Now Streaming: Live Sports with Ads
With Apple, Amazon, and Netflix all pursuing live sports content, advertisers gain a new window to reach cord-cutting households
Last week, Netflix officially launched its “Basic with Ads” tier in the U.S. and a dozen global markets, marking an end of an era for the so-called “streaming wars.” Now the key battle is no longer focused on subscriber growth via premium subscriptions, but rather maximizing audience reach, especially internationally, often through more affordable tiers subsidized by advertising.
But not every Netflix subscriber is going to downgrade to the ad-supported tier. Yes, subscription fatigue is growing, especially when it comes to content streaming services, with a recent survey reporting that more than one third of users worldwide are likely to cancel a subscription in the next year. But, given the various restrictions Netflix has put on its ad-supported tier, including lack of HD video quality and limited access to certain licensed titles, most existing subscribers will likely stay on their current subscription plans.
But that doesn’t mean there is no way for the streamers to monetize the audiences that are paying their subscriptions to avoid ads. In recent months, Amazon, Netflix, and Apple have all started to explore buying more sports rights and double down on ad-supported sports content.
Amazon has been working on adding live sports content to its Prime Video service for years. Starting with acquiring non-exclusive rights to stream portions of the NFL’s Thursday Night Football games during the 2017 NFL season, Amazon has experimented with many different types of sports content over the years. Now, Prime Video holds a variety of sports content in its live sports hub, which includes the sports content it has bought the rights of, as well as the sports content that Prime users can gain access to by subscribing to third-party streaming services, such as NBA TV and Paramount+, via Prime Video Channels.
Most recently, Prime Video won the exclusive streaming rights for NFL’s Thursday Night Football games, making the first-ever streaming-only provider to agree to carry a weekly package of NFL games. The first exclusive NFL game of Kansas City Chiefs vs. the Los Angeles Chargers, which live streamed on September 15, reportedly drew 15.3 million viewers and led to “the biggest three hours for US Prime sign-ups ever in the history of Amazon.”
(A side note on NFL content on streaming services — as part of the new deals the NFL signed with various media companies in 2022, once the new contracts kick in in 2023, NFL fans will have the opportunity to watch any game on streaming platforms. In addition to the aforementioned Thursday Night Football games on Prime Video, Disney will stream Monday Night Football on ESPN+, NBC’s Sunday Night Football will be available on Peacock, Paramount+ will stream the CBS package of games and Tubi, the Fox owned AVOD, will also stream live games. Therefore, beginning next season every NFL game will be streamed.)
In addition to the tentpole NFL content, Amazon is acquiring smaller, niche sports content as well. For instance, Axios reports Prime Video has recently signed a deal with Overtime Elite — which is a six-team basketball league featuring some of the best players in the world ages 16 to 20 — for the exclusive global streaming rights to 20 live games per season for the next three years. Overtime began as a digital media company centered around high school sports and quickly gained a massive following through viral videos and a brand that spoke to Gen Z.
Netflix is also getting into the live sports arena as it pursues low-cost ways of diversifying its own catalog with streaming sports, particularly sports streaming rights in Europe, according to a recent report by The Wall Street Journal. This strategy makes sense given the extensive global footprint of the company. The company also reportedly considered buying the World Surf League, but negotiations fell apart because of disagreements on pricing. This unrealized move points to an interesting strategy. Per the WSJ report:
Some Netflix executives believe that given the size of its platform, Netflix could turn lesser-known sports like surfing into big franchises, and create new sporting tournaments or events.
Following this logic, perhaps Netflix should consider buying a Pickleball Tournament, considering the momentum this emerging niche sport has been gaining in recent years. Even beer giant AB InBev has purchased a Major League Pickleball (MLP) team starting in the 2023 season.
It is also interesting to note that this week, Netflix is reportedly planning to host its first live comedy show starring Chris Rock, which is set to stream globally in early 2023. This upcoming live content could be Netflix testing the waters of live content on its famously binge-friendly, on-demand platform.
Apple is a relative newcomer to the streaming market, but Apple TV+ has already started streaming MLB’s Friday Night Baseball games in April, which are exclusively available through Apple and not broadcast elsewhere. The Apple TV+ MLB experience in the US also includes a 24/7 livestream ‘All MLB, All Day’, the ‘MLB Big Inning’ show, and other archive content, all streaming in the TV app as part of an Apple TV+ subscription. All these MLB games carried ads, just as a normal sports broadcast would, which was a noteworthy first for Apple, one of the only tech giants that have historically been largely ambivalent to ad dollars, and prefer to hammer home the anti-tracking privacy features of its devices as major selling points.
That said, perhaps that ambivalence is starting to fade away. Back in June, Apple inked a 10-year deal with Major League Soccer (MLS), making the Apple TV app the exclusive home to all live MLS matches starting in 2023. MLS season pass holders will get access to the full sports package via MLS’s own streaming channel while Apple TV+ subscribers will be able to watch most MLS and Leagues Cup matches. Last week, a Bloomberg report claimed that Apple is holding discussions with advertising partners and MLS sponsors about airing ads during soccer games and “related shows,” beginning in February. If true, the move would represent an expansion of Apple’s existing live advertising platform, which it is already using during the MLB games.
All these recent developments from the major global streamers point to an important trend of live sports content, long regarded as the last bastion of the cable TV bundles, finally starting to migrate to streaming services, and bringing with them, advertising opportunities to previously ad-free streaming environments. This dovetails nicely with the ongoing push towards revenue diversification among streaming companies, and could further unbundle cable TV packages and accelerate the cord-cutting movement further, without leaving brand advertisers in a lurch. After all, live sports content tends to have dead-air moments that lend itself perfectly to commercial breaks.
Another interesting side effect of sports content getting on streaming services with global reach is that sports content is also finding cross-border audiences beyond their home markets. For example, Australian audiences are sports fans’ interest in U.S. sports has grown significantly in the past few years, particularly among younger male audiences. The upcoming Qatar FIFA World Cup offers a global stage for brands, with matches to be streamed globally on platforms like Peacock and FuboTV.
