nScreenMedia OTT multiscreen media analysis

2017 to see sports value to pay TV erode further

Reasons people will cancel pay TV

Watching premium sports has been the tie that binds pay TV subscribers to their service. In 2017, however, new data shows that alternatives exist outside of the pay TV experience. And for most, sports aren’t a significant factor stopping them from cutting-the-cord.

 “Ambient” sports TV viewing widespread

In September, ESPN became the first network to sell the out-of-home audience as a separate group to advertisers. ESPN had long suspected that a significant share of the audience watched televised games in gyms, bars, hotels, restaurants, and other public venues. And in the fall upfronts the network convinced some advertisers to recognize this viewership as a valid ad sales standard.

ESPN had every reason to want to count the number of out-of-home viewers of its networks. Viewership of its marque properties, such as Monday night football, has been way down this season. For example, the AFC South-leading Houston Texans faced off against AFC-West leading Oakland Raiders on Monday November 21st. The game was a close one, with the Raiders emerging the winner after scoring two touchdowns in the fourth quarter. The game garnered a 4.0 share in the 18-49 demographic. The week 11 game in 2015, between the Patriots and Buffalo Bills, received a rating of 5.1 in the same age group.

ESPN enlisted Nielsen to help it count the number of folks watching in public venues. Just before the end of 2016, the first results of the experiment were released. Nielsen reports an overall 7% lift in ESPN ad deliveries among 18 to 49-year-olds due to out-of-home game viewers. A similar increase was seen among the 25 to 54-year-olds.

College football performed best among the sports tracked by Nielsen. Ad deliveries to the 18-49 and 25-54 age groups were up 9% compared to viewing of ESPN’s live channel at home. Given the current and more recent experience of college life, it is perhaps not surprising that the younger age group, 18-34, performed even better. That group saw a 10% increase in ads delivered over the linear channel alone.

Streaming alternatives growing

In 2016 we saw an easing of the logjam in watching live sports online. Twitter’s deal to stream 10 NFL games garnered a significant number of online viewers. The first game reached 2.35 million people, and this audience climbed to over three million by the end of October.

2016 started with just one service, Sling TV, delivering ESPN live online nationwide without a traditional pay TV subscription. By year’s end, it had been joined by PlayStation Vue and DirecTV Now. The first half of 2017 should see two new online services, from Google and Hulu, providing access to ESPN, Fox Sports Network, and many other TV sports services.

CBS All Access provides simulcasts of many local CBS affiliate channels from within the service. Unfortunately, the channels did not have the right to stream local NFL games, and were forced to black them out in the All Access simulcast. Late in the year, CBS rectified this licensing problem allowing All Access subscribers to watch an NFL game that is part of a local broadcast. It should be noted, however, that an All Access subscriber still cannot watch the games on a smartphone or tablet. Verizon owns the exclusive NFL mobile streaming rights.

Expect to see a further easing of online sports streaming restrictions this year.

Sports losing its power in the bundle

According to new survey data from Limelight Networks, access to sports is a significant factor binding millennial males to pay TV. When asked under what circumstances they would terminate their pay TV subscriptions, better access to sports and live events online was cited by 20% as a major factor. Only pay TV price increases was cited more often (39%).

However, for the general population sport does not appear to be a major factor. Just 8% said better access to sport and live events was cited as a significant factor. Price (41%), and better access to favorite channels (24%) were cited far more often.

Why it matters

Sport is generally considered a major factor in keeping people in the pay TV fold.

Better access to major sports online, and large groups of people watching games in public viewing situations is eroding sports power in the bundle.

Expect to see this erosion to accelerate in 2017.

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(2) Comments

  1. Pay TV will see a Big Change in Cord Cutters when Sports are put in a “SEPARATE PACKAGE”
    Most people don’t want to pay for Stations they Never watch.
    Have the Regular Channels in a Package, Sports in another.

    Would this fit your Plan ?
    First Bundle: Would Include ONLY the Regular Channels.
    “Three Packages”: Basic, (20 Channels) $ 20.00
    Medium, (50 Channels) $ 30.00
    Full, (ALL Regular Channels). $ 40.00
    ALL Packages would Include: The NETWORKS, LOCALS, NEWS
    and some additional Channels.
    ALL in HD. – NO Extra Charge for HD

    Second Bundle: Would be ONLY SPORTS Channels.
    These could be Added to any ONE of the First Bundle Packages.
    Example: A Sports Fan could order “ONLY the BASIC Package” (20 Channels) $ 20.00
    and then ADD Any or ALL Sports Channels.

    Third Bundle: The MOVIE CHANNELS, Same rules as Sports. A First Bundle Package,
    then ONE or More Movie Packages.
    To Subscribe to a Pay TV Service, you would need at Least the
    “BASIC” Package. $ 20.00

  2. OTT is shorthand for a massive set of related inflection points – much more profound than IPTV. Quiptel’s tag line is Streaming is the New Broadcasting, because of the shift in personal viewing habits in a world of BYOD, content owners who want direct contact with binge-viewing Millennials who no longer expect to pay for conventional Pay TV subscriptions and operators who want to reach beyond their broadcast license territories. Bandwidth requirements are increasing, but the 4k+ TV in the living room is no longer the prime target and CDN technology that was born in a world of dial-up modems cannot keep up and their cost/pricing models are outdated. The factors that underpin all these events can no longer be plotted on a simple XY – cost v bandwidth graph. Now Z-axis adjacent events are disrupting established models faster than conventional thinking allows eg. have we reached peak satellite broadcast signal distribution value versus using global fibre-based 2-way networks?

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