Across the globe, sports programming reigns supreme.
The most-watched programme in the UK this year was the England v Croatia Fifa World Cup semi-final match, with a peak audience of 26.5 million.
Appetite for sports content continues to grow and research from Nielsen shows sports programming increased 160 per cent in the last decade.
The combination of increased competition and fragmentation in the market creates a challenge for media companies with rights to sports content. The big question here is: are sports businesses optimising their revenue potential to balance the costs of sports rights?
A changing state of play
There are leading media players in sports, each with distinct business models. The traditional commercial broadcasters buy the media rights to sporting events and then recoup the cost and generate revenue via advertising. Meanwhile, over-the-top (OTT) media companies have generally relied on subscriptions or transactional payments, offering ad-free viewing of content they have either bought or produced.
New OTT entrants to the market are increasing competition for sports rights, which is inevitably shifting cost dynamics. Higher costs often mean reduced revenue opportunities as broadcasters are unwilling to pass these costs on to price-sensitive consumers, when their main objective is to attract more viewers.
Sports media is also being disrupted by the direct-to-consumer (D2C) opportunity, where sports brands and federations have the option to keep hold of their content and deliver direct to consumers. Formula One, for instance, has brought control of the brand in-house, launching a standalone OTT offering – F1 TV – that allows viewers to purchase content directly from them, rather than going through the traditional broadcast route, and which has the potential to be more profitable than licensing deals.
No longer a game of two halves
To survive and thrive in the sports media market, both commercial broadcasters and OTT streaming services are now starting to think beyond deploying ad supported-only or subscription-only models and take a more holistic approach to content monetisation.
To generate sustainable revenues, they must understand the value of sports content to the consumer and price it accordingly; after all, the consumer is creating the market and demands an optimum experience. Media providers need the agility to apply a range of models, from advanced advertising to subscription video-on-demand (SVOD) and transaction video-on-demand (TVOD), breaking down the silos of subscription and advertising.
For OTT providers, advertising is an additional way to recoup the initial investment in buying media rights and will balance the costs of sports programming. Offering some free content can increase the user base, and allow OTT platforms to introduce multi-tiered models.
Broadcasters, on the other hand, could explore hybrid business models including advanced advertising, SVOD and TVOD to optimise revenue yield. By offsetting the cost of sports rights by maximising revenue, broadcasters can address the balance of the ROI seesaw.
The agility to pivot and apply multiple business models will be enabled through the use of data, which empowers media owners to accurately forecast the value of sports content and make the right decisions around monetisation. Through empirical evidence and testing they will be able to predict advertising revenues of subscription or transaction fees, continually fine-tuning their monetisation mix across all delivery windows to ensure the greatest possible ROI.
Change in the sports media industry is rapid, with new players continually emerging to further disrupt a competitive market that is quickly reaching saturation point. To succeed in this challenging environment, broadcasters and OTT providers need to move away from a ‘one-business-model-fits-all’ approach, where they depend entirely on either ad revenue or subscription, and adopt a more holistic, data-driven approach to monetisation focused on the value of sports content to the consumer.
Thomas Bremond (pictured above, right) is the general manager, international at FreeWheel and Comcast Technology Solutions.