Deloitte predicts big sports rights rise

Every year, analyst and consultant Deloitte makes its predictions for the Technology, Media & Telecoms industry. 2014’s are just out and, as ever, they make fascinating reading, with a 14% increase in premium sports rights values among the headlines.

Overall, Deloitte estimates that the global value of premium sports rights will increase to $24.2bn, a $2.9bn rise over 2013’s values and the first double digit growth since 2009. Indeed, as the company puts it: “Premium sports rights fee growth is outpacing that of the broader economy.”

There is some small print regarding the methodology of Deloitte’s research — not every sport in every country is featured, only the premier competitions, and some big tournaments such as the Olympics and FIFA World Cup are excluded too — but all the same three quarters of that value will be generated by a mere 10 competitions: top tier football in England, France, Germany, Italy and Spain; the UEFA Champion’s League; and the four major North American leagues. And the explosive growth is mainly coming from three of those in turn: the EPL, Germany’s Bundesliga and MLB in the US.

Deloitte eschews the opinion that there is a bubble about to burst, reasoning instead that premium sport continues to deliver attractive demographic profiles to advertisers and is an important enough driver for pay TV that it demands reinvestment once the current crop of multi-year deals ends. The corollary of that is that it also reckons that continued investment in production technologies and ‘the show’ is crucial too, with increased functionality and choice — albeit often via the second screen — being seen as necessary for increasing perceived value, even if the features end up unused.

Interestingly, it also reckons the market for second tier sports is extremely viable provided rights owners can secure distribution though a suitable media platform. It points to the Ultimate Fighting Championship as an example, where growth has been driven by pay TV. How much? Its current owners bought the property for $2m in 2001. Thirteen years later it turns over $500m a year, is broadcast in 148 countries and pay-per-view fees can reach as high as $50 per event.

Which leads to a linked prediction: it looks like pay TV is going to undergo some substantial growth through the year, partly because people will be happy to manage more than one subscription as part of their domestic media strategy. This typically boils down to one platform-based option (ie satellite or cable) and one SVOD (Subscription Video on Demand) that can fulfil per match viewing as exemplified by the UFC above.

All this runs directly counter to the doleful expectations of cord-cutting in the industry, but is going to require a robust and widespread broadband architecture to realise fully and potentially raises some interesting rights questions, especially when coupled with another prediction for viewing figures to become realtime and realistic, ie. based on actual numbers rather than extrapolated ones. It isn’t too hard to envisage a two speed model that couples a flat fee with a viewing figure payment being very attractive in the future, at least to broadcasters.

Elsewhere, Deloitte is in no doubt that wearables are the future. It reckons that 10m units will ship in 2014, with 4m of those being smart glasses and the rest being a mix of watches and fitness bands. It’s estimating that the street price will be around $500, based on initial component costs of $200, which certainly puts them comfortably into an early adopter bracket. The main driver will be people’s ongoing obsession with being present on social media, though there are of course plenty of other applications in the sports video industry for coaching etc. And watch for them being banned left right and centre in competition.

100m users though are predicted worldwide by 2020 all in all, most of them using glass technology, which will give legislators a significant headache in keeping up with their progress through the sporting ecosystem.

To read the full report head to Deloitte TMT Global Predictions 2014:

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