Those pay TV operators that have relied heavily on live sports to build their subscriber bases face an existential threat if major leagues go D2C or premium rights fragment into non-exclusive packages. But there will still be opportunities by exploiting expertise and infrastructure to attract viewers if such fragmentation occurs, or to persuade leagues that their distribution platforms will engage fans the most.
Indeed, alongside content itself, online infrastructure will be crucial for success in sports as distribution goes increasingly OTT over the next few years. Sports media technology firm Deltatre has forecast OTT infrastructure sports-related spending will hit $6.8 billion a year by 2021 in the US alone and we note similar trends developing elsewhere. As Deltatre pointed out, this will be driven by D2C activity and associated development of features that enhance the viewing experience, especially augmented reality to enable users to explore imaginary what-if scenarios as “virtual action replays”.
Deltatre notes that sports operators worldwide are now spending 15% of their total budgets on OTT, split between the technical platforms themselves and supporting services to enhance the fan experience. Another interesting data point was the finding that about two thirds of sports fans among a sample of 1,000 – divided equally between the US and UK – regard $39 as the cut off point for sports packages, while also significant was growing use of smartphones for content consumption, now second only to the TV. This reflects smartphones being the device conveniently available whenever people are away from the big screen, given tablets and laptops require booting up and often lack cellular connectivity.
More speculatively, the firm forecasts a 24% increase in active subscriber numbers following investment in associated enhanced features and functionality that bring consumers ‘closer to the action’. This includes automatic removal of ads in on-demand content, as well as ‘picture-in-picture’ coverage during multi-sport events.
What the survey did not emphasize was the role of infrastructure in reducing latency and maximizing underlying video quality, without which fancy AR features would cut little ice with viewers who would have turned off anyway. The report did find though that over a third of sports fans cited 5G roll out as critical to enable faster, more reliable mobile data connections.
The message for pay TV operators from such findings is that their ability to retain sports rights will rest increasingly on cooperation with the ultimate rights holders or sporting leagues themselves. Their interest lies both in maximizing streaming revenues and boosting engagement with fans to increase the reach of the sport.
Therefore, KPIs associated with live sports are changing, with ancillary content accessed on demand before, after and even during matches becoming ever more important to increase engagement and make services stickier. The essence lies in encouraging viewers to return day after day, even when there is no live sporting event.
Already sporting leagues are exploiting such KPIs in non-live services offered in parallel with premium packages already sold to pay TV operators. In the first instance these are toe in the water exercises boosting the sport’s brand, but they can also be construed as first steps towards full blown D2C streaming offerings, perhaps starting in territories where viewer numbers are smaller and so there is less at stake.
But we know that the English Premier League was looking at a live football service for testing in Singapore, but then drew back and instead sold three seasons of TV rights to Singtel, the country’s leading telco, running until 2022 for about $400 million. But that will only be a reprieve unless such operators can offer compelling reasons for leagues like the EPL to stay with them in subsequent rights rounds.
Apart from operators paying over the odds, such reasons can include compelling propositions for ancillary content. That is why Sky Sports for example has raised its game on this front, introducing AR ingredients to its live EPL football coverage this season. From the start, the Sky Sports Football team deployed camera tracking and AR graphics for match presentation on its Super Sunday live double-header, as well as its Saturday lunchtime live matches. Further elements are being added, such as displaying team formations on the floor of the studio in front of the pundits, who can then move players around as part of their analysis, instead of being confined to pointers on the real screen.
Competition then for future rights packages may come down to more than just money. Rights will also be seen in the wider context of fan engagement, which may lead leagues as well as individual clubs where permissible to seek control over the content they generate.