How direct-to-consumer streaming is empowering sports rightsholders

By Eric Black, CTO/General Manager of Media, Edgio.

The streaming landscape is changing fast, with affordable technology empowering many companies to launch direct-to-consumer (D2C) streaming services. The sports TV market has been transformed as a result. On the one hand, major tech companies like Apple, Amazon and Google have entered the market. On the other, sports leagues and organisations are better placed than ever before to go D2C.

Streaming tech has also reached a level of excellence in delivery quality and robustness that places it ahead of broadcast for viewer experience. It’s not a niche market anymore, it’s mainstream. And, as a result, the focus is on defining the best long-term business strategies.

Experimentation in sports rights

We are in a period of experimentation within streaming – just look at the way rights are divided and delivered to viewers. In the US, for example, YouTube has NFL’s Sunday Ticket, while Amazon has Thursday Night Football, on top of the usual suspects in CBS, ESPN, NBC and Fox; Peacock has an NFL Wild Card Playoff game, the first ever exclusive live-streamed playoff game in the US, as well as MLB Sunday Leadoff, featuring a live game and a host of classic games and other content. Then Apple has Friday Night Baseball and MLS Season Pass. Rights are spread out like never before.

For sports fans, such division of rights means they have to subscribe to multiple services to watch all their teams’ games. It remains to be seen whether they’ll be willing to pay a subscription for just a game a week, which most of the time won’t feature their team. For the biggest sports organisations, such a broad rights strategy may well pay off. Other sports that cannot command such demand are exploring different options.

Peacock’s WWE offering provides a fan-friendly model of all the content in one spot at a lower price point, providing fans with a simple, one-stop shop for all their favourite events. There is also a fantastic opportunity for sports leagues and franchises to create D2C offerings that address under-served areas of a market. The Canadian Hockey League (CHL) is a great example: through better access to broadcast-grade streaming technology, CHL is now streaming all of its 2,000+ games per season – spinning channels up and down as required. Hockey fans get to watch more games and at a quality level they would have previously only associated with mainstream streaming services.

The same principle applies to regional sports networks (RSNs), for whom streaming provides a better business case by allowing them to broadcast more games, making more of their investment in rights, or by broadcasting niche sports for the first time to highly dedicated audiences.

Experimentation in monetisation

Another consideration for rightsholders is monetisation. With many committing to long-term deals – up to ten years in some cases – it is important that they build a business case that works to justify their large investments. Rationalisation of streaming technology is a good place to start. By operating in the most effective and efficient way possible, media companies can create more space for themselves to invest on the content side.

There are lots of different ideas today on how best to bring sports to fans, and there’s no one-size-fits-all method. Each sport and each audience requires its own unique approach. Companies will continue to experiment or fine-tune their offerings. Ultimately, it will be up to viewers to decide with their wallets which subscriptions they’re willing to pay for.

But subscriptions alone aren’t the only way. Hand-in-hand with experimentation of sports rights is experimentation of monetisation. Advertising is really coming to the fore now in light of economic pressures hitting sports fans. If ads can reduce, or even replace, subscription costs then that may be very appealing to a large section of viewers. Others may be happy to pay the subscription, or even be willing to pay more for better quality streaming with 4K or Dolby Atmos.

Then there is free ad-supported TV (FAST), which enables rightsholders to create linear channels from live and on-demand/catch-up content and syndicate them out via established streaming distributors. Paramount-backed Pluto TV offers 250+ FAST channels. Its Extreme Channel provides a free and easy-to-access 24/7 channel dedicated to extreme sports that commands a niche, but highly dedicated audience. Rightsholders of niche sports could follow Pluto’s lesson and do similar, in a cost-effective way and generate new revenues from advertising and syndication.

Flexibility vs complexity

There is a fantastic opportunity for rightsholders to build D2C offerings that deliver high-quality viewing and a successful long-term business model. It requires a lot of flexibility and, make no mistake, the tech required is incredibly complex – especially when you consider scale. There could be millions of concurrent viewers, with the audience divided into premium subscriptions, standard subscriptions, or hybrid subscriptions with ads. Each viewer will be watching in a different way: some may be on a Connected TV, others may be on the move watching on mobile. Every individual stream has to be continually checked to ensure the viewer is receiving the highest possible quality based on device, location and bandwidth. In short, every viewer must receive broadcast-level quality experiences

Streaming live sports is not for the faint-hearted – but the tech is mature now. Specialist vendors are coming at these challenges with the benefit of a decade or more of experience. And that’s the big difference in the market compared to just a few years ago. As a result, the cost of setting up, managing and scaling up live sports events has reduced dramatically. With the benefit of experience, automation and know-how, live events can be managed by less than ten people now where there used to 100 – and that’s why 2023 is a great time to be launching or rearchitecting a D2C sports service.