IP 12: The "Battering Ram": Are we on the verge of a new revolution in TV sport?
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It’s the last day of the Premier League season today and a good chance to consider how big tech and sport might converge in coming years and whether we are on the verge of a genuine disruption in both sport and television.
A second disruption in sports rights?
Rupert Murdoch famously described sports rights as the “battering ram” that would move his TV business into people’s living room. This approach, with Sky buying the rights to top flight football and test match cricket in the UK, was outstandingly successful. Murdoch was the original disruptor of TV sport (with the possible exception of his fellow Aussie Kerry Packer) and also the disruptor of sport itself.
Could we be on the brink of a new disruption, this time led by tech and streaming? Potentially this could lead to greater fan engagement and a more personalised fan experience. The unique ability of sports to create shared experiences could be front of mind as tech companies and streamers look to build both subscription and advertising revenue, whilst becoming central to important cultural moments. Similarly, sports such as cricket and basketball, which have ambitious global expansion plans might look to companies with an existing global footprint to lead the charge. If misjudged or rushed, however, a shift towards streaming could also create a confusing and fragmented environment that could prove frustrating for fans and counter-productive for sporting authorities.
Sport as the battering ram
There’s not a country I travel to that doesn’t have a passionate love of the English Premier League. It’s undoubtedly one of the great British exports of the past few decades, with Premier League sides having strong fanbases around the world (during my time in Singapore, everybody had a Premier League team and there’s even a replica of the Shankly Gates at the Liverpool shop in Bugis Junction). Over 3.2 billion people are said to have tuned in to a Premier League game on TV during the 2018/19 season.
The Premier League was launched in 1991, with matches being shown exclusively live on Murdoch’s Sky TV, which had started two years earlier. This led to a skyrocketing of subscriptions to Sky from which neither Sky nor the Premier League looked back.
The years following the launch of the Premier League led to a bonanza of TV rights deals not just in football but across the piece. The first Sky deal with the Premier League amounted to around £50 million a year. By 2001, that was £520 million a year.
The battering ram had worked for Sky. The coffers of sporting authorities round the world were bulging and sport had truly become a business. The first disruption in TV sport was of profound importance to not only sport, but also how people consume TV and information more generally.
Murdoch understood the power of sport to drive business growth and its unique ability to provide a shared experience. The power of sport remains undiminished and it is this power that might lead to a new, streaming-led disruption. Sport has a largely unmatched power to drive audience and communality. At a time when “water cooler” moments have diminished and societies often splinter into different interests, sport is a rare unifier.
The income versus audience size trade off. Increased income but a smaller shop window
Following the Premier League disruption, the global market for sports rights deals continued to sky rocket. The global value of sports rights deals was $27 billion in 2010, is now $55 billion and will top $60 billion by 2024. Indian Premier League cricket, plus the NFL American football and combat sport deals have helped the number continue to surge.
So far, so good for sporting authorities - a bumper payday and a massive global audience. For cable and satellite companies, sports rights became an essential part of the “bundle”, encouraging consumers to buy a bundle of channels that included sport.
But the trade-off for greater income for many sporting authorities was a decrease in their domestic audience. Cricket in the UK stands as one of the starkest examples of this. In the years since test matches were moved from free to air to pay TV the number of people actually watching test cricket on TV dramatically decreased.
Although the TV income going to cricketing authorities has continued to grow, the audience for the product has fallen dramatically. American sports, notably basketball and baseball, have also seen falling audiences after blockbuster rights deals that were cable heavy.
For the likes of football in Europe, cricket in India and NFL in the USA, the appetite for live sport remains insatiable, but for other sports the trade-off between income and attention becomes a much more difficult balancing act.
From scarcity to abundance. The struggle to capture attention has meant that TV sport audiences have grown older.
The disruption in TV and sports heralded by Sky and the Premier League was followed by an even greater disruption - the growth of the internet. And the growth of the internet led to a huge increase in rivals to sport for attention.
An age of scarcity, where cricket, football, horse racing and other sports were amongst the only sports to be shown live on UK television, was replaced by an age of abundance, where people became overwhelmed with choice of sports and greater choice of entertainment and information.
This has meant that the average age of TV sports viewers has tended to trend older.
This has been the case in the United States:
And in the UK:
The Deloitte Media Insight Report has found that millennials are much more likely to be gamers or consume user-generated content than watch sport using traditional TV. As such, sporting authorities are now having to consider how to maximise TV rights income whilst also ensuring that they aren’t putting the future of their sport at risk by neglecting the importance of building a generation of fans.
Younger viewers are much more likely to go directly to streaming. “Cord cutting” is accelerating
As a number of studies have shown, a shift from traditional TV to streaming services is increasingly becoming the norm. A study by UK regulator OFCOM found that 16-24 year olds watch seven times less broadcast TV than those aged 65 and over. Nine out of ten 16-24 year olds will go straight to streaming services.
Subscription video on demand and YouTube now accounts for over half of all TV viewing by 16-34 year-olds. This pattern is also seen in the United States:
This trend is pushing so-called “cord cutting” in the United States, where people abandon traditional cable bundles in favour of streaming services and aggregators like Apple TV.
This trend looks to be one that is accelerating. It’s notable that this is also leading to a consolidation in the streaming market, which became oversaturated during the pandemic.
Clearly this has a massive impact on the future of big tech and the future of sports rights. The decline of broadcast TV, particularly amongst younger people, means that sports governing bodies will have to shift their approach to TV rights. Tech companies have already dipped their feet in the sport streaming waters, with Apple TV gaining streaming rights for the Major League Football in the US and Amazon gaining some Premier League rights and rights to the US Open tennis. The potential power of sporting rights was shown when Amazon Prime displayed its most successful period of new customer acquisition in the UK after gaining a relatively limited set of Premier League rights.
The initial experience of watching sport via streaming was a frustrating one, with broadband speeds meaning that the stream was seconds or even minutes behind real time and some fans complain about buffering and unreliability. Some streaming services, such as ITV during the 2021 European Championships, buckled and crashed because of the increased demand for its service. But as streaming becomes increasingly reliable and tech companies invest heavily into an improved and immersive user experience, might the next disruption be just around the corner?
The potential impact of streaming led disruption of sports rights
YouTube TV’s acquisition of “Sunday Ticket” NFL rights looks to be the sign of things to come as big tech moves from flirtation with sports rights to seeing sport as a more important part of driving subscriber, revenue and brand growth. Big moves by big tech into sporting rights could have the similar battering ram impact on both TV and sport that the formation of the Premier League had over thirty years ago.
An “All In” approach to sports rights could deliver increased engagement and personalisation
If sporting authorities decide to follow the lead of Baseball and sell sporting rights at a global, rather than a local, level both sporting authorities and consumers might benefit from an “all in” approach. This could mean greater choice and personalisation across devices; the ability for enhanced engagement through social media and other channels; and the chance to tap in to the global fandom that accompanies major sports such as football, cricket and basketball. A thoroughly integrated engagement experience could build on the matchday experience for fans and prove a boon for advertisers looking to reach a key and engaged market segment.
An attachment to a global tech brand, with high visibility and substantial marketing heft in a number of markets, could help sports with substantial global ambitions (cricket and basketball were the two most mentioned at a recent panel discussion on this that I attended) quickly reach new markets. For tech firms, building global streaming rights would mean the potential for substantial growth in their streaming subscriptions and advertising revenue.
Tech firms buying sports rights could see tech platforms become immersed in local culture
Tech companies and streaming providers could make a major play with the purchase of TV rights in their dominant local market. This has already been seen to an extent with You Tube TV’s purchase of Sunday night NFL matches. Buying streaming rights to the Premier League in the UK or IPL cricket in India, for example, would quickly make rights buyers a crucial part of national culture. By going “all in” to create a high-quality multi-platform experience in this scenario, tech companies could transform perceptions and be seen as genuinely “local” as well as global.
An effective streaming revolution could increase the shop window for some sports
As noted earlier, the shift from free-to-air to pay TV has substantially reduced the shop window for many sports, including some as culturally important as cricket in England. A canny streaming operator would consider streaming some content for free as well as partnering with local terrestrial broadcasters to maximise both distribution and brand recognition. Such a move can already be seen with the change in approach taken by basketball teams in Phoenix in a response to falling audiences. As ESPN described the move:
In a move that is perhaps both game-changer and tipping point, the Phoenix Suns and Phoenix Mercury have struck a deal that removes their long-held television rights from cable. Starting with their next seasons, the teams' games will be broadcast for free over-the-air and streamed online on a new direct-to-consumer service.
A streaming revolution in sports could accelerate aggregation and smart TV adoption
The rise of cord-cutting and shift towards streaming has already seen a big shift towards the use of smart TVs to view streaming services. Over 40 per cent of people using YouTube in the United States, for example, are doing so on televisions, rather than computers or mobile devices. The use of smart televisions is already forecast to grow by 11% year on year and a decisive shift towards sports streaming could accelerate this further. Undoubtedly the goal of major tech players, such as Apple TV, You Tube and Amazon will be to be the market leader in this trend and use their sports streaming investments to position themselves as the most important TV aggregator and “doorway” to a smart TV and a streaming dominated TV environment.
The globalisation of cord-cutting?
Pay TV, particularly in bundles that include broadband and telephone, continues to be a popular package in Europe, despite years of “cord-cutting” in the United States. But dramatic changes to the way in which sport is televised could change this. Pay-TV providers should consider at this early stage how they can enhance the user experience and build more effective streaming integration into their services to ensure that “cord-cutting” doesn’t cross the Atlantic.
Streaming done badly could lead to fragmentation and frustration for sports fans
A potential nightmare for sports fans would be if tech companies only approached streaming in a half-hearted manner, rather than seeing at as a core proposition. Any streaming offer marred by technical glitches and delays could be damaging for both the streamer and the sport. Equally, a sports rights environment that saw different sports going to a variety of streamers could lead to fragmentation of sports content, increased friction and frustration for both fans and sporting authorities.