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OTT’s On Fire; Should Broadcast Be Terrified?

By Ben Woods, Lead Consultant, Two Circles, A Part of ESP Properties Jul 7, 2016

OTT’s On Fire; Should Broadcast Be Terrified?

Certainly not for a while, at least. As I stroll out of Lille’s Eurostar terminal, with my precious tickets stowed safely in my suitcase, my friends and family will be turning to a television to follow the UEFA Euro 2016 football tournament this summer. In fact, in scenes repeated around the world, around 90 percent of all sports fans in Great Britain are likely to do the same when it comes to finding the next best alternative to attending a live sports event itself. But things are slowly changing.

Our media consumption has changed considerably and sports fans are no different when it comes to consuming their passions in new ways. Rightsholders are starting to recognise this, as are broadcasters themselves. For example, BT Sport recently aired the Europa League final live on YouTube, whilst the BBC reached an online audience of 2.3 million for England’s Euro 2016 game against Wales. Impressive, given that just 4 years ago BBC Sport proudly boasted an online audience of 800,000 during the London 2012 Olympic Games.

This reflects an acknowledgement by the industry that sports fans’ habits are evolving in what is an increasingly online and mobile-first world. From major leagues looking to grow global audiences to smaller governing bodies gaining exposure not available via traditional media, the digital world is presenting new opportunities for fans and rights holders alike.

Are We Going Over The Top?
At last year’s Two Circles Client Conference, we outlined the importance for rightsholders to start considering themselves as media owners. A year on, this is increasingly relevant as the media landscape that permeates the sports industry becomes ever more fragmented. A great example of this disruption is the partnership between NHL and Yahoo, which will see a selection of weekly live games streamed for free. Indeed, the boundaries between content delivered to fans directly and via more traditional broadcast channels continue to merge and blur.

Since the emergence of Netflix and NowTV, “over-the-top” is becoming a familiar term to those in the sports industry and something that rightsholders are starting to contemplate. Away from sport, a land-grab is already in full swing, with content owners and broadcasters developing apps for connected TVs to ensure they appear prominently on the homescreen. Buzzwords are as popular now as they ever have been.

And whilst technology is a fundamental component of OTT, it’s the business model that underpins its execution that is key. Rights holders will be wise to heed the expensive pitfalls encountered by corporations that snatched at CRM as the latest trend a few decades ago. CRM was (and still is) acknowledged by many as something that involved data and software alone, leading to countless projects being scrapped in the absence of a clear customer strategy.

Content Is King
Rights holders that embrace the fact that they sit on bundles of owned content, from archive footage to exclusive player access, will benefit in the long run. As we’ve stressed, strategies need to be in place to ensure content is generated and distributed effectively, not to mention protected.

Interestingly, when MUTV first launched in 1998, a handful of clubs were quick to dismiss Manchester United’s pay-and-display strategy, with one chairman claiming his club would “probably run out of content within the first few weeks.” Yet in an age where technology has empowered even the smallest of rightsholders to capture and share content with followers and fans, this couldn’t be further from the truth.

The extent to which OTT will tangibly influence the market value of broadcast rights remains to be seen, as broadcasters are likely to play a central role in content distribution for many years to come. However important this revenue stream is to a federation, league or club, a future-proofed content strategy which considers OTT as part of the proposition gives rightsholders options.

A dedicated channel has not only facilitated United’s ability to sell exclusive MUTV rights in China, for example, but also provides the club with a bargaining chip with broadcasters and options for the future. How lucrative these options will become, only time will tell.

The Force Is Strong
We’re not suggesting every rightsholder should harvest its content and go it alone. The likes of Sky Sports aren’t going anywhere and such market forces will continue to play a central role in determining media rights value. Broadcasters will rightly fight hard to retain rights to live events – invariably enhancing their value in the process – and continue to leverage them as part of an overall “quad play.” BT Sport was open about such a strategy, which underpinned its decision to secure EPL rights in 2013/14, for example.

The prevalence of OTT coincides with the growing interest of Silicon Valley in creating new arenas for content to be created and shared. Where will Facebook take its “Sports Stadium” concept following this summer’s grand slam of sport?

The cyclical relationship between rightsholders, broadcasters and technology vendors is set to evolve, shifting the dial towards a new era in customer marketing. This is exciting, not least because of the opportunities it will present to both audiences and brands alike.

Know Your Audience
One thing that will remain true, and we’re certain of this, is that a clear and consistent understanding of who your audience is is fundamental. Who are the tech-savvy cord cutters and who are the die-hard traditionalists that risk being alienated by OTT? The way news and media is consumed and shared is constantly changing, and so too must the way it is distributed. The ability to predict and plan how customers interact with your content will be as important as reacting to opportunities that present themselves.

Rightsholders must equip themselves with the ability to capture and synthesise the most relevant data from an expanding list of sources, such as web browsing behaviour or content preferences, in order to evolve their view of existing fans as well as identify new look-a-like audiences.

Our partnership with ATP Media in the OTT space is a perfect example of how a better understanding of a global, digital audience has improved marketing effectiveness and cut-through resulting in sustained revenue growth. More than ever before, rightsholders’ data has become the ultimate differentiator.

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