Powered by TMCnet
| More

Cable Technology Feature Article

August 29, 2013

Game On: Sports Fuel Content Strategy Changes

By Bob Wallace, VP of Content

With the NFL regular season fast approaching, members of the content food chain are employing divergent plans to best deal with soaring costs and sore pay-TV subscribers as carriage fees continue their climb for what represents the last bastion of appointment TV: live sports.

NBC’s Sports Network and Fox Sports 1 are clear examples of how broadcasters have decided to handle soaring costs that have driven many to what appeared to be a content cliff late last year. The possibility of Google bidding on NFL games long-offered under DirecTV’s (News - Alert) Sunday Ticket package –its crown jewel - next year and uncertainty to a picture that is TBD (to be defined).

Need more proof of the value of live sports? Spots for the 2014 Super Bowl are $4 million a pop and are either sold out or close to it, before the regular season begins! And roughly a year ago, ESPN (News - Alert) paid $5.6 billion over eight years – a 100 percent rights increase - for rights to Major League Baseball telecast and online distribution. Throw in March Madness and the 2014 Olympics in Sochi Russia and you can see that broadcasters are putting money where their viewers are.

Video on demand and DVRs enable viewers to watch the second most coveted content – original series – at their leisure. But who wants to watch a live sports event after it has concluded? Few. As a result, advertisers are flocking to live sports events to pitch their wares to the consumer masses as is evidenced in part by the price for Super Bowl ad spots.

So what does all this mean to the fluid video distribution ecosystem?

-Content owners – They couldn’t be happier as there are more bidders and higher attainable prices for their highly coveted assets. Add in the growth in online distribution via streaming. A wide and growing array of sports channels and networks (see college football) beyond the four major pro sports) have risen and taken hold, all with real fans.

-Cable, Telco TV and satellite – These distributors are taking a financial beating from soaring live sports content prices. They are passing at least some of the expense along to subscribers in higher rates and or pay-extra sports programming tiers and packages. Neither pleases customers who have another reason to cut the cord or to sign up for pay TV in the first place. Charging extra for NFL Network was met with uproar years ago.

-Advertisers – Their world has been turned upside down and their primary focus is giving advertisers what they crave – a live sports viewing audience they can count on. Their continuing pursuit of major sports events is evidence of this as are the launch of the NBC Sports Network and Fox Sports 1. Comcast (News - Alert) owns NBC Universal.

-Broadcasters - This group is between a rock and a hard place and has chosen in part to take things into their own hands in some cases launch their own ESPN-like or ESPN-killer channels and networks. Seeking a broader audience, they have aggressively pursued online distribution and ad sales, see CBS and Turner Sports with the delivery of March Madness the last few years.

-CDNs & infrastructure providers – This group couldn’t be happier as content owners step up their online delivery efforts as do the those that pay to distribute programming licensed from them. Seemingly all parties need enabling products and services to get their content to multiple screens (wired and wireless) ASAP to expand viewing audiences and ad opportunities accordingly.

-Consumer electronics makers – For this group, it’s the good, the bad & the ugly. It’s great for wireless device makers such as Apple. It’s potentially bad for TV makers’ sales thanks to Google’s (News - Alert) Chromecast attachment that turns dumb TVs into smart ones (Internet connected) for $35. It’s ugly for makers of old-school cable TV gear that lacks smarts as more functionality and capabilities are moving to the cloud as is the case with Comcast’s X1 in-network platform that houses functionalities-turned-apps.

-Newcomers – Companies looking to enter the video space with products – Google – and services - Intel (News - Alert) and Aereo – aim to capture consumers’ attention with innovative offerings that provide cheaper innovative programming alternatives. They provide different approaches that could sidestep costs problems experienced by large and entrenched providers listed above.

-Broadband providers – This constituency should benefit greatly as consumers look to take advantage of streaming video services and online web sites. A recent stat: Netflix use accounts for 30% if Internet usage between 9 PM and midnight in the U.S. With Google bent on 1 Gbps Internet and traditional operators beating the drum, a broadband need-for-speed would drive the video economy forward. Two words, pricing and availability, are the keys to success or failure here.

-Mobile video usage – This stands to climb as allowed by available bandwidth. Whether it’s smartphones or (better), tablets and laptops, live sports viewing is on a steady rise already. The chief and continuing impediment here are big screen TVs which are the fan’s favorite for watching sports matches when they are accessible.

The Bottom Line

There are three certainties in life: death, taxes and rising sports carriage rates. And realities: NFL attendance has been dropping for years but overall viewership (TV and beyond) continues to rise – are forcing many constituencies of the video ecosystem to adjust strategies to soften the financial blow and give advertisers what they want. Still others look to capitalize in resulting opportunities to better serve current and potential viewers while containing costs.

Stay tuned and enjoy the games.

Edited by Stefania Viscusi

blog comments powered by Disqus