Last week, MLB became the latest sports property to experience a Covid broadcast bump, with the season-opening Yankees-Nationals game becoming the most-watched MLB regular-season game for nearly a decade.
With Covid-19 lockdowns forcing billions to find new sources of at-home entertainment, sport has been a source of light in an otherwise pretty gloomy landscape. The result has been record viewing figures – and not just for live sports coverage but the documentaries, archive footage and esports broadcasts that filled the gap for live sport between March and May.
We should not be surprised that sport has shown, once again, that it will win the battle for attention whatever the prevailing conditions. Sports media has thrived since the dawn of mass market internet; the average person consuming 38 per cent more sports media content in 2019 than in 2009 according to Two Circles analysis last year.
With internet penetration and access to digital media rising globally, we are confident the amount of time spent watching sport at home or on the move will continue on a similar trajectory. For everyone working in the industry this is good news – something we cannot get enough of at the moment.
But there is a challenge inherent in this situation. The way people are consuming sport is more fragmented than ever.
In our Growing Out of the Uncertainty series we have been exploring how Covid-19 will accelerate shifts in how people engage with sport and the commercial entities that invest in sports rights.
Today, live sport, highlights, and outside-the-ropes content is accessible on any number of devices through linear pay-TV subscriptions, OTT streaming services, social media, news platforms, and even messaging apps. And though broadcasters and rights-owners know the long-standing business model for live, linear TV – which, since Bill Rasmussen founded ESPN in 1979, has been as a driver of subscriptions and/or a platform to sell advertising – the models for this dispersed attention are less-established.
In sports media, we believe the likely Covid-19-induced recession and associated rise in global unemployment will accelerate subscription churn to linear pay-TV broadcasters*, who accounted for 71.4 per cent of a total $48.2bn spend on media rights ($34.4bn) in 2019 according to our analysis.
The consequences will be significant. The amount spent on sports media rights by pay-TV broadcasters will start to decrease after consistent growth for the last half a century. In fact, we will look back on 2019 as the year that, collectively, pay-TV broadcasters as we have traditionally known them reached the peak of their spend on sports rights.
In its place, we will see the adoption of what we call the hybrid media model. Sports rights-owners with a heavy reliance on pay-TV income will be forced to adapt the way they commercialise their media businesses. This means changing how they package and distribute content to sign deals with a greater number of media partners, hedge risk, and become more actively masters of their own destinies.
Hybrid media model
In the hybrid model, rights-owners will cut and sell rights for linear pay-TV broadcasters, free-to-air broadcasters, subscription OTT platforms such as Amazon or DAZN, ‘owned’ D2C streaming services, and free digital publishers – all in the same rights cycle.
This spreads the risk and brings every media platform to the negotiation table – critical in driving competition, a primary contributor to the growth in value of media rights this century as triple or quad-play providers using sport to tie subscribers into long-term broadband or phone deals.
We’ve already seen the early signs of this with pioneering properties like the NFL, which have supplemented strong relationships with linear pay-TV broadcasters with partnerships with Twitter and Amazon for live rights, and highlights and outside-the-ropes content with Facebook – all while building up the subscription bases for Game Pass, the D2C streaming service, in every territory. Expect this to become the norm, rather than the exception.
The billion-dollar question – literally – for sports rights-owners is what content packages they should create, and which distribution channels they should partner with, to drive the biggest long-term commercial growth. Sports content is in high demand, culturally relevant and consumed by billions globally; that means sports rights owners hold the chips, but where should they place them?
Data holds the key to the answer. By understanding the audiences a property is reaching or wants to reach, and how and where they want to consume their content, the foundations for a hybrid packaging and distribution strategy start to form.
Value will be found by selling, activating and evaluating media rights by knocking down the walls that have existed since ESPN was founded over 40 years ago. And with that, sport will realise its potential as a timeless media winner.
* Broadcasters who primarily charge subscription fees for channels, and whose channels are available primarily through satellite, cable and telecoms services