Consumer habits are changing constantly. The way they consume sports content is different than it was a few years ago — when traditional linear TV was the only way to consume sports. The entrance of big tech into the content and entertainment space has hastened these changes. Netflix’s annual content spend exceeds $15 billion; Disney+ reached 100 million subscribers in less than 18 months and expects over 350 million subscribers across its Disney+, ESPN+ and Hulu streaming services by 2024. In the sports industry, the shift to direct-to-consumer (D2C) streaming services has quickened thanks to the changing fan — according to a study released by Grabyo in 2021, 79% of fans globally would now be prepared to completely switch to streaming services for live sports and only 12% plan to continue paying for broadcast TV packages exclusively.
But the question is, what is the best formula for video monetization?
For the past two to three decades, rights holders have relied on broadcasters and media partners to create the industry’s business model and drive the most significant revenue streams in sports. These commercial partners brought large amounts of money into sports, and anchored these relationships in contractually obligated incomes, fixed commissions, and minimum guarantees, usually over long periods of time. This has driven stability and growth in the industry. For example, from 2010 till 2020 the franchise values of the top professional teams in sports have increased by an average of 500%, outstripping the performance of the general economy.
Now, the next iteration of the model has different actors in the mix. Technology companies, data companies, athletes (or athlepreneurs), and capital owners (e.g. private equity). This new wave of powerful stakeholders is evolving the model to take advantage of the new landscape. Instead of relying on legacy revenue streams, they are generating new ones and expanding the IP monetization of sports beyond the regular revenue streams.
Traditional media rights values are declining or stuttering, as evidenced by the recent domestic deals in Spain for LaLiga and England for the Premier League. And yet, global sports media rights are expected to rise to $85 billion by 2025. This is driven by the growth of streaming and the unbundling of digital streaming rights from traditional media rights.
This shift from traditional broadcasting to digital media is a consequence of technological innovation and changing consumer habits– digital video is easily distributable and therefore bypasses traditional distributors, creating new revenue models and consuming premium content any time, anywhere, on any device, with no interruptions. Sports organizations are responding. The International Olympic Committee launched the Olympic Channel in 2016, as a way to engage fans through video content and social media. Relying on this mixed media approach with over 90% of the content relating to athletes, it was able to monetize media in a new way whilst avoiding the cannibalization of its existing broadcast agreement. In 2019, UEFA launched UEFA.tv and grew their digital audience significantly and offered new opportunities to their commercial partners. World Rugby has seen a 9x increase in digital video views at its last World Cup in Japan, giving its partners new channels to engage with fans. Across the Pacific from Japan, the San Francisco 49ers saw a 338% increase in live game video streams once it launched a dedicated app.
The global pandemic accelerated the adoption of digital platforms to engage fan bases. With events slowing down or stopping, content development across video & digital media became a source of commercial innovation for sports organizations.
LEVERAGING VIDEO
Platforms
Tech-enabled platforms on the market now offer the possibility of taking a pay-as-you-grow approach, enabling sports organizations to experiment & innovate in video distribution & monetization. By owning the video monetization formula, sports organizations can also own the fan data chain that is created. With these solutions, it is possible to understand who is consuming your content, when they do it, what they consume, and on what type of devices. Other behavioral data and demographic data give sports organizations a powerful new tool to iterate their own video production processes, timelines, calendars, to increase engagement.
Digital assets
The increase in the availability of these platforms has encouraged the creation of new digital assets. Different types of packages of content, media, merchandise & experiences can be bundled based on the data coming into the sports organization. Coupled with powerful CRM & marketing analytics tools, it is possible for marketing & revenue teams to create new assets on a regular basis. By thinking about the full video chain and creating smaller assets for partners, it is possible to increase commercial success.
Content
Sports organizations’ video strategy must increasingly be controlled internally and operationalized through a mix of internal and external resources. By thinking of the full content matrix possibilities of the sports organization, the video opportunity expands beyond the action happening on the pitch or in the pool. Fans are interested in this type of content. In fact, 25% of Millennials and 23% of Gen Z watch 3+ hours of non-game content a week. The type of content that is possible to develop & distribute can be funny clips, bloopers, player interviews, match stats, expert analysis, documentaries and dozens of other content options.
WHAT'S COMING N3XT
In 2022 and beyond, we will see more organizations taking ownership of their video monetization formula by leveraging new platforms that allow for algorithmic programming & personalization. They will grow through video & content. And, they will unlock first-party data for sports organizations. Personalized marketing is much more effective than mass communications. That’s where first-party data becomes critical for sports organizations. It is the key to creating and delivering highly personalized content to the right audiences at scale.
Social media platforms, technology companies and media companies are taking a greater share of consumers’ time and driving up the cost of acquiring new fans. Advertising on Facebook, Instagram, YouTube, or other platforms is becoming more expensive for sports organizations to use. Privacy concerns spurred by multiple data leaks in the last few years have given birth to new data privacy laws & regulations such as GDPR.
As Sir Martin Sorrell, founder of WPP, the walled gardens have gotten taller in the last few years. This makes the direct-to-consumer transformation imperative for sports organizations.
Examples abound in the sports industry and are great learning sources for those of you looking to embark on your video monetization journey. The PGA Tour launched TOURCast, an interactive golf shot tracker and video highlights platform that lets its fans track players in real-time as they move around the golf course. Each of the log-ins, camera changes, email campaign clicks, social media engagements, are sources of first-party data that the PGA Tour can use to improve the fans’ experience and engage its partners.
The future of sports viewership is not too different from its past. The fans are the focus. What has changed is that they are now in the driver’s seat. The viewership landscape is changing, and sports rights holders would benefit from understanding these trends early on, and integrating them into their media, commercial and digital rights negotiations and distribution plans. While sports rights may have plateaued in the traditional sense, the unbundling and disintermediation of sports media will pay higher dividends to those that innovate.
BEFORE YOU GET STARTED
Sports is about building a strong and engaged community. When a sports organization is thinking about launching a new video initiative or project it needs to be evaluated on two metrics– cost of acquisition and customer lifetime value– in order to determine the business opportunity behind it. When we work with our clients on their digital transformation initiatives and video strategies this is a critical analysis that must take place.
Are you thinking of your video monetization formula? Are you considering becoming a D2C sports property? Are your fans looking for you to innovate how you engage with them? Let us know. We will bring our team of experts who are guiding our clients and partners in their own transformation process. Fill out the form below and we will get in touch with you as soon as possible.