The Sports Streaming Tipping Point: Four Lessons for Future Success
Live sport is a big business. Of all the industry innovations in recent years, OTT streaming has undoubtedly had the most significant impact on its status quo and put the greatest number of cats amongst the pigeons in terms of how much time and mind space (not to mention column inches) has been dedicated to addressing it. More consumers are now sports streaming than ever before. And with the rise of online-only providers like DAZN bringing new competition for existing market players, this has ushered in new expectations among sports fans about when, where, and how to watch their favorite teams play.
The transformational impact of OTT is set to forever change the sports landscape in years to come, and the next three-to-six years will be critical from an Operational and Marketing point of view as global media rights for the world’s most viewed sporting events become available to bid on. Getting the foundations right before then is therefore essential. Not only to maintain and ideally grow audience volume and engagement, and secure a bigger slice of the consumer spending pie, but also to take advantage of streaming technology to uncover new ways of monetizing fans through targeted marketing and engagement.
With this tipping point on the horizon, Deltatre and Massive Interactive recently commissioned a global analysis into the economics of the market – ‘Where the Money is Going: The Future of Sports Entertainment’. The report uncovers how fans prefer to watch sports content, how much they’re willing to pay for it, and where sports operators prepare to invest to meet those expectations.
For sports operators and their marketing teams, four key factors stood out that will impact how they foster loyalty, drive engagement, and grow their bottom line going forward.
How Have Consumer Expectations Changed?
Contrary to a commonly held view in the industry, the number of millennials and generation Z watching sport hasn’t fallen off a cliff. It’s the ways they consume it and the total time spent that has fundamentally changed. Almost as many consume sports media as any other age group, but the mechanisms through which they engage with that content, and how much they’ll accept paying for it, have changed. So, while there’s been a 53% year-on-year increase in sports media streaming online, 80% of under 24-year-olds will not pay more than $39 per month to access it. A similar percentage say that they consider flexibility in canceling any subscription at any time to be a pre-requisite.
The competition for their attention during every minute of every day is unprecedented. And their sports media diets are so much more varied than any generation preceding them that sports content owners and rights holders have to work so much harder than before to create a portfolio of media assets that meet those varied tastes and retains their engagement.
At the same time, with wage growth in real terms in many markets relatively stagnant, employment growth within these demographics is also relatively weak. Combined with ever more competition for ways to spend the disposable income they do have, it should come as little surprise that younger demographics are demanding more flexibility from the services they subscribe to.
The flexibility of purchasing options, and the ability to cancel those subscriptions at any time, are cited as key requirements for this group, no doubt also influenced by the benchmarks in expectations set by the likes of Amazon (who have made online purchasing and exchanges/refunds completely frictionless).
But OTT is more than just another delivery mechanism for putting the live sport in front of paying subscribers. By reacting to this change in Consumer Expectation and putting digital platforms and innovation at the heart of their offerings, sports media operators can set the foundations to monetize consumers beyond simply providing access to watch their favorite teams play. $39 per month may be a limit consumers cite today, but by leveraging the opportunities to change the way sport is consumed (and the enjoyment and engagement it provides), OTT operators have it in their power to change the value perception in consumers mind and earn a larger share of people’s limited time and money.
Hitting a Home Run with Fan-Level Personalisation
Investment in OTT technology is steadily increasing. Sports media operators are expected to spend $6.8 billion (an average of approximately 15% of their total budgets) on the OTT tech stack by 2021, and for good reason. When it comes to sport, digital platforms are a powerful way to drive loyalty.
A sizeable chunk of this investment is going into new ways to take advantage of data insights, by having a much better understanding of each user and implementing UX platforms that can bring the right experience to the right fan at the right time. Whether that means offering a range of different viewing angles, integrating gaming and social features, enabling fans to ‘choose their own adventure’ in how they watch different sports at different times or showing on-screen overlays specific to that subscriber’s team, this depends on being able to adjust the user experience on the fly. The latest Digital Streaming platforms can deliver this, taking advantage of the action as it unfolds.
Personalization also has a role to play in tackling account sharing. By offering tiered ‘family packages’ akin to those marketed by Netflix and Spotify, where multiple device access is capped by the account type, it’s possible for sports operators and rights holders to monetize otherwise non-paying subscribers through user data and personalization. The flexibility of OTT payment models, content offerings, and platform access, as well as the ability to push marketing promotions or advertising to otherwise unmonetized users, is key to making this a reality.
The Added Value of Digital
Digital platforms present an avenue for sports media operators to better cater to die-hard fans in a way that can grow the bottom line. Our research found operators who build out their streaming platforms beyond simple video hosting and categorization, by introducing new features like picture-in-picture of simultaneous matches/events, interactive timelines to review key moments, or live catch-up highlights when entering the live stream, see a 24% uplift in subscriber acquisition. Rolling out functionality typically not seen in linear TV creates a new up-sell and marketing opportunity to fans who want a hyper-engaged experience where they can feel more connected to the game.
Digital platforms also give sports fans greater control over how they watch their favorite team. By providing a seamless experience across multiple devices and personalizing the offering to each subscriber, digital platforms make it easier for fans to follow their chosen sport in the way they want to, creating a deeper emotional connection that stands to reduce churn in the long term.
Capitalizing on OTT 2.0
Perhaps most important of all, investment into the OTT tech stack being made by sports media operators today is ushering in the arrival of OTT 2.0. This is the future of sports entertainment, where one platform can offer fans access to a suite of related services such as in-game betting, fantasy sports, live chat, and more, on top of the Personalised Content offering.
Each service represents another revenue stream for sports media operators and is a key factor in how they’ll overcome the $39 limit imposed by consumers today. This OTT evolution holds several other benefits too. The added data created by connected services are of value to marketing teams, offering a rich pool of insights to guide future decision making. By providing everything a sports fan could need in one place, this also stands to significantly increase the time they spend engaged in that ecosystem, providing a further vehicle through which to drive the emotional engagement that proves to create a loyal fanbase, as well as a way to bring new fans into the funnel and keep them there.
The Future of Sports Streaming
It’s clear that the consumption of sports content around the world is changing. Today’s viewers demand more for less, and the flexibility to cut products that don’t suit them at a moment’s notice. In an environment like this, it’s become increasingly important to use technology to deliver target, one-to-one experiences as a means to capture audience share, drive monetization, and reduce churn.
By marrying together the best of broadcast with the best in digital, and innovating on those, sports media operators can recapture and retain audience attention that has fragmented dramatically over the last 20 years. Maximising ways to consume live sports content, ways for users to control their experiences as they like, ways to access that content, the variety of content formats, and the breadth of purchasing options and/or monetization is how sports media operators have begun to tackle the challenges that digital proliferation and fragmentation has presented the industry.
As sports media operators continue to see the growing demand for OTT, they’re investing in new ways to take advantage of changing Consumer Expectation. And for their marketing teams, that investment opens up a host of opportunities to stand out from the crowd, draw new customers into the funnel, and retain them for years to come with highly engaged, personalized offerings.