With the finish line in sight, British long distance runner and Olympic gold medalist Mo Farah made one final sprint at the IAAF Diamond League finals in Zurich, Switzerland, last month. It was the last race of his long and distinguished track and field career and, coming up from behind, he won the last title in his storied career to wild applause.
NBC Sports Group televised Farah’s triumph to track and field fans live via its Track and Field Pass service, a $69.99-per-year, direct-to-consumer service that’s part of an emerging category of digital streaming sports subscription offerings that could threaten to sprint past traditional linear cable sports services to super-serve sports fans across the country.
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Traditionally, live sports programming lived in cable bundles that featured national sports networks like ESPN and FS1, as well as regional sports networks and a handful of general entertainment services.
But now, subscription digital sports services can showcase a huge roster — whether it’s NBC Sports Group offering packages with sports ranging from track and field to cycling to rugby; or Turner Sports kicking up a proposed OTT service geared to UEFA Champions League European football; or ESPN planning a direct-to-consumer service featuring 10,000 live Major League Baseball, National Hockey League and Major League Soccer games.
Getting Cord-Cutters in the Game
The new services seek to provide additional revenue to help sports programmers offset the high cost of rights while giving younger cord-cutting fans an opportunity to access content that’s not typically offered on linear sports channels.
“Before, if you were a cord-cutter or cord-never, you effectively said sports aren’t important to you because the only way to access U.S. pro sports content was through the pay TV network ecosystem,” fuboTV chief financial officer Joel Armijo said. “Now, in the [internet protocol] world, we’re moving toward completely personalizing that experience for a sports fans looking for that lean-forward kind of immersive experience.”
The sports industry has already taken several swings at the multiplatform, direct-to-consumer digital subscription model — all of the major pro sports leagues offer out-of-market packages of live games — while national and regional networks have offered marquee sports via TV everywhere platforms to authenticated viewers subscribing to the traditional cable bundle. As a result, audiences are increasingly viewing live sports content on phones, laptops and computers.
At the same time, younger viewers in particular are increasingly cutting the cable cord or choosing not to subscribe to cable at all, decreasing the pool of potential viewers who watch linear sports content. Pay TV providers lost about 976,000 net video subscribers in the second quarter of 2017, continuing a disturbing trend for cable networks, according to Kagan.
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The realities of the changing marketplace have pushed several linear sports channels, which are heavily reliant on distributor license fees and advertising dollars to offset high sports-content fees, to look for opportunities to generate revenue on alternative platforms. Last month alone, three major sports-media players committed to stepping onto the direct-to-consumer field within the next year:
● ESPN, which has recently suffered subscriber losses — its subscriber total was down 3.5% in its recent third-quarter earnings report — will launch a new service in 2018 that will mostly offer content not currently available on the linear channel. Offerings would include MLB and NHL content from BAMTech, which provides the technological backbone for the two leagues’ out-of-market streaming packages, and which is now majority-owned by ESPN parent The Walt Disney Co. While details of the service are vague, Disney chairman and CEO Bob Iger said during the earnings report that the launch of the direct-to-consumer service marks “an entirely new growth strategy for the company.”
● CBS Sports will launch a new OTT service later this year. It also launched a Showtime PPV app on Apple TV devices for the Aug. 26 Floyd Mayweather-Conor McGregor pay-per-view boxing match.
● Turner Sports — which distributes National Basketball Association games on TNT and Major League Baseball games on TBS — will launch a new streaming service based on its recent acquisition of UEFA Champions League and UEFA Europa League rights in 2018.
Sports media consultant Lee Berke said the recent OTT sports service announcements mark a shift in the traditional cable bundle’s virtual stranglehold on the category as viewers migrate to more multiplatform viewing.
“I don’t think the bundle or traditional cable is going away, but it’s shrinking, and the days of 80% to 90% penetration of cable services in homes are gone,” said Berke. “The key is that [sports networks] need to be in [the digital] space in an aggressive way and take a new look at their programming rights to see how best to divvy them up in an innovative range of approaches that meet the needs of new generations of viewers that may think their televisions are their phone, laptop or tablet.”
NBC’s Niche Play
Still, cable sports networks have to walk a fine line in trying to generate new digital revenue streams with direct-to-consumer services while not syphoning away cable subscribers from its linear cable channel offerings. NBC Sports Group has tried to have the best of both worlds by launching several direct-to-consumer services under its NBC Sports Gold service featuring niche content and international sports.
The company’s Cycling Pass, Pro Motocross Pass, Track and Field Pass, Rugby Pass and Premier League Pass all offer content that isn’t available on broadcaster NBC or cable sports network NBCSN, said Rick Cordella, executive vice president and general manager for Digital Media for NBC Sports Group.
While NBC Sports Group remains a big supporter of the existing cable ecosystem, the advent of new digital technology, combined with viewers’ willingness to watch content on multiple platforms (NBC’s Sunday Night Football drew an average of 600,000 unique digital viewers to NBCSports.com last year), represents a chance to deliver content to underserved groups of fans, Cordella said.
“What I think has happened is, the technology is now available to deliver these products, and the acceptance of that technology allows you create offerings like NBC Gold that weren’t possible years ago,” Cordella said. ”People are willing and open to watch content this way.”
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A huge question looming over this shift is whether enough underserved sports fans would be willing to pay anywhere from $10 to $70 to watch live sports fare on their phones and laptops. Cordella wouldn’t provide specific subscriber numbers for any of the five OTT sports services, but he said the numbers have “exceeded expectations.”
OTT provider fuboTV is one player that’s skeptical that sports alone will draw enough subscribers to change the game in a video-streaming marketplace dominated by entertainment services such as Netflix, Hulu and Amazon Prime Video. A mix of quality sports content and entertainment-based fare will attract a broader audience and score more revenue dollars, CFO Armijo argued.
FuboTV’s 70-plus channel Fubo Premier bundle sells for $34.95 and includes 35 channels that feature sports content, including soccer-heavy beIN Sports, fuboTV Network, Eleven Sports and most recently, Pac-12 Network, to go along with FS1, Golf Channel, Olympic Channel, NBCSN, CBS Sports Network and NBA TV. Also part of the bundle are a number of news and entertainment-based channels including Lifetime, Fox News Channel, USA Network, Univision, El Rey Network, HGTV, Hallmark Channel and History.
“We will continue to work to really super-serve sports fans and that’s very core to what we do,” Ben Grad, fuboTV’s North American head of content strategy and acquisition, said. “At the same time, there’s no one-size-fits-all model out here. We’re confident with our approach of being able to very well serve a number of customers in the marketplace with both sports and entertainment programming.”
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Still, NBC’s Cordella said a sports-only OTT service is an easy sell to fans hungry to watch their favorite sport. “One of the good things about sports is the fact that this is a known entity — you’re tapping into a built-in fan base that already exists,” he said. “When you take a particular soccer game and say, ‘It’s this team versus that team,’ you know exactly what you are getting, as opposed to entertainment services where you have to explain what the content is and why it’s different and better than what your cable subscription already has.”
It could be a while before standalone OTT services replace pay TV providers, Berke said, but companies that don’t explore the direct-to-consumer marketplace do so at their own risk.
“I don’t know if it’s the end game, but it is a necessary step,” Berke said. “It doesn’t mean that that’s the only way consumers will be watching sports in the future, but it means that you need to have a substantial presence there if you’re going to keep yourself relevant for new viewing options. You have to be able to reinvent yourself for each new generation.”
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