Deltatre: OTT sport investors can win fans and reap benefits
By Simon Ward
Sports media companies are buying into the importance of over-the-top streaming services to such an extent that, by 2021, in North America alone, spend in the related technology will amount to almost $7 billion, and those operators that invest in real-time engagement stand to benefit significantly in terms of extra subscribers, according to a new report.
Broadcasters, other content providers, leagues and federations are increasingly tapping into the potential of OTT as viewing habits change, and they look to connect with younger audiences more inclined than their elders to watch sport online and on mobile devices than via traditional television services.
The scale of the outlay is reflected in the report from Deltatre, the international sports media services company, entitled ‘Where the Money is Going: The Future of Sports Entertainment, an unprecedented global analysis of the economics of OTT sport’, published today.
Deltatre, which is owned by Bruin Sports Capital, the international media, sports, marketing and branded lifestyle investment company, found that, for two-thirds of consumers, $39 per month has become the cut-off point for sports content spend, with only a third prepared to pay more.
This helps to explain why sports operators worldwide are now spending 15 per cent of their total budgets on OTT, and it is projected that by 2021, more than $6.8 billion will be invested in the OTT tech stack, namely the framework behind web and mobile applications, in North America only.
Moreover, the study concluded that those operators which invest in new functionality to maximise fan engagement through OTT services enjoy a 24-per-cent uplift in subscriber acquisition.
Deltatre’s findings are based on research of US and UK sports fans, analysis of its 1.2 billion minutes of live-streamed sports content and exclusive interviews it has conducted with leading sports executives worldwide.
The year 2021 is considered particularly significant as an ‘OTT 2.0’ is expected to emerge that year with executives suggesting that the ‘freemium’ model or ‘family packages’ will be necessary to attract new customers and convert them to full paid-up subscribers later.
While live content remains the most sought-after rights property, the report recommends that operators look to attract consumers with a mixed offering that also includes short clips and news updates
Giampiero Rinaudo, the chief executive of Deltatre, said: “The sports OTT KPIs have changed. It's no longer just about streaming the match. Encouraging viewers to come back day after day is the gold standard, even when there’s not a live match taking place.
“That means maximising engagement on the shoulders of the game itself. Tailoring video and editorial content to different types of fans and reconfiguring the UI [user interface] and UX [user experience] based on time of day, user insights, or the latest developments in the sports world that week is how brands can create a better ecosystem around a sport.”
Adapting to cord-cutting OTT streaming and short-form content is seen as a sensible investment in light of increased ‘cord-cutting’, namely the gravitation from often costly traditional subscription TV services to cheaper, and more flexible, digital options, and explains the efforts of various operators to market themselves as ‘the Netflix of sports’.
According to the report, 80 per cent of millennials or Generation Z indicate that they currently spend less than $39 per month on sport content, and only 27 per cent of consumers aged over 25 pay more than that figure per month.
Deltatre quotes an unnamed senior industry executive from a North American sports league saying: “Netflix has been a huge success because its pricing is widely affordable. But what the sports industry has seen is that a premium price product creates a barrier to entry – and also to fandom.
“Putting out highlights and original content as freemium is a great way to bring people into the product with something that can be enjoyed year-round 24/7. From there, we can encourage them deeper into the ecosystem and ladder them to a fully paid-up subscriber over time.”
This view is echoed by Jamie Hindhaugh, the chief operating officer of UK pay-TV operator BT Sport, who said: “Younger generations want to see untold stories about their favourite sport just as much as older fans, even if they’re watching in different ways. Offering a look behind the scenes will always be an engagement driver and we’ve seen huge success with our ‘No Filter’ series. Original content keeps fans on the hook during the off-season.”
The change in viewing habits is proved by survey results showing that traditional TV is now a primary device used to watch sports content for only 64 per cent of consumers, with mobile closing in, on 49 per cent, and tablet, on 41.5 per cent, and smart TV, on 38.2 per cent also prominent.
Future technology Sports fans are also energised by forthcoming advances, with over a third of those surveyed seeing 5G as the technology that will have the greatest impact on how they consume content by 2025, indicating that faster, more reliable internet connections are key to building a following.
It is deduced that this will also facilitate greater revenue opportunities for sport OTT providers from virtual reality and augmented reality, real-time data and distribution, live betting and synchronised content across mobile devices and live coverage.
Demand for content has already evolved beyond the home with 39 per cent of consumers watching at least four hours per week of sports programming on mobile.
A senior industry executive said: “The main difference [in 2025] will be the platforms. Younger generations will start to be in charge and so TV screens won’t be relevant anymore. Everything will be centred around the smartphone with more possibilities to buy short content PPV – like ‘last quarter’ or ‘last innings’.”
One significant finding from the research was that 20 per cent of sports fans pay nothing for access to content in any given month, with half of this number citing shared accounts with family members and friends as their means of consumption.
This is seen as an incentive for operators to develop ‘family packages’ similar to those available on Netflix and Spotify under which multiple devices and content access are capped to the account type.
Such a strategy will enable rights-holders to monetise users otherwise unwilling or unable to pay for a single account, as required for subscription TV packages.
Deltatre claims that cord-cutting, an identifiable movement in North America for several years, is now a “global trend, particularly in western markets,” as consumers seek greater flexibility in the services they sign up to, and is not going to be reversed. The third quarter of 2018 saw the first worldwide decline in pay-TV subscribers, with satellite suffering the biggest loss, of 110,000 customers.
The survey showed that 77 per cent of sports fans want the freedom to watch their favourite teams or players at their own pace, with whatever device they have to hand, with 79 per cent also wanting the freedom to cancel at any time, making it one of the most important factors in driving purchase decision-making.
Time for investment This helps explain to shift towards OTT with Deltatre citing research that shows a 49-per-cent increase in live streaming ‘plays’ of sports content in 2018 compared with the previous year. Deltatre saw a similar level of growth across the services it powered last year, and cites another operator that reported a 53-per-cent rise in the number of minutes streamed.
This would seem to justify investment in the fan experience to bring viewers closer to their favourite sports, be it via multi-angle viewing, contextual data overlays, social media integration, real-time targeted promotions and voice control.
The Deltatre survey found that 72 per cent of sports fans view personalisation as an important feature of next-generation OTT services and 71 per cent want deeper immersion and a desire to feel closer to the action through the more advanced functionality that OTT can provide.
The report also sees a recognition from leagues and federations of the need to offer appealing OTT content, with objectives including reaching younger audiences, facilitating new partnerships, exploiting different types of content (live, documentary and archive) and promoting year-round engagement.
Pioneers in the field include DAZN, the international OTT sports streaming platform now available in eight markets (soon to be nine, with the addition of Brazil), and Kayo, the sports streaming service of Australian pay-TV operator Foxtel.
Asked about the best way of engaging fans, a senior industry executive from a German sports federation was quoted saying: “Offer OTT. Exploit possibilities around ‘free rights’ without damaging commercial value. Apps across all platforms. 360-degree video, live chat and, most importantly, inspiring stories.”
Given that North American sports media rights alone are expected to cost $23 billion by 2021, an increase of 18 per cent from 2018, broadcasters and other content operators will be under greater pressure to deliver ROI, which will drive a surge in video streaming investment, according to Deltatre.
It is anticipated that the spend of $6.8 billion in North America will largely go towards reducing latency (including 5G investment), creating unique ways for users to engage with the different sports they watch and deploying tools that enable operator flexibility in defining experiences and monetisation capabilities.
George Pyne, the chief executive of Bruin, said: “If a content or distribution company wants to be relevant to the new generation of consumers, it has to be on the front end of the OTT movement and the time is now with a significant amount of sports rights in play over the next four years.
“The investment in OTT will drive innovation that fuels growth businesses informed by deep levels of data and insights derived from a highly-engaged, rapidly growing audience. Those that ignore this opportunity will play a real penalty because they’ll miss out on a highly-valuable consumer base which nobody can afford to do.”
Deltatre provides services to various federations, leagues, broadcasters and media companies, including Fifa, Uefa, English soccer's Premier League, German soccer's DFL, the International Olympic Committee, golf's European Tour, tennis' ATP Tour, the NFL, the BBC, BT Sport, Discovery and Sony.
Last November, it acquired Massive Interactive, a global OTT software company, in a move that made it the largest independent OTT solution provider in the world.