Google has taken the latest small step towards an OTT takeover of live sports as YouTube confirms a global deal with Major League Baseball (MLB) for rights to live stream 13 games this season. This is a two-pronged move embracing global streaming rights, but which most significantly are exclusive just in the US, Canada and Puerto Rico.
Yet the move is still a toe in the water exercise like similar moves from Amazon and Facebook, while the major rights are still held by legacy broadcasters and pay TV operators. In the US for example the four big leagues, NFL, NBA, NHL and MLB, are still locked up in multi-year deals, while Sky holds several highly valuable packages of European soccer rights in the UK, Germany and Italy.
But most of these deals come up for renewal in 2021 or 2022 and the OTT majors are already eyeing them up for major bids in the belief that time will be the tipping point when all the ingredients come together for a large-scale streaming advance on live sports. It will come about through a combination of technical and commercial maturation as the advantages of streaming come to overwhelm the deficiencies in quality and scale that are still slight handicaps today. Rights owners have noted that YouTube TV suffered from a major outage during the 2018 FIFA World Cup while Hulu went down more recently in February 2019 during the Super Bowl.
Such incidents have highlighted there is still some way to go before streaming can be trusted at scale for major live sporting events, but it is widely expected that the major players will have got there by 2021 when so many of the big rights packages come up for renewal. It was, after all, six years ago when Google lost out to DirecTV, now part of AT&T, over the NFL Sunday Ticket Package, in large part on quality grounds.
Even as the OTT players themselves confine themselves to smaller packages around the edges, there are signs of major leagues’ attitudes changing. Google’s recent acquisition of MLB rights is further evidence of that, as is the fact that that sports operators worldwide are now spending 15% of their total budgets on OTT, according to London-based sports technology consultancy Deltatre.
The company noted in its report Where the Money is Going: The Future of Sports Entertainment, that consumer trends are leading towards that tipping point as 39% now watch four or more hours of sports programming on their mobiles each week and one third cite 5G as the technology likely to have the most significant impact on their sports content consumption going forward. At the same time, fans are embracing streaming because it delivers a more personalized and tailored user experience with scope for deeper immersion.
We might note that when it comes to eSports, the tipping point for OTT has already been passed and was already there at the start. In fact, we can go further and say that the rise of eSports has been inextricably linked to streaming, which has created the exposure and especially more recently enabled innovations that deepen engagement, including AR. The eSports field experienced its first growth spurt, or inflection point, around 2010 with the arrival of the first usable consumer streaming platforms. This spawned the early specialist gaming services such as Ustream and also Justin.tv, which later became Twitch and was taken over by Amazon to become the world’s dominant eSports platform. The main benefit these services brought early on was the ability to break through regional barriers to establish global events.
Maturation of streaming, bringing greater reliability and lower latency, gave eSports another shot in the arm around 2016 and currently the field is expanding at over 25% a year. According to the eSports and mobile gaming analyst firm Newzoo, eSports will generate $1.1 billion revenue in 2019, 26.7% up year on year. Around 82% of this, or $897.2 million, will be from brand investment including advertising, sponsorship and media rights. Esports streaming continues to expand rapidly, with the number of eSports viewers rising 13.8% in 2018 according to Newzoo, with currently 215 million occasional viewers and 165 million enthusiasts who watch it regularly.
Newzoo predicts the present annual growth rate in streaming will be sustained at around 14% until at least 2021 when there will be 250 million eSports enthusiasts, which seems a reasonable shout given that innovations coming through will increase appeal further. Also, the range of events available continues to increase, a recent example being YouTube’s decision in the US to start streaming the NBA 2K League, a professional eSports league for players of the basketball video game.
The situation is different for real sports in that rights for major leagues have been split up on a regional or country basis enforced by geoblocking and access controls to maximize revenue per territory. This is unlikely to change in the foreseeable future whether or not rights go OTT and leagues go D2C, but otherwise some of the developments in eSports will also feed through and boost the appeal of streaming.
One example is the category that Twitch first called “In Real Life” or “IRL”, but then dropped the title because it was too broad, covering all non-gaming content incorporated in streams. This could include graphics, features of AR and live chat between streamers and viewers. Content under this heading has driven audience growth, according to Twitch, and many of the same ideas are being transferred to live sports streaming. The thesis is that OTT services carrying live sports cannot succeed just by broadcasting the events themselves as they happen.
The ability to incorporate additional content within the streams as well as attract viewers continuously through ancillary programming, will be critical for success. This includes behind the scenes documentaries and interviews with players, enhanced where relevant with AR and other immersive features. The demand is already there as was indicated by that Deltatre survey, which found that 72% of sports fans cite personalization and a tailored user experience as the most important features offered by OTT sports services, while 71% want deeper immersion and the perception of being closer to the action that they believe only streaming can provide.
One prediction we can make is that the current clear distinction between eSports and “real” sports will blur over the coming years, even with growing crossover between participants. We have already seen simulated (sim) motor racing champion Enzo Bonito transfer his skills successfully to the track, although some perspective is needed. Not all eSports skills will transfer in this way and we are not about to see a champion of the online football game FIFA appearing in the actual FIFA World Cup.