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College sports carve out a commercial niche on OTT platforms

PITTSBURGH, PA - DECEMBER 10: Tramaine Isabell #2 of the Drexel Dragons goes to the basket in the first half during the game against the Robert Morris Colonials at PPG Paints Arena on December 10, 2017 in Pittsburgh, Pennsylvania. (Photo by Justin Berl/Getty Images)

  • Colonial Athletic Conference’s 4-year deal with FloSports worth $4.5m
  • Streaming platforms don’t need large ratings to make college content economically viable
  • In most cases deals are non-exclusive, allowing smaller conferences to also cut linear deals

Joe D’Antonio, commissioner of the Colonial Athletic Conference (CAA), was looking for something beyond just money and scraps of television airtime when shopping the group’s latest media-rights deal.

He was also looking to find a media partner that would showcase the conference and commit sizeable resources to shoulder programming and marketing beyond just showing live games. But as an administrator sitting firmly in the centre of US college sports’ middle class, far away from the economic and competitive behemoths from the Power 5 group of conferences that dominate that portion of American sports, D’Antonio knew getting all he wanted from a traditional media partner would be difficult, if not impossible.

“I’m a realist. I know where we sit in the pecking order,” D’Antonio says. “Finding linear [TV] timeslots for games is more difficult for us. If we were going to sign with other entities, we were certainly not going to be their number one product.”

Enter over-the-top (OTT) digital streaming. In May, the CAA signed a four-year deal with Texas-based digital sports media company FloSports to show more than 300 of the conference’s sporting events live each year, including football and men’s and women’s basketball, along with ancillary content.

The groundbreaking deal, worth a reported $4.5m (€4m) over the four years, made the CAA the first US college conference to select a direct-to-consumer OTT company as its primary media partner. The agreement also marks the CAA’s first dedicated batch of rights fees.

But the CAA, while perhaps at the front of the pack in terms of mid-tier college conferences committing to OTT streaming, are far from alone. Many of their closest peers, including the Mountain West Conference, Atlantic 10 Conference, and Conference USA, among many others, have found in recent years sizeable bumps in prominence and exposure by moving games to OTT providers such as FloSports, Stadium, and ESPN+, the sports media giant’s unbundled direct-to-consumer offering.

Those streamers, conversely, have found college sports’ middle and lower classes to be a highly fertile source of content that, divorced from the realm of broadcast or cable TV, doesn’t necessarily require massive ratings to be economically viable. And less prominent sports such as volleyball and wrestling, that wouldn’t previously be shown anywhere, have now found a new home from the programming-hungry OTT operators.

“Tens of millions of viewers are not necessarily in the roadmap for a lot of these entities, but it doesn’t have to be either,” says Mark Floreani, FloSports’ co-founder and chief executive. “We think it’s a great time for the have-nots of the sports industry because they don’t have to be lost in the shuffle anymore. We see lots of opportunity in the middle and long tail.”

Humble origins

Like many successful startups, the origins of FloSports started from a personal story. Floreani ran track and cross country at the University of Texas, while his brother Martin wrestled in high school and was still a huge wrestling fan. In 2006, the pair started the company covering events digitally in those two sports, sitting far off the radar of any major US media company. The Floreanis’ start for FloSports involved just $10,000 in seed money raised from family and friends.

Several years of essentially a hand-to-mouth existence followed, with halting corporate expansions into swimming and gymnastics, two more sports outside the industry’s typical focus on US football and men’s basketball.

However, fuelled in part by a fast-accelerating acceptance for all forms of streaming video and a continued focus on giving fans what other outlets weren’t, FloSports’ subscriptions and corporate fundraising began to grow by 2013, and then by 2017, revenue was nearing doubling annually and now sits in an undisclosed eight-figure range, with content available in 20 different sports.

FloSports in early June also closed on a $47m Series C round of funding, led by Discovery Inc., with the funds targeted in part for more rights acquisitions.

Stadium

Stadium, created in 2017 from the merger of assets from the Sinclair Broadcast Group, 120 Sports, and Silver Chalice’s Campus Insiders, has a much more corporate origin story. Sinclair is one of the largest broadcasting groups in the country, 120 Sports was backed by several major US pro leagues and media entities, and Silver Chalice was created by the Chicago White Sox.

But it, too, has quickly grown its business in no small part by steadily amassing content rights from the likes of the Mountain West and Atlantic 10 conferences, Conference USA, and the Patriot League, among others, and has quickly grown its presence in women’s and Olympic sports.

“Everybody is in play now,” says Jason Coyle, Stadium’s chief executive, regarding the land rush for rights deals. “Not only is there a wealth of content to be had, but we’re continuing to see a lot of other players, whether it be DAZN, B/R Live, or somebody else, beginning to come into the market. It’s a really wide-open space now.”

Differing economic models

The developing niche college play in US sports media contrasts sharply against an overall, historic shift in the college sports landscape over the last decade that has concentrated clout and influence among the Power 5, which is made up of the Atlantic Coast, Big Ten, Big 12, Pac-12 and Southeastern Conferences.

Schools from those five conferences, boosted in part by a wave of realignment early this decade, now dominate both the on- and off-field competitive landscape in US college football and men’s basketball, two key revenue drivers in that part of the industry. And each of those five conferences have struck long-term media-rights deals with sports TV behemoths such as ESPN and Fox worth in excess of $2bn that extend well into the 2020s, and in the case of the ACC goes all the way to 2036.

As the recent CAA-FloSports deal shows, the next tiers of college sports operate at a vastly different level in terms of both dollars and years. But the rise of OTT streaming has allowed for a variety of different economic models, and an ability to work at a much smaller scale. Providers such as FloSports, ESPN+, and the much smaller College TV Ticket work on a subscription-based model, with fees typically ranging from $4.99 to $11.99 per month, generally in line with pricing for other streaming video products such as Netflix and Hulu.

ESPN, which in March struck a 13-year, broad-based media-rights deal with the American Athletic Conference that includes a sizable presence for the organisation on ESPN+, says a concerted push into college sports has been a boon for the subscription product, which debuted in April 2018. ESPN+ now has more than 2 million subscribers, and has helped the company generate a cord-cutting younger audience that is becoming increasingly didinterested in any type of traditional linear TV subscription.

“College sports will I think be a big part of” ESPN+, says Burke Magnus, ESPN’s executive vice-president of programming and scheduling, upon reaching the agreement with the American Athletic Conference. “It provides the opportunity for conferences of all shapes and sizes to have really deep-branded comprehensive environments in that product where their fans can have accessible and affordable access to high-quality content in a comprehensive way, and well beyond just football and basketball, which tend to be or have tended to be the bell cows, if you will, on linear television.”

Mike Aresco, commissioner of the American Athletic Conference, says its ESPN deal is so important as to potentially challenge the status quo of college sports.

“This agreement positions us well in the changing media landscape and moves us closer to our Power Six goal,” he says.

Stadium, conversely, works on an advertising-focused model where it also gains carriage fees from some pay-based streaming providers such as Sling. But Stadium has focused its efforts on providing viewers free access through its own digital channels and free streamers such as Pluto TV to supplement a presence on over-the-air TV.

But in each of those situations, individual games from smaller colleges generating as little as hundreds of viewers remains within the bounds of the economic models. And each of the programmers say they have been able to steadily expand their reach beyond the core audience of alumni, and family and friends of the participating athletes.

“We’re seeing a lot of increasing boost around viewer discovery,” Coyle says. “A good game is a good game, regardless of who’s playing, and if you help bring viewers into that, they’ll stick around. And I would presume for a lot of what we’ll do, we’ll actually reach a bigger audience than what they might otherwise get on cable.”

Heightened flexibility

In addition to new levels of exposure, particularly for under-served sports, the OTT platforms have afforded new levels of flexibility both on and off the field for smaller college conferences.

On TV, the smaller conferences have often shunted to less attractive kickoff and tip-off times and days, such as weeknight and late-night weekend windows, in order to get those timeslots at all. Operating game schedules so heavily at the mercy of TV has been received poorly by many of the conferences.

“Why are we playing at 8:15pm? Why is a basketball game tipping after 9 o’clock?” asked the Mountain West Conference’s commissioner Craig Thompson last year. The conference is currently in the midst of negotiating a new media-rights deal, and given its prior forays with Stadium, FloSports and placing some live games on Facebook, some type of prominent streaming component is heavily expected in that next pact.

“We’re not the only league that does that, everybody plays late. We have been told directly by our television partners, the later you play the more value you bring to us,” Thompson said.

But Coyle says a fundamental part of Stadium’s basic pitch with conferences that he meets with is returning that control back to the colleges.

“We’re willing to be very flexible with kickoff and tip times,” Coyle says. “That’s not something we’re dictating.”

The other major piece of flexibility comes from game inventory. In nearly all of the deals between the streaming players and the smaller conferences, the agreements are not exclusive, allowing the conferences to slice off pieces of their schedules to air on linear TV, either as additional rights agreements or as time buys.

Even the Colonial Athletic Conference, despite its aggressive play with FloSports, will retain the ability for both the conference itself and its individual member schools to place some games on linear TV, including a package of basketball games on the CBS Sports Network.

“That ability to do both and maintain that flexibility was really key to all of this,” D’Antonio says. “We believe we are set up well for the future, and we’re sort of a taking a step off the ledge [toward digital]. But we do still have a good number of fans on linear TV, too. It’s really the best of both worlds.”

That type of flexibility is going to be important for the streaming players going forward. As major entities such as ESPN and CBS increasingly emphasise their digital assets, the smaller digital-only players won’t be able to compete for future rights packages strictly on financial terms.

“We certainly don’t want to get into a cheque-writing contest with the likes of an ESPN or a DAZN, and we don’t need to go to a conference and ask for the whole [schedule],” Coyle says. “But what we want is a solid package of games that gives us consistency in scheduling and something to rally around. We get that, and we’re in good shape.”

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