The emergence of 💻"Over-the-Top"📱Streaming has resulted in the empowerment of the consumer.
At the same time, it has revitalized a declining 🎶 music industry eroded by digital piracy into an industry that is growing revenues again. 📈 It has created billion-dollar companies such as Netflix in the 📽 video space, resulting in a straight-out 🇺🇸 U.S. streaming war including Amazon's Prime Video, Disney+, Apple TV+, NBC's Peacock, HBO Max or 🇪🇺 European competitors such as BritBox (in the U.K.), Joyn (in Germany), and My Canal (in France).
The inherent nature of live sports programming, however, has offered limited incentives for an accelerated adoption of OTT ❌ distribution (on the supply side) and ❌ consumption (on the demand side) in the sports broadcasting market:
1️⃣ Pure-play sports streaming services such as DAZN, FloSports, and Stadium are left with second-tier and long-tail sports that struggle to cross over into the mainstream.
2️⃣ Network-owned OTT services such ESPN+, NBC Sports Gold Pass, B/R Live, or Fox Soccer Match Pass, on the other hand, merely serve as overflow channels for less-attractive content given the limited shelf space in the linear broadcasting system. After all, most of the marquee live sports programming remains on linear (pay) television — both for economic (e.g. holding on to declining but profitable business models) and technical (e.g. lack of reliability/quality) reasons.
3️⃣ "Big-Tech" is hypothetically an enormous threat to traditional sports rights holders given their diversified revenue base which would allow them to not to need to squeeze the last penny out of customers through subscription fees but other means of monetizing a user. However, Amazon, Facebook & Co. have not proven to be the much-needed catalyst for rights fees. Instead, these technology giants rather seem to have a deflationary impact on price levels for broadcasting rights -- just as they had on music and on-demand video content.
Ultimately, OTT streaming will not only impact how rights holders distribute and monetize live sports, but will also present fundamental challenges for ⚽️🏀rights owners 🏈⚾️ (e.g. sports leagues and organizations) and consumers going forward:
⏺ CAN OTT LIVE UP TO THE HYPE?
The fundamental differences between general entertainment and live sports programming ensure a place for traditional linear broadcasts in the future. 📺
⏺ CHALLENGES FOR DIGITAL-FIRST, PURE-SPORTS OTT SERVICES:
Digital distribution might be the future but it's not the present just yet -- problems include discovery, consumer adaption, and churn. 🤨
⏺ CORD-CUTTING AS A THREAT FOR ORIGINAL RIGHTS HOLDERS, NOT ONLY TRADITIONAL PAY-TV:
Ballooned and/or bundled (to other telecommunication services) linear pay-TV subscriptions has been an attractive business for decades. With the secular trend of "cord-cutting," any decreased monetizability of live sports programming will be passed on to rights owners -- just on a slightly delayed basis. ☝🏼
⏺ RE-EVALUATION OF SPORTS BROADCASTING RIGHTS IN AN OTT-DOMINATED WORLD:
With the unbundling of the pay-TV bundle, live sports programming will be increasingly valued on an a-la-carte basis, instead of as a strategic subscription driver for ballooned bundles. In other words, even live sports programming becomes less valuable in the grand scheme of things. 📉
⏺ OWNED & OPERATED OTT SERVICES AS ALTERNATIVE TO THIRD-PARTY RIGHTS BUYERS:
A much more drastic decline from current rights fee levels is needed to make going direct-to-consumer a viable option for sports leagues and organizations, but it's not a binary decision for rights owners. 📱 ↔️ 📺
⏺ CONSUMER EMPOWERMENT MAKES SPORTS FANS A WINNER,
but they are still lost and face increasing wallet share tensions in the fragmented media entertainment space.
💬 CONCLUSION:
Moving on from "Walled Gardens", focusing on first-tier rights, and embracing a multi-platform world has been a go-to strategy for legacy media companies to a new reality. New-media players, on the other end, have to overpay significantly for sought-after properties in order to convince them to forego the scale, reach, and distribution offered by traditional rights holders.
(🇩🇪 Bundesliga's ⚽️ move in the 🇺🇸 United States from Fox Sports, reaching more than >100M TV households via its broadcast channel, to ESPN+, a digital-only, 2.4M-subscriber OTT service, was examined as an example for such a potential trade-off for rights owners between short-term revenue maximization and long-term value creation.🤑)
