THE SPORTS STREAMING ECOSYSTEM: How sports are going over-the-top and eroding the last bastion of pay-TV

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Live sports content is one of the strongest and last-remaining drivers of value for traditional pay-TV – for both viewers and advertisers alike. But like entertainment programming, live sports content is migrating over the top (OTT) to streaming services – meaning that sports fans can increasingly access sports programming without the need for a pay-TV subscription or watching on linear TV channels.

Streaming access to sports programming has been led by a diverse range of platforms and services, including:

• Skinny bundles (e.g. Sling TV, YouTube TV) that carry live sports programming distributed by traditional TV networks;
• Media-branded OTT services (e.g. ESPN+, CBS All Access, NBCUniversal’s Peacock) that feature live sports where respective networks hold rights;
• League-branded services (e.g. MLB.TV, NBA League Pass, NFL Game Pass);
• Digital startups like DAZN that typically cater to more niche fan bases;
• Tech platforms (e.g. Amazon, YouTube, Facebook, Twitter, Twitch) that have each acquired live game rights;
• Social media platforms (e.g. Facebook, Twitter, YouTube, Snapchat, TikTok) that are increasingly partnering with both leagues and broadcasters to to develop and distribute highlights or original short-form programming around live sports events.

So far, the majority of prior dealmaking with digital players has been limited and experimental – there’s too much value still tied to the status quo for leagues to hand over exclusive rights to digital partners just yet. But we expect that leagues will increasingly look to form partnerships with tech and social platforms for opportunities to reach young people, who are more likely to be cord-nevers or cord-cutters. In the meantime, OTT platforms that carry sports offer incremental, new-in-kind opportunities to reach sports fans in more targeted, interactive, and hyperengaging ways that complement or even surpass the typical capabilities of linear broadcast.

In The Sports Streaming Ecosystem, Business Insider Intelligence examines how the OTT sports landscape is expanding and fragmenting, and how the fan experience is evolving on digital services and devices. We discuss how and why traditional TV relies on live sports content; how some sports rights packages have been allocated to digital platforms; and how digital players are expected to vie for live sports rights packages as current rights deals are set to expire.

We further lay out the expanding range of OTT video services and platforms that currently distribute live sports and other sports programming. In each section, we explore the evolving roles of existing and emergent players within the OTT sports landscape across both free and paid services, live and on-demand streaming, games or matches and ancillary content.

Additionally, this report features a section on how we expect the coronavirus pandemic to impact live sports programming and advertising spend through 2020. In it, we discuss how the unprecedented lack of live sports programming will impact US ad spending this year – in particular on TV – by examining how sports advertisers have responded to the crisis so far, and how they anticipate changing their spend over the next 12 months.

Second, we discuss early strategies that leagues and broadcasters have taken to fill the programming void – and how we expect these changes to familiarize consumers with digital, on-demand access in ways that could accelerate longer-term shifts to sports streaming.

The companies mentioned in this report are: AB InBev, Amazon, AT&T, Bleacher Report, DAZN Group, DirecTV, Dish Network, English Premier League (EPL), FaceBank Group, Facebook, Fox, International Cricket Council (ICC), Major League Baseball (MLB), Major League Soccer (MLS), NASCAR, National Basketball Association (NBA), National Collegiate Athletic Association (NCAA), National Hockey League (NHL), NBCUniversal, NFL, PGA Tour, Procter & Gamble, Snapchat, TikTok, Twitch, Twitter, The Walt Disney Co., WarnerMedia, World Wrestling Entertainment (WWE), YouTube.

Here are a few key takeaways from the report:

• While sports fans are the stickest pay-TV subscribers – and therefore the least likely to cut the cord – streaming platforms are gaining favor among some sports fans. Among US internet users who regularly watch sports, 79% subscribe to traditional pay-TV, compared with just 61% of sports nonviewers, per Altman Vilandrie & Co. But sports fans increasingly view streaming alternatives as valuable complements or cost-effective substitutes. Among US sports fans who use a streaming service to access live sports, 57% do so to get access to sports that aren’t available on TV, and 38% do so because “it’s less expensive than pay-TV,” per Verizon Media/Sapio Research.
• The indefinite cancellation of live sports due to the coronavirus pandemic could exacerbate cord-cutting in the US in 2020. While pressure on consumer discretionary spending will be the most likely factor causing people to ditch pay-TV, the prolonged absence of live sports programming in 2020 could have at least some influence on cord-cutting in the near term: 11% of respondents who had either already cut the cord or were planning to do so said their most important reason was the postponement of live sports, according to Business Insider Intelligence’s Coronavirus Consumer Survey, conducted on March 31, 2020.
• US live digital sports viewers have nearly doubled since 2018 and will become a growing proportion of total live sports viewers in coming years. This year, there will be 36.5 million digital live sports viewers in the US, up 97% from 18.6 million in 2018, according to eMarketer’s first forecast for US live sports viewers and digital live sports viewers. Further, digital live sports viewers represent 11.0% of the US population, and are set to grow to 14.2% by 2023 – that’s compared with total live sports viewer penetration of 46.3% in 2020, which will grow only slightly to 46.9% by 2023.

In full, the report:

• Analyzes the market forces, consumer preferences, and changing consumption habits that have led pay-TV and traditional TV networks alike to depend on live sports programming.
• Discusses how leagues could reallocate sports rights to digital players as existing rights deals expire starting in 2021 – and presents complete grids displaying existing US broadcast sports rights deals as well as digital sports rights deals (including some global digital rights deals).
• Identifies and examines the key players in the OTT sports landscape, including skinny bundles (or vMVPDs); media, league, and startup pure-play OTT services that offer sports programming; tech giants; and social media companies – and presents complete grids displaying the existing players and offerings within each group.
• Explores how digital platforms are enhancing or changing sports broadcasts and the overall fan experience through new features.
• Contains 77 pages and 40 figures – including 9 landscape grids.

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