The Return to Sports
How the return of live sports content will impact the shifting TV landscape
On March 9th, Rudy Gobert of the Utah Jazz mocked the Coronavirus threat by purposefully touching journalists’ recording equipment during a postgame news conference. Two days later, on March 11th, he was the first NBA player to test positive for the virus. That same day, the NBA was the first professional league in the US to postpone its 2020 season. Finally, on July 30th, after 141 days, the NBA restarted its season in a “bubble” in Orlando. The player to score the first points in the first game back? You guessed it: Rudy Gobert.
Of course, the NBA is not the only league that has been impacted by the pandemic. The NHL, MLB, PGA, WNBA, NCAA, and international soccer leagues were forced to put their competitions on hold, while the Olympics was forced to postpone its competitions one year, ruining arguably the greatest (unofficial) logo design in recent sports history. This dearth of sports content created a vacuum in which other forms of entertainment have risen to attract audiences’ attention.
Filling a Sports-Shaped Gap
Attempting to fill that gap while lacking traditional league highlights, many sports media companies are expanding on existing fandoms to include alternative sports and user-generated content. For example, ESPN distributed content from a Russian slap fight league across their social channels. This type of interstitial content is easily consumed and shared on social platforms like Instagram, Snapchat, and TikTok. It is also a copycat tactic that has been employed by social-native content companies like House of Highlights and Wave.tv for years, which has led to big valuations and acquisitions. Wave.tv raised $32 million at a $50 million -$100 million valuation in July and since the pandemic began, roughly 80% of Wave.tv’s overall viewing came from videos featuring nontraditional sports, according to the company.
Although digital in nature, and therefore seemingly perfectly set up for socially distanced competition, esports have not caught on amongst the wider audience during the pandemic like many would have expected. A CivicScience survey conducted in May found that less than 6% of respondents aged 18 or older had turned to esports as a replacement for traditional sports.
That being said, a good deal of attention has shifted to playing video games, as a quarter of US internet users in a GlobalWebIndex poll said that they had been spending more time playing computer and video games. In Great Britain, 85% of self-proclaimed gamers have spent more time playing video games, with over a quarter of those surveyed claiming that they are spending an additional 5+ hours per day gaming. These players are taking their civic duty to socially distance seriously, choosing to spend time with friends virtually rather than physically in order to share their passions and help reduce transmission. Notably, this mass-scale migration to in-game socialization also feeds into the accelerated development of the metaverse.
For those craving more traditional sports content, some appointment-viewing events soothed the itch, as millions gathered around their televisions for five weeks to relive Michael Jordan’s dominance of the 1980s and 1990s in the documentary, “The Last Dance.” The limited series set records for ESPN original programming, with over six million households tuning in for the premiere episodes. In fact, a Morning Consult survey conducted in April (when The Last Dance aired) concluded that 27% of respondents were interested in sports documentaries as an alternative to live sports viewing. It tied with “news coverage of Covid’s impact on sports” as the most popular response.
OTT Platforms to Ramp Up Sports Content
It is no secret that there has been a major uptick in streaming platform usage during the pandemic. Almost half of the respondents in the GlobalWebIndex survey stated that they have been watching more shows and films on streaming services during the pandemic. In fact, 98.9% of US digital video viewers are watching an additional 30 minutes or more per day on streaming platforms, with a whopping 40% of them spending 3+ additional hours per day. We know that even before the pandemic, sports viewers were 18% more likely to subscribe to traditional pay TV services than sports non-viewers.
Without this last foothold of linear television available, it is not surprising that many households are cutting the cord entirely, or at least reducing their traditional TV services. According to a MARCO Consulting survey that was conducted on behalf of Roku (so please take with a grain of salt), 28% of respondents that had cut the cord listed the lack of live sports as the #1 reason. A good amount of the attention that has shifted to SVOD services during the pandemic will not be returning, as that same survey found that only 17% of those respondents said they would re-subscribe to traditional linear services once live sports returns.
However, now that sports are back in one degree or another, the platforms that grabbed the attention of sports fans during the pause will now have to compete with live sports again, and they are already working to diversify their content to hold onto their newly gained audience. The main way to compete with live sports broadcasting on linear TV is to bid for the broadcast rights themselves, which is exactly what the streaming platforms are doing.
As we have discussed previously, Covid-19 is a powerful trend accelerator, and adoption of streaming services is certainly a trend that has accelerated. For those that have considered or gone through with canceling their traditional pay TV services, they expect that sports will still be available to them through their streaming services. This has increased the demand from OTT services to land live sports broadcasting rights to fill out their bundles. Already, Amazon has purchased the streaming rights for Thursday Night Football games, which they have made available to Prime members and even streamed on Twitch. Linear TV services are extending coverage of their sports to streaming customers either through DTC offerings or via single sign-on through their cable providers in order to keep consumers from cutting.
Another hurdle that OTT services need to address in order to lure consumers away from standard linear services is streaming latency. Streamers are at the mercy of their wifi connection, and it is no fun to watch a game with friends in a text chain and have the action spoiled for you seconds before the events play out on your screen. Streaming services like Amazon Prime and third party services are aiming to solve the latency issue by introducing group watching elements that encourage synchronized viewing on the same platform. The latency only matters if everyone’s timing is different. By creating a network effect and aggregating viewers on one platform, everyone will be able to watch at the same pace, even if that pace is slower than what you may be able to get from a cable jack. By aggregating enough attention via watch party features, the people who haven’t cut their cords become inconvenienced by being forced to delay their reactions, rather than those who are behind getting spoiled.
Leagues exploring new revenue streams
Currently, each major league in the US offers a direct-to-consumer streaming service, bypassing existing television broadcast agreements, with the exception of local and nationally broadcasted games. Although prices are typically well over $100 per season, this is well worth the price of admission for anyone that follows more than just their hometown team, a market that has grown over the past decade with the increase of fantasy sports and sports betting.
As the various leagues return to action, they are looking for new ways to monetize their events since they can not rely on ticket sales, concessions, or merchandise from in-person attendance. To put a number to it, the NBA estimates that it has already lost $1 billion in revenue while the season was paused.
Cue advertising to the rescue. Rather than filling seats with fans, many stadiums are placing branded tarps over entire sections of seats, using digital overlays, and selling advertising on the jerseys themselves. Although these practices already existed in some capacity before the pandemic, there has been a much wider acceptance of these revenue opportunities in lieu of fans in attendance.
The NBA has perhaps had to deal with the biggest shift, as their entire season has been moved to the bubble in Orlando. In the bubble, games are played on three separate courts, surrounded by digital signage that can be customized and branded. They have also been offering virtual court overlays to advertisers that rotate throughout the course of the games. New and existing league partners have rushed back to participate in the bubble branding because of the new opportunities and increased audience since the restart.
Sports are a welcome respite from the complicated environment we currently find ourselves in. Even the most staunch sports traditionalists would soften their stance on advertising disrupting their viewing experience knowing that the ad revenue is what is keeping allowing the leagues to compete. Although the method through which the content is delivered to fans may change due to the coronavirus, the interest remains, and advertisers have an opportunity to capitalize on new inventory.
Sports around the world are in a fluid situation. No one knows how long these competitions will be able to continue safely, nor how long it will be before fans are allowed to attend games once again. The one certainty is that demand for sports is there. At the end of the day, the content owners and distributors have to keep up not only with the rapidly changing circumstances created by the pandemic, but the shift in audience behaviors and viewing habits that have existed for years. Ultimately, Covid-19 could act as a catalyst to shift attention towards streaming services, which will gradually undo the last piece of the linear TV bundle.
