THE DESTINATION IS UNCLEAR, BUT SPORTS MUST ADAPT TO A RAPIDLY CHANGING MEDIA LANDSCAPE
Perhaps the single biggest question for the sports business today is whether media rights revenues will hold up as the traditional TV business is disrupted.
In developed markets, pay-television has been the engine of media revenue growth for two decades or more.
These are impinging on the finances of pay-television operators, in turn putting pressure on content budgets.
This story has a long way to go, however, and indeed some of the agents of disruption – the internet tech giants – could yet be sports’ saviors. Facebook and Amazon made big strides into sports content in 2017. Were they to really open their checkbooks and build serious sports video services – perhaps even joined by the likes of YouTube, Apple and China’s Tencent – it would herald a rich new age for sports media revenues.
But it’s clear that we are a way off that scenario. Facebook and Amazon are still experimenting and searching for a business model, and have not yet committed serious cash to sports. And so far there is no model in sight that is as lucrative for sports as pay-TV has been.
In the short term, interest from the likes of Facebook and Amazon, and the life-or-death value of live sports to pay-TV, should maintain rights fee growth for premium properties.
Other significant effects of disruption include consolidation among traditional media companies. Several large media companies are seeking greater scale in revenue, geographical and programming terms, partly in order to compete with the tech giants.
Direct-to-Consumer (D2C) products are being rolled out, whether from sports rights holders or broadcasters, like ESPN, that previously did not have a direct relationship with customers. As well as creating new revenue streams and gathering consumer data that can be further leveraged, D2C products can be a credible threat for rights holders during media rights auctions.
Leading rights holders are experimenting with D2C and different combinations of rights packages to explore all the options available to them in the shifting media landscape.
It’s clear that the business of distributing sports video is on the cusp of profound change. For fans, it is an exciting time – they can expect more options to watch their favorite sports, and innovation from new players in how sports are presented. Sports rights holders must navigate this period of change by clearly planning and evaluating their distribution options. For traditional media broadcasters, they must remain diligent to the threat posed by the tech giants and drive scale, innovation and the most relevant content to acquire and retain customers. In regard to the new entrants, the industry eagerly awaits to see how they develop their sports content budgets and offerings.
