The sports industry is booming. In 2018, it generated more than $49.5 billion in media rights revenue. Unsurprisingly, most of this revenue (94%) comes from linear broadcast rights. However, rights holders are having an increasingly tough time negotiating.
Just look at the most recent EPL auction, where Sky grabbed itself a comparative bargain of £1.193 billion per annum for principal rights – a 16% cost reduction per game on the previous deal.
Linear broadcasting by itself won’t be sufficient to drive sustainable growth and success in the long term. Here’s why:
First, despite the fantastic development of sports channels over the past two decades, linear broadcast doesn’t reach all fans across the globe, nor does it show every game available.
Second, sports fans worldwide are going digital. FC Barcelona had over a billion interactions on social media last year. Last summer’s FIFA World Cup meanwhile broke records for concurrent digital streams.
As a result, global players like Amazon are taking notice; the tech giant recently secured distribution rights for the EPL in the 2019/20 season, opening it up to a new set of subscribers.
Meanwhile, operators and broadcasters are also making significant investments to get access to the distribution rights across platforms. We expect this shift to continue only in one direction.
And yet, while alternative distribution options like OTT streaming can open up exciting new mobile-first opportunities, they still have major limitations that only a select group of service providers have overcome to date.
Think about issues of scalability and the expertise required to support peak load access on the backend, and problems with buffering and delays on the consumer end; streams can lag up to a minute behind broadcast and social media – hardly in the spirit of live entertainment.
While technology components are increasingly accessible, assembling and deploying a high-performance OTT direct-to-consumer services remains challenging from a technical standpoint – and it can result in high integration costs.
And with the widespread development of streaming piracy and Kodi add-ons, sports content piracy is growing at an alarming rate, damaging the industry and applying negative pressure to the value of rights in all international markets in parallel.
Basically, OTT sports streaming is by no means an easy ride.
So how do we address these challenges? Well, to extend digital reach to fans across the world, the vision we should be laying out is this:
A next-generation, cloud-based, highly scalable, end-to-end, and productised OTT streaming service for live and on-demand premium content, integrated with sports data sources, social media platforms, payment and loyalty systems to maximise engagement, reach, and monetisation.
We also need to deliver broadcast-quality video across all devices—there can’t be any delay compared with the instantaneous nature of broadcast and social media.
Operators need to leverage a one-stop-shop approach: a pre-integrated solution with faster time-to-market and less risk, single vendor accountability, and competitive pricing without margin stacking.
And ultimately, it has to be done with experienced and skilled technology partners that can leverage the best OTT and digital technology and networks.
Going OTT is undoubtedly key to future glory – but only with the right teammates.
Learn more here on how NAGRA can help.