Changing Landscape of Sports Media
Key Takeaways & Insights from NYVC Sports’ Ad Week Panels
Thursday evening I attended NYVC Sports’ annual Ad Week panels— just hours before the much anticipated premiere of Amazon’s first Thursday Night Football broadcast. Given what the NFL on Amazon means for the future of sports content and distribution, it seemed the right night for these two important conversations — to a standing room only crowd, no less.
The first was Rich Greenfield’s fireside chat with Barstool Sports founder Dave Portnoy (a.k.a. El Pres) on the importance of authenticity and voice in building a loyal (read: rabid) audience. The second was a panel discussing the changing landscape of bidders vying for top-tier sports rights — including insights from executives representing The Athletic, OATH Sports, Burst, and Octagon.
Both offered a really good look into just how far the sports media landscape has shifted to digital over the last decade and what this means for the entrenched distributors, digital upstarts, rights holders, sponsors and consumers. I wanted to highlight a few key takeaways and offer my own perspective and context from the evening’s excellent conversations.
Key Takeaways
1. TV isn’t dying, it’s just morphing... but into what, exactly?
The change that’s happening in this industry today is unlike any other paradigm shift, likely since the last 1970’s when cable was introduced. But for a $46.5Bn rights industry at the intersection of their old and new business model, that likely means operating in a dual-track — offering content via both linear TV and digital means, because digital alone can’t make up the shortfall. Octagon’s Daniel Cohen cited Facebook’s $600M bid Indian Premier League cricket rights that “couldn’t hold a candle” to Star India’s winning and Sony’s runner-up bids that came in at $2.6Bn and $1.78Bn respectively.
“The next generation of rights acquisitions is going to be an imprecise, hybridized version of traditional distribution and new distribution” said Oath’s Geoff Riess
Now that there are even more bidder groups for sports rights, from both traditional and digital, the new competition offers rights holders greater flexibility to reach audiences at every level. That said, some of the lower tier rights owners may opt to go for digital-only/digital-first forms faster because traditional bidders will allocate their prime timeslots (and even more capital) to keep top tier (i.e. NFL, NBA, MLB, NHL) rights out of the hands of digital competitors. After all, as I see it, where else is traditional media going to find cornerstone franchises that will keep subscribers from cutting the cord? They needs sports content way more to survive.
But that said, TV isn’t going out of business anytime soon.
For some perspective, Burst CEO Bryant McBride shared that while the mobile video advertising has grown from “~$2.5Bn to $3Bn 48 mos ago to almost $9Bn today… TV [advertising business] is ~$80Bn”. In fact, there are still 97M paid TV households in the US and while that’s eroding ~2% Y/Y — it’s not insignificant either.
Note: Bryant’s TV vs Mobile video comparison isn’t the whole picture so I provided eMarketer’s breakout of TV vs. Digital Mobile and where that’s projected to go by 2021. Emarketer has a more favorable estimate of Mobile ad spend today than the stats Bryant cited.
The “meaning” of TV might be changing — into one where content is seamlessly available across multiple screens and on-demand — but it’s hard for me to envision a near-term future where all major rights move to digital. In the long term, it’s also hard for me to imagine that the traditional players won’t figure out their digital distribution strategy in due time — although, it may mean cannibalizing their TV profits in the shorter term to survive and profit digitally in the longer one.
2. Digital is powerful — and not just in the ways you expected
“The world is moving digital — you have to be in digital and if you’re not where your fans are with mobile, digital content… you’re lost” says Octagon’s Cohen
But what do the fans actually want and how much will it cost the distributor to give that to them. The panel agreed that Barstool Sports is a great example of building powerful digital reach and audience — without having to pay for access to rights — which let’s them scale differently than an a traditional rights buyer like ESPN or Fox Sports (I’ll discuss that in takeaway #5 below)
When we step outside the “rarified air [of the Big-4 sports] and delve into the chaos below the line” says McBride, there is a lot of value that can be harnessed. He gave the example of providing parents and friends access to youth and amateur sports streaming and highlights, and being able to monetize that access the way linear TV does for top-tier pro sports — to quote “The money is already there; it’s just chaos”. Historically, traditional, linear TV hasn’t found a way to broadcast high school and lower-tier college athletics profitably, meaning targeted, digital distribution could be exactly the answer.
That said, it doesn’t mean being a digital platform in the sports world is easy:
- For legacy traditional players like Fox Sports, the “pivot to video” on digital isn’t the promised land they had envisioned when they flipped the switch. Rights alone won’t beget success.
- Everything online is a fight for attention and minutes. Companies that reliably have found 2–3 minutes of daily engagement (like Snap, Instagram) have build billion dollar empires. Digital significantly lowers the barrier to entry so it’s important to understand how can one digital sports company can build a “moat” around their engagement vs another.
- Furthermore, measurement is still a huge problem especially in video. 3 seconds is what Facebook measures as a view (vastly inflating their viewership numbers) but doesn’t necessarily mean that they have that scale of audience reach. Rights holders would do well to remember this the next time a digital upstart comes bidding for their content.
3. Everyone’s tracking Amazon — because Amazon is in EVERYTHING
Amazon paid $50M earlier this year to stream 10 “Thursday Night Football” games along with access to some of their own exclusive ad slots. For context, Twitter paid $10M to stream 10 Thursday games last year, demonstrating Amazon’s ability and willingness to really outbid competitors for rights.
As Cohen from Octagon pointed out, “Amazon did $156Bn in sales last year — meaning they can go buy whatever they want, which has made them a very scary competitor in the world of content acquisition” for traditional and digital media players alike. Thursday’s game actually represents an interesting experiment in the world of PPV sports economics — what does a paywall (Amazon’s Prime Video) do for viewership and advertising when the same CBS telecast was also being simulcast on a “free” network.
Amazon’s power is also in it’s data and knowledge of its customers’ preferences. For 40+ years sports on traditional linear TV has been either advertising based or subscription based but now Amazon has the ability to drive direct traffic to their other revenue generators from these NFL games. It will be interesting to see if the NFL rights have ripple effects on the rest of Amazon’s ludicrously diverse portfolio.
4. Voice, authenticity & personality is key for new content creators
Direct to consumer is a big shift on the distribution side but that trend is mirrored on the content side too, given the rise of content platforms like Players Tribune, Uninterrupted and The Athletic. ACE Media is another great example, as the NFLPA’s athlete content production engine that given players opportunity to create and monetize new lifestyle content — like a new “Pimp my Ride” hosted by Marshawn Lynch (…hell yeah I’d watch that!).
Part of this, argued Oath’s Geoff Riess, is because the social networks have “created a shitty value proposition” where these athletes are creating massive engagement but don’t control the narrative or share in the upside. So they seek out ways to have more voice, more control and more authenticity — allowing them to more equitably monetize their own personality.
In the end, all of this comes back to voice, authenticity and personality.
Dave Portnoy said his stable of personalities is like a cast from professional wrestling. “You have fans who like me, other’s that like BigCat or PFT and they let us hear it constantly” because of the strength of influence of each’s individual brand under Barstool’s umbrella. That influence is the only way you get several dozen volunteers to distribute 70,000 Roger Goodell Clown Towels at the Patriots home opener.
“It’s like saying I want to go on a diet but I refuse to give up my cheesecake every day” says Reiss
The big advantage these new platforms have over legacy media — all of whom want to be more like Barstool and Bleacher Report — is that they are willing to say and do and put out the kind of “edgy” content that legacy platforms like ESPN just refuse to do (likely for fear of losing advertisers). It also turns out that authenticity actually begets access — the same access that legacy media pays Leagues for — players and coaches willingly give to new platforms that have an audience, reach and voice like Barstool’s.
5. Barstool is known for Sports, but it’s a comedy and lifestyle brand
Portnoy says the content on Barstool is “anything you’d talk about when sitting on a Barstool” at your local watering hole. So that might be the NFL or other Sports but it could also be pop culture, travel, music and more. Their audience is (mostly guys) ages 15–40 and has advertisers salivating. But for El Pres, Barstool’s success comes back to comedy and personality — that’s his moat — and he builds his team and expands his reach based on that ethos. That said, by his own admission, the acquisition has been “5 to 8 times more successful than what Chernin expected”
The interesting thing is that Barstool doesn’t pay leagues or teams for highlights, opting instead to turn the cameras on themselves so that you can watch them watch the World Series and tune in for live reactions. The lower overhead (and the fact that, amazingly, fans will tune in to watch this content) is another unique advantage. They create sponsored content for Dunkin Donuts (like their office combine) or their Totino’s cook-off that would seem kitschy and out of place at a legacy sports outlet.
So if his audience will tune in for that, and they’ll hand out Clown Towels and they’ll buy the same truck that Portnoy tweeted out he had bought (“like the ‘Oprah’s Book Club’ of sports”), it likely means they’ll also follow Barstool as they expand reach into new markets and new verticals, meaning that Portnoy and Chernin may well have a much bigger winning brand outside of the sports vertical, on their hands as well.
Parting Shots… err Thoughts.
When asked about ESPN’s bell weather debate show PTI, Portnoy said two very interesting things that really stuck out to me:
“PTI? My dad watched PTI… Guys our age? We watch Barstool Rundown.”
Maybe this is all part of a generational cycle of taste. Back when Dan Patrick and Keith Olbermann did Sports Center, their pop culture references and irreverent comedy was thought of as “edgy” and brought in droves of viewers. Decades later, ESPN is the behemoth that Barstool pokes fun at with their own pop culture references and irreverent comedy. Tastes evolve, audiences change and maybe when we have this discussion in 2037, something else will be supplanting 35-yr old Barstool Sports as the hot sports company du jour.
“I have no doubt that a show like Barstool Rundown or Pardon My Take will make its way on to TV. It might be with us or it might be somewhere else but these personalities are made for television.
So even the guy with the hottest digital brand in sports is thinking about what his distribution look like on TV. If that’s not a rebuke of the “TV is Dead” Cassandras, I’m not sure what is. Distribution is changing but the content will eventually make its way on to the big screen in the living room. The pipes might be controlled by Comcast or Amazon or someone else but I guess all we’ll end up doing is swapping out the old TV remote for a Smartphone app, just so we can plop down on the couch for Rundown.
Ah. Progress.
Thanks for reading! If you’re interested getting involved in the intersection of sports, media and technology, NYVC Sports hosts awesome events almost every month and I highly recommend signing up. Much thanks to Jeff Volk, Deepen Parikh, Joe Favorito, Tom Richardson and the rest of the crew for another great event.
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