Over the top (OTT) video streaming is all the rage right now. Used in the right way, OTT platforms can drive brand and commercial value for sports property owners. However, as DAZN’s recent teething troubles with their NFL streams in Canada proved, it’s not all plain sailing.
OTT video streams are delivered via public internet direct to viewers as opposed to the closed networks of cable or satellite providers. Netflix, one of the best known OTT platforms around today, have almost single-handedly driven a step change in TV consumption habits. They have created a binge-viewing culture and we have come to trust the algorithm-driven recommendations they serve us.
Netflix built their business in the early years on recycled content from the likes of Disney and this is an interesting case for sports property owners to study.
Digital TV Research predict that Netflix will increase its subscriber base by 44% from the end of 2016 through to 2022 (from 89 million to 128 million subscribers). However, their success does not come cheap. The $5 billion they invested in video content in 2016 (more than top US networks NBC and CBS) is compelling evidence that content remains king.
Only ESPN, who are suffering at the hands of other (sports) OTT platforms, invested more in content (an estimated $7.3 billion), most of which is tied to long-term sports rights deals.
Don’t write off linear broadcasters just yet
Sports property owners need to decide where they see the value in OTT and what role OTT should play in their commercial strategy. Although this will slowly change, the big audiences and big returns for premium sports content still come from linear broadcast networks.
Somewhat ironically, linear TV is playing an important role in building the Olympic Channel. The IOC has signed partnerships with linear broadcast networks to carry Olympic Channel content in an effort to find bigger audiences for the content and build the brand in the long-term.
Experimentation is key
Most top sports properties (and many broadcasters) are already testing and learning on OTT platforms (principally on leading third party platforms such as YouTube and Facebook Live). The more adventurous, such as MLB, are already experienced producers, aggregators and distributors of content via their own OTT platforms.
Experimentation is key for any sports organisation with an eye on future-proofing their property. The NFL, more than most, have taken this approach by giving a big chunk of NFL content rights to DAZN in Canada.
Know your audience
Fans are often getting their sports fix from free or low cost online platforms including illegal streaming sites. A recent BBC study found that 36% of English Premier League fans streamed live matches online through an unofficial provider at least once a month.
Until viewers become more accustomed to OTT platforms, a certain level of investment may be required to educate them to ensure that they know how to get the best viewing experience (e.g. in terms of device, browser and internet speed). Otherwise there is a risk that they may go elsewhere, including searching out illegal streams.
New forms of content and editorial styles are also gaining traction. This has given rise to a new wave of disruptive sports media platforms like Dugout (launched in 2016), Whistle Sports (2014), SPORTbible (2013), COPA90 (2012) and GiveMeSport (2011). These new players recognise the importance of video and in some cases are streaming live sports content direct to fans.
The landscape is shifting rapidly
Unsurprisingly, content producers like Disney (parent company of ESPN) and the big cable networks are chasing the cord-cutters and so-called cord-nevers. Disney are planning to launch an ESPN-branded OTT service in 2018.
Disney will face tough competition from Turner (launching a sports OTT channel in 2018 that will include UEFA Champions League matches), CBS (planning their own sports channel) and Amazon (who have paid a reported $50 million for the rights to NFL “Thursday Night Football”), amongst others. Consolidation in the sector may come at some point but until then fans will be faced with an increasingly complex array of platforms.
Most of the big social media networks, leveraging their own OTT video capabilities, are also making forays into the premium sports content market via rights acquisitions or partnerships. For example, Facebook partnered with Fox who will broadcast live UEFA Champions League matches on some of their Facebook pages during the 2017/18 season.
Sports property owners need to understand that the big content producers like Disney and 21st Century Fox would rather see the pay TV business thrive for as long as possible. They get anywhere between 30% and 75% of their total revenues from cable channels. However, Disney’s move into sports OTT is a clear sign that they see the need to diversify. Sports property owners would be wise to monitor this shift in terms of both financial muscle and audience.
Data without structure is worthless
It is the access to first party data (i.e. data that you collect directly from your audience) that is driving value for OTT platforms. This point will not have been lost on the IOC when they set out to deliver their own platform.
The insight generated from data is the key to creating personalised viewing experiences and more effective commercial integrations (e.g. highly targeted advertising). Unsurprisingly, it is difficult to find established third-party OTT platforms that offer flexible data collection opportunities and freely share data with those bringing content to their platform.
The current debate in the sports industry around data remains at a superficial level. The most advanced OTT video platforms including Netflix, Twitch and YouTube are investing heavily in machine learning and predictive analytics techniques to generate the kind of insights that grow their platforms. This is where sport needs to aspire to be.
Where to next?
OTT video streaming will slowly democratise sport. Premium content from the top level (and long-tail content from the lower levels) of every sport is increasingly accessible to the 3.2 billion people with internet connectivity. Fans are being empowered to vote with their eyeballs.
Those sports willing to adapt by adjusting formats and scheduling will have a greater chance of survival in this era of accessibility, while others may fade away.
Sports property owners without access to the rich first party data that an OTT platform can generate (and without the ability to deliver content tailored around individual fan needs) will find themselves very soon at a competitive disadvantage.
About the author of this post:
David is a Chartered Marketer with more than 15 years’ experience in international sports marketing roles. You can follow David on twitter (@davidgfowler) or connect on LinkedIn (linkedin.com/in/davidgfowler).