BY GARETH BROWN
It has been well documented that media consumption has and will continue to change considerably over the coming years. Consumers now have access to staggering amounts of content and are becoming increasingly demanding of how and when they access it. There are several examples of this changing landscape; the growth of second screens (90% of US consumers multitask while watching TV) and consumers, particularly the younger demographic, migrating to streaming rather than live TV are a couple of examples. Traditional television viewership on a broader level has been a victim of this changing landscape, with significant declines in viewership across all age groups except for those aged 65 and over.
Sport until this point has been resilient to declining viewership figures, with it being one of a few interests that entices vast live broadcast audiences. It has been no surprise that for a number of years “traditional” broadcasters have invested heavily in securing the rights to broadcast live sport. This is partly due to it being placed in a unique and privileged position. For fans there is an authentic and deeper emotional link with sport: it often delivers excitement, drama, adventure and a real sense of hope that fans can relate to. Yet sport is now also seeing a drop in live TV viewing figures; the NFL, UEFA Champions League and the English Premier League are all high profile examples of rights owners seeing declines in live viewing figures from last season.
In contrast to the downward trend of live television figures both inside and outside of sport, direct to consumer streaming has been on an upward trajectory. Platforms such as Netflix, Amazon and YouTube have been growing exponentially and are now either beginning to stream live sport or are showing early indications that they are about to make a move. There have also been a number of International Sports Federations, National Federations, Leagues and Clubs launching their own direct to consumer initiatives, with many more contemplating making a move in the near future.
With the emergence of sports rights owners launching direct to consumer streaming platforms, they are enabling a direct relationship with their fans, while also presenting an opportunity to their sponsors for unique collaborations. With direct to consumer streaming, rights owners are able to deliver personalised content to their audience in a way that has never previously been possible through traditional broadcast or print. This provides an opportunity for rights owners to continue the evolution towards a behavioural led audience strategy.
Launching and maintaining a direct to consumer streaming platform, while growing audience size and revenue requires a strong focus in two core areas: content and technology. Both of these must be underpinned by a strong understanding of data that is being captured. Whether a sports rights owner is thinking about creating or has already launched a direct to consumer streaming strategy, a few factors are key to success.
UNDERSTANDING YOUR AUDIENCE
Direct to consumer streaming platforms are delivered digitally, which for rights owners owning their own platform means they are able to capture transactional, demographical, behavioural and attitudinal audience data. This is a huge advantage over streaming through 3rd party platforms such as Facebook or Twitter where they hold onto that data, though this is not to say that 3rd party platforms should be discounted altogether (later I discuss some of the benefits of streaming through 3rd parties).
Developing and launching a platform can be a significant investment. Therefore a clear understanding of your existing and potential audience is essential. Building a platform from audience insight can be a game changer as it can be used as a solid basis from which to determine which territories to take a product into and how it can then be packaged, priced and advertised. This will also assist rights owners in allocating the correct budget. Developing learnings into potential market size, followed by analysing and acting on insight gained from interests, consumption and behaviour can support the overall strategy from day one. Through a direct to consumer platform, rights owners can understand what an avid fan looks and behaves like, providing the opportunity to build further engagement within their fan base. A good understanding of your audience therefore is central to creating and developing both the content and tech that drives a direct to consumer streaming business…
APPLY THE RIGHT TECHNOLOGY
Direct to consumer platforms are built not only to stream live content, but also provide a host of additional features, whether this be streaming multiple live games concurrently or providing an entire library of original programming at an audiences fingertips. Advances in technology can lead rights owners to create a truly special user experience. The NBA are one example who recently announced a “mobile view” for users wanting to get closer to the action through phones and tablets, while also announcing the streaming of one game per week through a VR-optimized experience. With the continuing developments in technology, the boundaries are ever increasing for what is possible. Rights owners therefore have lots to play with, which is great, yet as ever it is important to develop the product in a way that fans want.
Sports fans are increasingly consuming media content through mobile – a trend which is not slowing down anytime soon. This can cause a few headaches for a rights owner with a global fanbase. Audience preferences will vary from one geography to another with regards to device and operating system used to consume media. Although direct to consumer streaming requires the web to deliver content, to be native on digital media players (e.g. Chromecast and Roku) as well as operating systems (Windows, iOS and Android), platforms need to be built specifically with each one in mind. Understanding what devices fans currently use as well as what they intend to be using in the coming years will assist a rights owner in making key strategic decisions on what development areas are required both now and in the future.
While device and operating system are used as examples, it should be recognised that this same concept of understanding fans’ current and future wants and needs would be applied across the full spectrum of development areas for a direct to consumer streaming platform. As referenced above, the NBAs decision to host just one game per week on VR, rather than every game is likely to be because they do not have the volumes in their subscriber base to validate a full roll out for all games.
SERVE THE RIGHT CONTENT
A rights owner should look to develop a content strategy built on both a macro and micro level, using audience insight to adapt and optimise accordingly. At a macro level, a rights owner can learn who their most engaged audience is by territory and demographics to understand what works best and what programming resonates best. While at a micro-level, a rights owner can deliver a unique user experience on a 1:1 level, built through learning about key drivers such as favourite teams, players or usage behaviour. This is also without the constraints of an allocated timeslot which has traditionally been the case with linear TV. Fundamentally rights owners have the capability to act on insight often in real time, serving up tailored content and communicating the right message to their audience at the right time.
Outside of sport, there are some widely documented examples of direct to consumer streaming platforms leveraging audience data to make key decisions on investment in programming. Netflix are one of those and they seem to be getting it right. With insight on viewing habits providing Netflix an advantage over “traditional” broadcasters, it wasn’t a surprise that in 2016, Morgan Stanley announced that respondents from a US study selected Netflix above all other Premium TV and internet-video streaming services as the “best” for original programming, displacing HBO. Perhaps one of the key reasons for this is not only that they are investing in the programmes that their subscribers want, but they are simply serving the right content to their subscriber base. The platform provides Netflix with the capability to learn about subscriber viewing habits and deliver the content which is most relevant. The returns are significant, with Netflix stating they believe their personalised recommendations are worth $1 billion per year.
DIRECT TO CONSUMER STREAMING REVENUE MODELS
The paid subscription model is what most sports rights owners have adopted for their platforms. However, it is recognised that a subscription model will limit the penetration that a rights owner can achieve in developing markets. Flexibility on price is certainly an option, although advertising may be the enabler to protect revenues in developing markets. With brands becoming increasingly demanding on targeting the right audience, a direct to consumer channel provides rights owners with another opportunity to deliver personalised, targeted sponsor messaging. Further collaborative strategies can be created that establish genuine value exchanges with brands, while both rights owners and brands will be able to measure the return on investment. Both a user subscription model and advertising model are adopted by rights owners who have their own platform.
It is important to note that rights owners do not have to choose between developing their own platform to stream content or sell their rights to other platforms. It looks likely that a hybrid model will emerge, with many rights owners reaching audiences through several digital platforms. The NFL, for example, have their own platform (Game Pass) which broadcasts 300+ live games per season. In addition to this they broadcast 61 games on the dedicated sports streaming platform DAZN (currently available in Switzerland, Austria, Germany and Japan), while a further 10 games are streamed for free through Twitter. NFL are making the strategic decision to leverage multiple platforms to penetrate markets they may not yet have a large following in, while also acquiring new customers through streaming a select amount of games for free. NHL are another example who recently announced their partnership with Twitter to stream live out of market games.
Depending on the strategic objectives of a rights owner, there continue to be more options than ever. An increasing amount of rights owners are developing localised initiatives such as the Asia only direct to consumer streaming service RugbyPass. Others are also looking to expand reach by leveraging other brands’ pages on social media to broadcast live sport, such as Table Tennis England who agreed a broadcast rights deal with TheLADbible Group to show matches via The SportBible, whose Facebook page has more than 9 million followers. It’s important to remember, as referenced earlier, that all the major social media platforms are closed networks. This means that although they can certainly deliver on reach, it can be difficult for rights owners to truly nurture an audience who may have engaged with live content on a social media platform such as Facebook. For rights owners choosing this option, it is critical that the content provides a clear customer journey to a rights owners’ owned digital channels. Without this, it will be incredibly difficult to ever own the direct relationship with those potential fans and nurture them into one of their core audience in the future.
Direct to consumer streaming can provide rights owners the capability to reach new audiences while providing an experience which wouldn’t be possible through traditional channels. With informed decisions based on data, direct to consumer streaming is an exciting prospect for rights owners both now and in the future. Developing a successful direct to consumer streaming business is built from a clear understanding of your audience, not only in creating and developing content and technology pre-launch but also in accelerating growth post-launch.
Gareth Brown is a consultant and direct to consumer streaming expert at Two Circles, based in Switzerland.
Two Circles is a data driven sports marketing agency that helps sports organisations grow relationships with their audiences and partners. Working with some of the biggest rights owners in sport across the UK, mainland Europe and North America, the business helps its clients improve customer experience, increase revenue and enhance their partner proposition.
Deloitte – Digital Democracy Survey