Major broadcasters to lose out to OTT providers bidding for sports rights says new research

Sports broadcasters must take advantage of new technologies to drive audience engagement, according to a new study from Juniper Research. Augmented reality (AR), cognitive highlights and 360 degree content are critical to providing immersive content via premium media channels, the study showed.

ESL events like this one in Cologne last year continue to draw larger crowds

These new technologies are critical to providing immersive content, said Research author Lauren Foye. “Viewership habits and expectations are changing, in a similar vein to on demand content, so viewers expect snackable media which they can easily jump in and out of. They also feel that sports broadcasters should provide interesting commentary and data analysis. As such due to the costly nature and the perceived value of sports media, these will continue to be delivered via premium paid for channels or as part of bundled subscriptions.”

As to what will happen to those broadcasters that do not apply new technologies to drive audience engagement, Foye stated: “Such broadcasters risk falling behind both rival providers and new entrants into the market. As we see OTTs enter the fray, these will be seeking to carve out a unique offering which sets them apart from traditional players, and the best way to do this will be through adding immersive content stemming from technologies such as player tracking, AR and interactive content.”

In addition, broadcasters must seize the eSports opportunity as partnerships with games publishers or eSports leagues will allow the broadcast of exclusive content and media.

Future sports technologies, including the rapidly growing eSports channel, will see annual spend reach $3.4 billion by 2023. This is up from just $700 million in 2018, posing a significant opportunity for agile start ups and over the top (OTT) players.

There is a good eSport opportunity for today’s sports broadcasters. Foye commented: “Streaming rights to eSports have not had much in the way of development to date. The crucial issue here is quality and audience. The majority of tournaments are shown on Twitch simply because it is seen as providing the best quality environment in which to offer such media.

“However, much like traditional sports, such as football’s Premier League, Juniper believes that eSports leagues will see battles fought over content rights and ownership; with the industry set to have valuations in millions of dollars. The strength of online platforms and communication tools suggests that traditional providers risk losing out to Internet platforms unless these players make a concerted push for content now.”

The new research, The Future of Sports Content: Technologies, Broadcast Strategies & eSports 2018-2023, found that these new technologies (that also include professional sports wearables and in-game monitoring) will infiltrate both broadcasting and sports participation, with real time player tracking providing live statistics and concussion monitoring devices impacting in-game substitutions. It found that professional sports wearables will generate $2.6 billion by 2023; most of this attributable to hardware sales themselves.

Helped by these new technologies, the sports broadcast industry will be significantly disrupted over the next five years. Juniper predicted that US broadcasters will lose contracts during the next decade when two of the biggest national sports broadcasting rights are up for renewal. Juniper identified MLB and NHL as the sports leagues which will have significant disruption from OTT rights purchases.

As to how badly the sports broadcast industry will be disrupted in the next five years, Foye said: “Juniper believes that more OTT providers will purchase sporting rights, as these players increasingly disrupt traditional sports viewership. In an attempt to appeal to a much broader audience, acquisition of these rights will also greatly hurt traditional providers and will provide a significant revenue stream through advertising deals. It is likely however that the purchase of things such as Premier League rights or NBA rights will require a need to increase membership fees, or offer add-on subscriptions.”

Juniper argued that Amazon is in pole position to acquire US sports rights, given that the costs could be offset by increased Prime subscriptions, allied to additional income from eRetail purchases made via the Amazon platform.

Foye explained: “According to our analysis, Amazon would only require 1.7 million new Prime subscribers to pay for Turner’s current MLB rights package priced in the region of $3 billion for eight years.”

While OTT players such as Amazon may be interested in acquiring sports rights from major broadcasters, they also need to consider production of that content and the cost that will add to the final bill. Yet Foye commented: “Of course production costs will be considered, but players such as Amazon have significant user/subscriber bases and sports is seen as a considerable hook for new customers. We have seen Amazon make in-roads into US sports broadcasting with the purchase of sporting rights packages for Thursday night NFL games. These matches were then made available to Amazon Prime subscribers around the world, aiding in spreading cost.”