Yet another acronym, but this one can upset the sports media.
This article discusses why D2C is for everyone and why it is the right time for federations, leagues and clubs to undertake this transition.
D2C (direct to consumer) in sports, offers video content directly to the fans, without tertiary platforms, intermediaries, nor dependence on the TV rights or the GAFA.
Due to some technological hurdles, the D2C was struggling to gain ground and take over. Barriers to entry have now been removed. The deployment of very high-speed services, smartphones and SVoD (Subscription Video on Demand) such as Netflix has created a public technically familiar with the direct mail model (D2C) and the appetite for a buying model of more ‘a la carte’ video increases.
Can small and medium-sized content owners be among the biggest beneficiaries?
Sports organizations are beginning to test different business models around OTT platforms, although this is largely a relatively unexplored territory. And for the moment, everyone is trying to get on the D2C bandwagon.
Netflix has led the way and everyone is thinking about replicating their model. It is not as easy in reality, but it is good for rights holders and sports organizations to identify ways to maximize their assets.
Going into D2C is nothing new:
At the end of the 1990s, several European football clubs launched internal television channels. Manchester United has created MUTV, GIRONDINS TV for the Girondins of Bordeaux, OMTV, OLTV etc.
The major US sports leagues also use their own services. NBA TV, NFL Network, NHL Network and MLB Network.
They all offer live content, match replays and magazine content to complement the pay-TV appearances.
However, limited satellite and cable capabilities and associated costs limited this opportunity for organizations with the necessary funds and a captive audience.
The reasons for today’s D2C are countless. A popular sport can increase revenue by offering more coverage, while a non-premium sport can gain more visibility. The D2C has now reached a point where it has become a more cost-effective option than the traditional streaming option for content owners.
The first to take the plunge was Wrestling. WWE changed the model by dropping TV rights with Pay Per View running, which could cost up to $ 55 per event for fans, for a D2C service to $ 9.99 a month with live access to all of their major events as well as an on-demand content library of over 10,000 hours of archival material. Many people have said, “Why would you do this? Nobody looks at old sports content.” And yet every minute of this content has been consumed by at least one subscriber.
Giving up on tens of millions of dollars worth of TV rights was a huge risk, but 1.7 million subscribers later WWE generated revenue of 801 million USD in 2017, its highest turnover of its history and an increase of 10% compared to 2016. In the 2nd quarter of 2018, revenues increased by 31% to 281.6 million USD.
WWE has even reversed the balance of power with television channels, negotiating contracts to keep “Raw” on the US network and linking “SmackDown” to FOX networks in 2019, increasing their average annual value of US TV rights by 3.6 times compared to previous contracts by switching to D2C.
More recently the NBA, the NFL, but also clubs like Manchester City have launched their OTT platform offering live matches, full replays, archival content and original programming for a few dollars a month.
Imagine, the English Premier League could become the Netflix of football, that is the video-on-demand platform that controls its own product. If you had 100 million Premier League TV subscribers, like Netflix at £ 8 a month, you would earn £ 10bn a year, not £ 8.7bn every three years, as expected by current agreement. Very scary for the traditional sports media.
CHANGE OF MODEL, the D2C is more than ever aimed at so-called “minor” sports
Millennials are hungry for sports content. They are young, with a high purchasing power, they love technology, they watch a lot less television, and they watch videos with online services. They are already creating their own entertainment offerings at home and the D2C model fits in perfectly.
UEFA with uefa.tv brings visibility to youth tournaments and less-than-media-dominated women’s football, The English FA is also surfing the excitement of women’s football by providing live coverage of almost every match of the day on a new mobile application called FA Player.
But it’s not just football: tennis, squash and darts organizations have all launched dedicated OTT fan platforms with full coverage for a monthly subscription.
Like Olympic Channel, which was created after the Olympic Games in Rio in 2016 to give minor disciplines visibility outside the quadrennial games, Sport in France, the CNOSF (National Olympic and Sports Committee French) develops its OTT platform thanks to MyTVchain to offer 100% new sports programs, with games, focused on youth clubs, women’s sports, etc. It also makes it possible to follow national or international competitions which until then had little or no access to the small public screen.
By using a platform such as MyTVchain, sports associations, leagues, federations and even amateur clubs can easily broadcast their events live, store and share on-demand replays online and increase their audience and revenue.
This allows rights holders to leverage their content, make better partnering arrangements with their sponsors, and provide better service to an engaged, tech-savvy fanbase disappointed by current TV services.
Arnaud Simon in his article “Who still wants non-premium rights? » opens interesting tracks:
“The first decision to make is not to focus all the means of production solely on the live. The popularity of stories and short formats is a great way to give visibility to its athletes and its competition and to conquer the fans. It is interesting to see the partnership that has just announced the English Women’s Football League with Copa90 to produce stories in numbers throughout the Championship with a powerful social activation. The Women’s League of Handball could be inspired.
Launching an OTT offer is a difficult step to take but it seems essential to avoid relying on a declining market. But in what form and how?
In isolation, for a federation with limited means, it is a difficult challenge even if it is going in the right direction. You have to think outside the box. Why not think about a common Federation / League platform? As with the handball case.
We can also go further and imagine a common platform for several sports with shared development and operating costs and allow to reach a more critical traffic size. A BHV offer (Basket / Hand / Volley) on which we could find the emerging competitions (Basket 3 on 3) and the championships that are no longer visible in historical broadcasters is it unimaginable? The model of LigaTV in Spain that hosts other sports (Futsal, Basketball, Handball) is much more disruptive! “
MyTVchain offers the ideal tool for these federations to create an isolated platform or for a platform of combat sports, or water sports … Blockchain technology used by MyTVchain allows to distribute very accurately the income generated by them .
There may be challenges and obstacles associated with the D2C platform model, but it’s clear how much of a future it has, and the content providers that are doing it today will reap the benefits tomorrow.
So, are you hopping on to this train ?