SportMichael Murphy

The sports media landscape post-pandemic: Consumer behaviours may accelerate towards streaming, but sports broadcasting won’t necessarily be quick to follow suit

Like much of the world, professional sport has ground to a halt as the spread of the COVID-19 pandemic has set in. Professional coaches and players were amongst the first, high-profile names to test positive and the Champions League fixture between Atalanta and Valencia has been described as a 'biological bomb' that intensified the spread of the virus in both Italy and Spain.

The Sports Media Landscape post-pandemic

Today, we sit in a world of uncertainty, with no live sport to lift our spirits as they did less than a year ago when the Wimbledon Men's Final, The British Grand Prix and Cricket World Cup Final climaxed in a sports scheduling extravaganza. Indeed, the Euros and Olympics have been postponed, and who knows if LeBron will win his 4th ring with the Lakers or if Liverpool will ever lift the Premier League title? At least the corona virus has brought about the best in meme-making, the likes of which have not been seen since football was coming home in the long hot summer of 2018. Some things never change (the memes, not the weather!).

Many newspaper columns have already been written about the longer-term effect of the current hiatus on society at large, but what will it hold for sport. Re-scheduled fixtures and tournaments aside, will consumers relationship with sport change? Heaven forbid, some may even fail to reignite their passion for sport as its significance pales in these uncertain times; there is, after all, more to life than football (apparently)?

Whilst public demand for professional sports broadcasting is unlikely to drop significantly post-pandemic, media consumption behaviours may well have changed. For many, more traditional, linear TV viewers, this time stuck indoors with family may well open their eyes to online platforms or indeed highlight the lack of value in their current Pay TV packages without sport. Early reports are that BT and Sky are already experiencing a subscriber exodus for this very reason.

Pre-pandemic, the sports media landscape was already evolving, with Over The Top (OTT) streaming services like DAZN disrupting traditional linear and pay TV broadcast viewing. Further developments, like the rollout of 5G, are likely to make streaming more commonplace and, even prior to the corona outbreak, rumours of a direct to consumer (D2C) service from the Premier League were abound. It seems only intuitive then that, if natural consumer shifts towards streaming are accelerated during this time, consumer demand for different sports packages like MLB.tv and NFL Sunday Ticket will grow too.

In February I attended the Westminster Media Forum on Sports Broadcasting, which offered a timely insight into the outlooks of rights holders and broadcasters alike, including the Premier League, PGA, Sky Sports, and BT Sport, among others. The case for more personalised and affordable, streamed sports content was unsurprisingly put forward by DAZN who delivered over 100 events with a million simultaneous streams in 2019. Others also see the value of personalisation and the wealth of data a digital offer could provide for understanding and targeting audiences. However, wider talk highlighted how a switch away from premium and linear, Pay TV sport may not come as quickly as evolved consumer appetites desire.

There are a number of reasons why the shift towards digital platforms may be slow, especially in the UK:

  1. A strong relationship with linear broadcasters: This is not to be underestimated, these relationships are longstanding and mutually beneficial.
  2. Production values and quality: Rights holders don't want to devalue their product with lower quality output. Broadcasters offer high production values and services that can't be taken for granted - production teams, assets, commentators, etc. They're also innovative and invest in pushing production forward. With streaming there are possible quality issues depending on internet performance. Lag in particular is an issue - a split-second delay can ruin any goal scored if you can hear the neighbours next-door celebrating already.
  3. The challenges of moving to a direct to consumer model: Moving away from a broadcaster partnership to a D2C model is a considerable pivot in business model with challenges in understanding, acquiring and serving customers rather than sponsors and broadcasters.
  4. Regulation and piracy: The legal ramifications of shifting models and channels are complicated, especially if broadcasting internationally. Piracy is already a huge problem, that may require even greater investment to combat if going direct to consumer.
  5. Aggregation and minority sports: A moral justification for traditional free-to-air or Pay TV sport is the benefit they bring to niche or minority sports. Free-to-air and sports aggregators bring much needed eyeballs and revenue to these sports that would struggle without this investment.
  6. The challenge of monetising digital channels: Finally, the most significant issue of driving revenue. Monetising digital channels is a considerable challenge; reach may be broader in theory, but up to now this hasn't always been proven out. This has significant implications for sponsorship, after all, BT Sports famously moved its coverage of the Champions League Final to Free-to-air due to sponsors being unhappy with their viewing figures. Likewise, Eleven Sports' purchase of La Liga and Serie A rights was a catastrophic flop due to overestimation of the same. Even Sky Sports viewing figures pale into insignificance versus Free-to-air and in developing markets, like India, where only 1 in 3 have internet access, moving a sport like cricket to digital channels only would have catastrophic implications for reach

It's likely the value of sports rights have peaked as the sporting hiatus hits broadcasters hard, leaving them with less to spend. The same will be true for OTT providers who don't have the luxury of a wider telecoms customer base to fall back on. In this context, for rights holders weighing up taking a risk on an OTT provider or a D2C model versus, say, an intermediary who is prepared to pay more for rights as part of a quad play offer it's currently a no brainer, even if the prices are lower than before.

It's certainly likely to be an interesting few years ahead. How things will play out is uncertain, but what's without doubt is that rights holders and broadcasters will continue to innovate and diversify their channel offering to deliver the right content to the right audience at the right time, but always for the best possible price.

Before we see a proliferation of direct to consumer OTT platforms, partnerships and tailored content by channel are likely to increase. The mirroring of TV and online channels to suit consumer needs may well become more prevalent. Indeed, we're likely to see an expansion of the Premier League's recent collaboration with Amazon over Christmas 2019. Some even speculate that Amazon may be the one player with deep enough pockets to take the Premier League rights off Sky in the next auction, but only time will tell if they end up leading the next phase in the sports streaming revolution.

Meanwhile, other channels like YouTube are likely to continue to help drive reach and revenue with highlights. It's also possible that Free-to-air plays an unexpected, reprising role in driving reach should Pay TV and digital bases decline significantly. Afterall, Sky's collaboration with Channel 4 to broadcast the Cricket World Cup final on Free-to-air is said to have increased viewing by over 10 million - a shrewd move ahead of their Pay TV Ashes coverage.

In sum, even if consumers evolve during their current isolation, once on the other side they remain at the whim of the rights holders and the purchase power of broadcasters. And, even if sports streaming does become more prevalent, this may well not be in the interests of the average sports fan if it means even more fragmentation across paid-for broadcasters and online platforms. Nevertheless, change is afoot; just how quickly and in what direction remains to be seen.

Michael Murphy, Associate Director 2CV London

Michael.Murphy@2cv.com