the English Premier League (EPL), the soccer lineup is notable for having an exclusive deal with FuboTV, for the Canadian coverage. In the US, a broadly equivalent deal is in place with NBC, which sees the games housed inside the Peacock app. However, the EPL is notable for not having an equivalent to the big-four North American leagues’ international apps.
For a final wrinkle, Formula One has an international service called F1 TV, but a seemingly exclusive deal in Canada with TSN. In the US, a two-tiered approach also relies on the F1 TV app, but Disney recently scored an extension for ESPN’s coverage.
Still, those pay TV rights packages are worth a fortune. The sports leagues are laying the foundation for what appears to be their inevitable transition to the direct-to-consumer model, and so this is a matter of when, not if.
To this end, it seems that the major North American sports leagues could jump ship from the pay TV hegemony at the drop of a hat – at least from a technological perspective. Formula One is similarly positioned, but the English Premier League seems a laggard of sorts, as it does not appear to have an international streaming app like the others. As one of the world’s most lucrative sports leagues, the EPL’s situation is muddied by a complex global web of long-term pay TV and streaming rights contracts.
When searching for streaming options, the volume of web pages recommending VPN usage should be alarming for the rights holders, but this is why the sports leagues are pushing towards much stricter security technology requirements. It is unclear how DRM or watermarking would prevent VPN usage, but tying viewing to accounts with fixed geographies is a practical first step, and hiding everything behind a password.
In related fashion, the entire historic justification for the advertising markets was so that local advertisements could be pushed to specific audiences – and therefore net a higher premium. With personalized advertising increasing its accuracy and prevalence, the in-market restrictions could be safely moved past by both the leagues and those that are broadcasting the sports.
This is the moment where the commercial arguments will intensify. The incumbent broadcasters will claim that their audience footprints are the best location for sports, casting a wide net, but effectively at a lower ARPU for the sports leagues. In a D2C model, fueled by highly targetable personalized advertising, with complete control over the user experience, the D2C advocate will argue that higher margins are possible with smaller audiences – and this is before considering the actual reach of TV advertising in the age of second-screen consumption.
Throw in the old adage that ‘content is king,’ and the incumbent pay TV distribution channels should be quaking in their boots. If true, the audiences will migrate to the new viewing platform, and while the pay TV world is painfully aware of just how dumb its subscriber base collectively is (just ask a UI engineer or help desk staffer), it has simultaneously never been easier to fire up an app on a video device.
Such a scenario would not mean the complete loss of sports from pay TV. FuboTV has managed to chalk up a pile of contracts for the ‘out-of-market’ games, acting something like a second tier of OTT offerings. In a similar fashion, the pay TV platforms all have OTT capabilities, and could fill that same role. Alternative broadcast feeds, like the NFL’s Manningcast, are also viable options, especially based on local celebrity and coverage angles.
Regardless, the transition from the current dynamic to a new OTT-first approach will be chaotic. The individual teams will have to reach revenue-sharing agreements with the leagues they compete in, which will definitely not be free of drama. Different leagues will attempt to negotiate cross-border deals too, so that English fans can watch their teams compete in European competitions, and at any one moment, a single team could scuttle the entire project by attempting to go it alone.
That there were not more teams with standalone D2C apps in the final months of 2022 was something of a surprise. Most launched some form of behind-the-scenes app during the Covid pandemic, but due to the existing rights deals, these have not housed the main events.
This has relegated them somewhat, but the technological groundwork has been completed, and so jumping into a full season broadcast is far less of an undertaking than it would otherwise be.