The sports media industry is caught in a complicated and metastable balancing act. On one hand, they’re losing pay-TV subscriptions to OTT, even though pay-TV continues to be extremely lucrative. On the other, Millennials and younger audiences are consuming their media from an increasingly fragmented set of OTT outlets, making direct-to-consumer (DTC) content tough to master. This shift to DTC is thought to contribute significantly to the loss of TV subscriptions and, consequently, to the loss of ad revenue caused by the shrinking subscription audience. Now, more than ever, we need sports streaming solutions that can pose a sufficient balance between TV, OTT, and mobile platforms.
Some sports media companies, like ESPN, make up this loss by negotiating higher affiliate fees. This increases the cost of TV subscriptions for the consumer. Sports already accounts for over 40% of subscription TV’s price. One has to wonder, “When does it end?” By negotiating higher affiliate fees, they end up raising the price of pay-TV and potentially accelerating subscription losses and fueling the transition to OTT.
But that’s not all. The fragmented OTT landscape offers a new difficulty, too. The number of OTT platforms are legion: mobile phone, tablet, laptop, desktop, connected device, game console, smart TV, and so on. At any given moment, a fan might be second-screening with a laptop, tablet or phone while watching the game on desktop, linear TV, Smart TV, or connected device. They could be watching only a percentage of the game! Or, they may view several games at once! Or, more troubling: are they even watching the game?
Speaking of second-screening: there’s social media, too. Twitter just launched a feature called, “Happening Now,” featuring a stream of moment-to-moment updates for fans of US sports. Then there’s Twitter live and Facebook live. Amazon partnered with the NFL, and its first game streamed to 372,000Amazon Prime viewers. These numbers compare to Twitter’s 243,000 viewers and linear TV’s 14.6 million. Even if TV dominates, Amazon’s numbers demonstrate the potential growth, something with which TV has certainly been struggling. With Disney and ESPN further acquiring BAMTech, and NBC and CBS turning to their own sports streaming solutions in 2018, media companies are looking to tap into that growing audience.
While that growth appears to be in its infancy, how businesses respond now will decide whether they succeed in the future.
If DTC content and OTT platforms are the new growth strategy for ESPN, then it’s a good bet that the solution to all these difficulties lies with VOD and live streaming on mobile and OTT. Yet, with rapidly advancing technology, the rise of cloud-based APIs, and the competitive market, it will not “do” to simply start a sports streaming service. These sports streaming solutions will have to be creative enough to innovate their streaming environments in ways that retain and engage their users–that redouble efforts to create compelling user experiences.
The mobile phone: Always connected, always distracted
We all know that a mobile device is one that can be carried from place to place. This means that mobile users are constantly connected. And easily distracted. Distraction plays a key part in the way people consume sports content. Mobile devices are extremely important for second-screening–when viewers watch a sports game and use their phone, tablet, laptop, desktop, etc. simultaneously. Although the mobile phone is a great platform for delivering content direct-to-consumer (DTC), it contributes to many of the difficulties for sports media that we see today.
6 recent mobile usage patterns crucial for sports streaming:
- The mobile phone is popular among Millennials, and younger audiences
According to 2016 Nielsen sports media report, adults aged 18–24 spend 57 hours consuming media each week–-it’s basically a full-time job!
For the first time in any demographic ever, mobile phone media consumption exceeded TV. Millennials use their phone for media 20 hours per week, whereas they watched TV 15.5 hours each week
2. Space on the screen comes at a premium, so any extra means of engaging users needs to be deployed economically
3. The user is always connected and, yet, more likely to be distracted. Push-notifications can pull fans back to the phone
4. The mobile phone is the most popular second-screen.
For example, 76% of NFL fans use their mobile phone while watching a game on TV or online (See Table) and 30% of consumers use their mobile phone as a second-screen (Nielsen).
Second-screening is more common among sports fans. According to the Global Web Index, 86% of sports fans use another device while watching TV, and 7 of 10 fans use a mobile device
5. The mobile phone is often the gateway to social networking, texting, or messaging. 52% of fans use social networks and 48% chat or message with friends and family
6. Google will make its search index mobile-first, arguably, the largest endorsement mobile could receive
Mobile’s implications for sports streaming:
- Whether fans are using their phone as second-screening device or watching a game on the go, the mobile phone is the key device to integrate into sports media viewing
- Is the answer to broadcast content through social media?
- Fans are definitely looking at their phones, but I’d wager they’re not looking to social media to watch a sports game unless the social platform delivers the content free to members who don’t already have a TV subscription. This reaches a new market and generates affiliate fees, but you’re growing the social platform’s subscription base and not your own. As media companies in their own right, I’d wager that social media companies will become the next competitors for sports media. So why sell your content rights for a mess of pottage? These short-term gains may displace declining subscriptions, but this is not a long-term strategy.
- Instead, grow your own subscriptions! Fans are either looking for short-form content–the mobile phone’s specialty–or looking to communicate with friends or their community. Give it to them.
- If sports media hopes to grow its subscriptions and increase engagement for their own content wherever the fans are already looking, they need to develop a more continuous experience between the viewer’s phone or other device and the TV.
- Your sports streaming solutions must invest in your mobile, web, and connected device OTT applications.
- By integrating messaging or chat, you might head off the viewer’s impulse to fear missing out on something outside the game. Put them in direct contact with their community.
- Develop a more continuous experience between your live content, fantasy sports, and other short-form on-demand content. Make it available on your OTT app.
OTT or Connected Devices: re-unify the fragmented pieces of your sports streaming solutions
Over-the-top (OTT) implies the delivery of content through the internet without using a cable or telecommunications infrastructure, or the paid subscriptions typically required by cable or satellite TV. It is often used synonymously with a connected device or direct-to-consumer, though there are important differences. A connected device refers more specifically to the devices that connect to a TV and deliver video content to it over the internet. DTC requires a direct connection between content producers and consumers.
TV Everywhere might be responsible for the conflation between OTT and connected devices. It’s a strategy for tapping into the OTT market without releasing viewers from TV subscriptions. Since TV Everywhere links cable TV subscriptions to OTT content like HBO Go or Big Ten Network’s BTN2Go, it often has a user experience much like TV. But it misses the spirit of OTT, housed in the temple of a high quality, ad-free, video subscription on-demand (VSOD) priced at $7.99/month.
I think we need to face it. Cable companies are built around the cable company. Not the consumer. Frankly, I think consumers resent the high prices of fast internet and cable TV subscriptions. Think about it. The consumer doesn’t care how much those cable companies paid for hard-wired infrastructure. Nor do they think that cable companies should enjoy near monopoly rights. In such conditions, media is ripe for fragmentation. And it has already happened.
OTT disrupted cable companies so profoundly because it disentangled the viewer from the expensive subscription to content they don’t want to watch. Consumers want to pay for what they want to watch. That’s why on demand works. That’s why Netflix’s $7.99/month VSOD subscription succeeds.
And, as always, content is central to OTT. That’s why Netflix succeeds. That’s why HBO Go succeeds in TV Everywhere. That’s why the veritable sports content machine, ESPN, can change its growth strategy to DTC and OTT content and will likely succeed.
Here are 4 key characteristics of OTT (according to a recent Freewheel Study) for sports streaming:
- OTT platforms are often segmented into 3 categories:
A. An attached device (e.g. Roku, AppleTV, etc.)
B. Game console (XBox, PS4, etc.)
C. Smart TV
2. User experience is similar to watching TV
3. The audience is 23 years younger than linear TV, and the median household income $10,000/year greater
4. One-third of viewing sessions are over one hour
This graph gives us an overview of how global audiences use their devices. Connected devices are almost entirely long-form, whereas the mobile and desktop remain a mix. The mobile phone, of course, wins for short-form content. This aligns with our understanding of it as a device on the go, where opportunities to watch video come intermittently and only briefly.
Implications: Sports streaming solutions must integrate OTT and mobile platforms
- OTT through connected devices perform like linear TV. They’re a great opportunity to access younger, more affluent audiences in a format familiar to media companies and advertisers
- The key is to build continuity between your OTT connected device and your mobile app
- A TV and a mobile app are two distinct units, so viewer attention is separated between two distinct entities
- Bridge the gap between where viewers watch sports and where they can watch short-form video, tweet, share on social media, play fantasy sports, or chat and message with their immediate community and family
- If you build continuity between OTT and the mobile app, then engagement and retention will benefit immensely. Viewers will watch where it resembles a TV experience and will second-screen within your own sports streaming solutions ecosystem.
Conclusion: whether VOD or live streaming sports content, invest in your platform
To continue growing and succeeding, sports media companies need to balance TV, OTT, and mobile. And be ready, like Disney, ESPN, NBC, and CBS, to pivot one way or the other. But these companies still lack the necessary investment to develop rich OTT and mobile experiences that would merit a pivot.
No matter how you reach your consumer, it’s clear that the media landscape has fragmented into many channels. As best as possible, sports media needs to integrate their apps and OTT into a single ecosystem.
How will you engage your users?
Share your own predictions and solutions for sports media. We’d love to hear from you!
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