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OTT viewership is increasing steadily, but linear still rules

  • Greater variety of sports are now available due to OTT offerings
  • Key issues inhibiting growth relate to technology, willingness to spend on t0p-tier rights, according to experts
  • OTT companies’ rights fees still fall well below linear fees

After all the glitz faded from Super Bowl LIII this past February in Atlanta, Georgia, and the last piece of confetti fell on the champion of the National Football League, the New England Patriots, CBS Sports reported an average minute audience of 2.6 million people for its digital stream of the game.

The number, a new record for the Super Bowl that is generally the annual highwater mark for US traditional pro sports streaming, was up by a whopping 31 per cent from 2018 and was roughly five times as large as the figure Fox Sports generated just five years prior for Super Bowl XLVIII in 2013.

But that streaming figure also remained a tiny fraction of the average US television audience of 98.2 million for the game, which comparatively sank to an 11-year low.

Such is the dichotomy where live sports streaming now finds itself. The last decade-and-a-half has seen a historic explosion of available live sports content online from out-of-market league subscription packages, to niche sports offerings, to college sports, to highlights-based programming and to parallel offerings such as the Super Bowl, which are straight digital simulcasts of what is shown on TV.

Many of those streaming products continue to enjoy robust relative growth, while still existing more on the margins of the traditional sports media ecosystem where broadcast-based deals such as the ones the NFL has represented the vast majority of overall fan consumption and rights dollars spent.

But the ever-increasing amount of OTT sports content, as well as the growing interest of digital-only players such as Facebook and Amazon in obtaining top-tier sports content and continued growth of pure-play digital sports streamers such as Stadium, DAZN and FloSports presents several big questions. Namely, how soon will live streaming represent an actual majority of the sports media landscape, if ever, and what needs to happen to make that a reality?

“Streaming traditionally was 2 to 3 per cent of the total viewing audience for a big event,” said John Kosner, formerly ESPN’s digital chief and now president of digital sports consultancy Kosner Media. “It’s generally about 5 per cent now. I could certainly see that figure tripling. But for the immediate future, it’s still going to be the vast minority.”

The key issues inhibiting further growth, executives say, relate to technology, and even more pertinently, dollars.

For all the consumer choice, ease and portability OTT streaming provides, it still has a critical issue with latency from real time. Emerging mobile technologies such as 5G and improved WiFi networks hold sizeable promises in dropping down lag times to near zero.

But for now, average lag times for live streaming to real time generally average 30 seconds to a minute, though that can vary on a wide array of factors specific to each end user.

Along those lines, Kosner describes the current experience of streaming a live football game where “Tom Brady will score three different times more or less at once depending on which room you’re in.”

Then there is the critical issue of rights fees. Amazon, for example, spent an estimated $130m (€119m) on a two-year extension for non-exclusive rights to the NFL’s Thursday Night Football. And DAZN spent an estimated $300m for three years of streaming rights with Major League Baseball to create its NFL RedZone-style whip-around show ChangeUp. Many other digital sports rights deals have also hovered in the eight and nine-figure range. But those amounts remain far below the billions of dollars typically necessary to obtain any significant package of top-tier US pro sports rights.

For several years now, the entire sports industry has actively wondered when one of the so-called ‘FAANGs’, Facebook, Amazon, Apple, Netflix and Google, or perhaps someone else, would buy a large package of sports rights on par with a traditional broadcaster. And while they continue to be engaged with the top leagues, their game and highlight inventory generally remains mere fractions of those of the large broadcast networks. Each of the major US pro leagues, however, has their core media rights coming up for renewal in the first half of the 2020s.

“The next rights cycle is going to be a real telltale” said Jeff Volk, head of business and revenue for the Americas at Deltatre, which supports the live streaming efforts of numerous entities, including the NFL. “But the big boys are always going to be there. This is still a scale-driven business, and so far they’ve also shown they’re still writing the biggest checks.”

Even World Wresting Entertainment, which after five years upended its entire media strategy and now centers it around its OTT product the WWE Network, still airs Friday Night Smackdown on Fox in a rights deal that debuts the new network TV placement on October 5.

“Linear is not dead. It’s just changed, because the world has changed,” said John Brody, WWE executive vice-president of global sales and head of international.

There are several areas outside of the established stick-and-ball sports where a digitally native media strategy is fully in place and posting massive streaming numbers. Esports routinely draws streaming audiences in the millions and tens of millions. And last year’s League of Legends World Championship Finals drew a global average minute audience of 19.6 million, though that figure was boosted in part by some TV distribution to supplement online platforms such as Twitch, YouTube, and ESPN+.

As a result, many leagues such as the NBA are increasingly placing content on Twitch and seeking to learn as much as possible about the consumer loads and traffic patterns they see. A similar dynamic is afoot in India where streaming platform Hotstar in May delivered a streaming audience of 18.6 million concurrent viewers for a championship cricket match, an audience figure that dwarfs anything comparable currently occurring in North America.

In the meantime, a wide array of technological efforts are rapidly developing to boost live sports streaming with interactive features such as customised statistics, personalised play-by-play and colour commentary, synchronised chat features, gamification features, and dedicated camera angles. Such measures are all in an effort to make streaming look less and act less like linear TV, while still boosting audience size and engagement.

“There is a lot happening to lean into the inherent advantages of digital to create a truly singular experience,” said Miheer Walavalkar, chief executive and co-founder of virtual reality firm Live Like, which is working with Deltatre on a combined streaming product offering.

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