The starting gun has officially been fired in the migration of premium sports online. However, the way we will access it online could be far different than in the past. Here are three ways in which online distribution of premium sports will differ from traditional television.
Number 1: Smaller than TV audiences…for now!
Year-over-over, event-by-event, the online audience for live sports continues to grow strongly. In the 2016-2017 football season, Twitter streamed 10 Thursday night games online. It delivered an average minute audience of 265,800 viewers and 2.7 million uniques per game. Amazon won the same streaming rights for 2017-2018. It delivered an average minute audience of 310,000, 17% higher than Twitter.
While this is impressive growth, it is still small compared with the performance of traditional television. Though the audience for games carried by CBS and NBC was 10+% down from the previous season, they still drew 14+ million viewers. However, it could be that an increasing number of the CBS and NBC viewers are watching online. vMVPD services like YouTube TV and Sling TV are growing fast and could represent a substantial proportion of the “traditional TV” audience by the end of this year.
Number 2: Targeted at super-fans
Discovery Communications CEO David Zaslav thinks that season passes to individual sports can deliver more value than the traditional aggregation approach taken by television. Discovery, which owns the Eurosport channel, is going after sports league rights in individual EU countries with the explicit goal of delivering them direct-to-consumer online. The objective is to serve the super-fan of a specific sport.
Discovery has used this targeted approach before. It already produces TV channels, like Investigation Discovery, targeted at super-fans.
ESPN indicated that its service, scheduled to debut this spring, will take a similar approach. Although consumers will be able to subscribe directly to the new service, called ESPN+, they also can subscribe to an individual sport for just a season. For example, people will be able to subscribe to MLB.TV, NHL.TV, and MLS Live.
Number 3: Scattered across screens and services
In the short term, it does not look like finding the game you want to watch will be any easier online than on traditional television. Sports league rights are not only sliced-and-diced across different services, but they are also divvied up between screens.
Verizon just reached the end of an exclusive deal with the NFL that allowed the company to stream live regular season and playoff football games to its customers on mobile devices. It has just renegotiated the deal to extend its reach to any mobile, not just those belonging to its customers. The 5-year $2 billion agreement is non-exclusive, meaning the NFL can license other providers to deliver to mobile devices. Despite losing exclusivity, Tim Armstrong, the CEO of Verizon subsidiary Oath, considers the deal a good one:
“I would argue a five-year deal for NFL is money really well spent to drive Verizon and its core strategy.”
The Premier League in the UK is taking the same path as the NFL. It already sells exclusive TV rights to bundles of games to Sky and BT. Unless a consumer has a subscription to both pay TV services he or she can’t watch all the games. When bidding opens for 2019-2020 rights, analyst expect Amazon will emerge as a strong bidder. Facebook and Twitter may join in too. The addition of online to the already complicated picture has the potential to further complicate the situation for avid UK soccer fans.
Why it matters
Though still small in comparison to TV audiences, live premium sports consumption online is growing fast. vMVPD growth will only fuel the trend.
Selling sports by the season directly to consumers will be very common by the end of this year.
Sports leagues are slicing-and-dicing rights between services and screens, making it very hard for consumers to figure out how to watch.