Browse the sections of the report
- Chapter one: The story so far
- Chapter two: Audiences and data
- Chapter three: Barriers to growth
- Chapter four: The future
- Download the OTT Report
The next big thing in almost any market is reliably hailed “the Netflix” of whatever sector is being disrupted by its new distribution model. This month alone, Texture is “the Netflix of magazines”, Forbes is following the billion-dollar race to become “the Netflix of China” and the WSJ says “the Netflix of music” won’t be Spotify. But one market attracts the moniker far more frequently than any other: sport.
Ignoring the fact that the company apparently least interested in becoming “the Netflix of sport” is Netflix itself, the prevalence of this piece of digital shorthand highlights the level of anticipation that exists among rights-holders, broadcasters, technology providers and brands over the possibilities to which new online distribution platforms can open the market. The race is on to go Over The Top.
This report examines what going OTT means for sport, exploring the forces driving the rise of streamed sports coverage, both live and on-demand, and assessing the benefits these new services can bring. It also investigates the size and strength of the barriers that are discouraging more rights holders and consumers from cutting the cord, looks at the potential impact of the tech giants joining the fray and asks how the market will evolve over the short and medium term.
2017 was the year in which OTT video became a demonstrably mainstream platform as viewership of its services extended into a majority of US homes for the first time. The rise of OTT represents a shift in viewing habits away from linear television that is being driven by the expansion of ownership of streaming-enabled devices and improvements in network connectivity that have normalised video consumption on smartphones into a behaviour that is now spreading to bigger screens and a wider range of demographics.
This sea-change has created a new opportunity for sports properties to go direct-to-consumer with their own live and on-demand OTT services; an opportunity that an increasing number of organisations of all sizes are exploring as a means of growing their revenues and expanding their reach.
Established broadcasters are by no means out of the picture, though. Aside from their own ambitions to go OTT, linear television continues to dominate the viewing habits of all demographic groups from Millennials up, delivers audience numbers beyond the current reach of streaming platforms and enjoys some residual protection from the technology gaps that its would-be successors are still to bridge.
For sports rights-holders, the appeal of OTT services centres primarily on their potential audience – in terms of both quantity and quality alike. On quantity measures, the economies of DTC delivery are enabling smaller federations to aggregate dispersed viewers into a viable audience base and larger properties to reach under-served fans beyond their core markets. And in quality, the one-to-one nature of OTT distribution means all rights-holders (and their commercial partners) can learn much more about audience demographics, habits and preferences than they can through linear TV.
The wide range of metrics OTT providers are able to track is now producing a rich flow of data that can be used to drive content strategy and improve subscriber retention rates through personalised and interest-led programming, as well as deliver more targeted and contextual commercial messaging.
The ‘what’ and the ‘why’ of OTT sport have been very clearly articulated by the technology’s advocates, but outstanding questions over the ‘how?’ and the ‘how much?’ are leaving many consumers and rights-holders wary of getting on board the bandwagon just yet.
Connectivity remains the weak link in OTT’s distribution chain, with even high-profile properties still suffering embarrassing service outages and sports fans resigned to experiencing latency, buffering and loss of picture when they watch live action online. That situation is likely to become even less acceptable as the costs of going OTT begin to mount for properties and consumers alike, for the former through the production expense of creating their own output and the latter through the patchwork of subscriptions increasingly required to stay across the disconnected DTC landscape.
One potential solution to the platform proliferation problem already being floated is (with apologies to Netflix) an ‘iTunes of sport’ that allows consumers to choose their viewing from across multiple services on an à la carte basis, funded by micro-payment models and dynamic pricing. This is additionally seen as a concept that could also help address the other main barrier to rights-holder participation – piracy – by making legitimate content easier to find.
The interdependent relationship that exists between platform development and media consumption habits will continue to fuel the growth and shape of OTT services in sport, with the data-generation capacity of DTC platforms now starting to inform content strategy and fan behaviours continuing to drive the introduction of new functionalities.
Personalisation is already emerging as a strong focus of DTC provision, with audience preferences shaping content development – particularly outside the live window – and those of the individual feeding scheduling, discovery and presentation. From a hardware point of view, consumers’ willingness to multi-task is creating a growing need for OTT producers to extend the viewing experience onto second screens or incorporate additional activities into the main stream.
But potentially the biggest game-changer would be a move by one or more of the FANGs – the global tech giants Facebook, Amazon, Netflix and Google – to become a major player in the sports-rights market. Their involvement to date has mostly had a proof-of-concept feel about it, while the disincentives to deeper engagement that exist around commercial models and logistics mean there is no clear consensus on where, how (and, for some, even if) they will look to put sport at the heart of their media businesses. Rights-holders await their conclusion with anticipation; incumbent media partners are steeling themselves for a fight.