Rights-owners set to change media rights models amid Covid-19 recession
Broadcasters reducing their sports rights spending amid a Covid-19 recession will force rights owners to adopt a new hybrid media model to reduce their reliance on pay-television revenue, according to a new report by UK-based international data-driven agency Two Circles.
In its report, Growing Out of the Uncertainty: Sports Media’s Hybrid Future, Two Circles found while coronavirus-enforced social restrictions has seen 95 per cent of people spend more time consuming media, the likely Covid-19-induced recession and unemployment will mean consumers walk away from high-cost monthly payments to pay-TV broadcasters.
Two Circles said the decline of pay-TV subscriptions will have a significant impact on the sports industry, resulting in the amount of spend on sports media rights by such broadcasters decrease after consistent overall growth for the last half a century.
According to its data analysis, pay-TV broadcasters accounted for 71.4 per cent, or $34.9 billion, of a total $48.2 billion spend on media rights in 2019 – an amount which Two Circles believes will be the apex of the pay-TV spending curve globally.
The report said: “In the last six weeks alone, US pay-TV broadcaster Fox Sports ended its $93 million per year deal with US Golf Association seven years early with NBC Sports filling the void but for $56 million less per year.
“Rugby Australia, meanwhile, saw a similar deflation in its new deal with pay-television broadcaster Foxtel for the 2020 Super Rugby Australia – worth a maximum of A$10 million [$7.15 million], a 70 per cent reduction in what Foxtel was due to pay pre-Covid.”
Two Circles said to protect their media revenues in the future, rights-owners will have to adapt the way they package and distribute their content to sign deals with a greater number of media partners.
The change will see the acceleration of a new ‘hybrid’ media model, where rights-owners will cut and sell rights for linear pay-TV broadcasters, free-to-air broadcasters, subscription OTT platforms including Amazon and DAZN, ‘owned’ direct-to-consumer streaming services and free digital publishers all in the same rights cycle, reducing their reliance on pay-TV.
There will also be more emphasis on non-live content as a premium product after the coronavirus period has illustrated that sports fans do not just want live action but documentary-style content that fits around it.
The model will also spread the risk and brings every media platform to the negotiation table, which is critical in driving competition.
Early signs of the model have been seen in properties such as American football’s National Football League, which has supplemented its rights deals with linear pay-TV broadcasters with partnerships with social media channel Twitter and online retail giant Amazon for live rights, and highlights and non-live content with Facebook, as well as building up subscription bases for Game Pass, the D2C streaming service in most territories.
The report said sports rights-owners will have to figure out what content packages they should create, and which distribution channels they should partner with, to drive the biggest long-term commercial growth.