TV shows are rapidly shifting to online or on-demand viewing. To illustrate this, out of the 100 most watched live broadcasted sporting events in the US in 2005, only 14 were sporting events. Ten years later, in 2015 sporting events comprised 93 of the top 100 telecasts.
TV networks rely on live broadcasts of the biggest sports as the main thing they have left to draw in new audiences. The more they keep those sports on TV and off streaming services the more young people are turning into other sports leagues instead.
Sports leagues have massively grown due to the immense adoption of subscription video streaming services (Netflix, Amazon Prime etc.) and social live streams (YouTube, Twitch etc.). This has opened ground for sports like esports that keep thriving, while traditional pro leagues like the NFL decline.
OTT Means Growth
The number of OTT-only households is facing immense growth and has tripled in 5 years. 50% of US Internet users use a subscription service at least once a week. Almost one-third of Americans say they watch more streaming TV than linear TV, and among millennials it’s 54%. 29% of them have completely cut the cord on linear TV.
This is happening because young people find greater value in shows for $8-40 per month subscription they can watch on demand and on any device rather than a $100+ per month cable bill.
The growing dominance of OTT services is the central narrative in the global TV industry now. In the meantime, social live-streaming platforms like Twitch averaged 1 million viewers at any given point of day, and Facebook Live reported 3.5 billion broadcasts in the first two years after it launched.
Linear TV is declining. This is a fact. Media has become streaming-first. Every major cable network (NBC Sports is an exception) has declining viewership and older audience. Between 2007 and 2017, the average age of primetime viewers on ABC, CBS, NBC, and Fox went up was between 50 and 60 years of age.
The last bastion of linear TV remains to be pro sporting events, because the dominant brands are almost always available live on TV. Apart from these, the content that gets large audiences for simultaneous tuning in awards shows and premieres of hit shows like The Big Bang Theory.
High-Quality Live Streaming and Subscription OTT
The NFL, NBA, MLB and top NCAA basketball and football games are still the reason for young people not to completely cut the cord. To illustrate: ESPN makes $7.6 billion per year in carriage fees from cable companies that pay for the right to carry the main ESPN channel. The other ESPN channels add another $1 billion. That number is increasing even as ESPN’s viewership is declining.
ESPN is owned by Disney and they together with major broadcasters don’t want people to watch those events online. The reason for this is they believe the new OTT revenue stream, which is mainly consisted of subscriptions and ads, won’t make up for their as quickly as they expect.
Major TV networks are paying record sums for exclusive broadcast rights to top sports leagues out of fear that losing them to a rival could be devastating revenue-wise.
But the shift in consumption habits is happening nonetheless. More and more young people are tuning out and turning to esports. The average age of Fox News, MSNBC, and CNN viewers is now 66, 65, and 61 respectively.
New sports are beginning to fill the open space for people who mainly consume content online. Namely, a growing marketplace of different sports leagues (this includes esports) is developing their own fanbases. OTT video lowers the barrier to entry to near-zero and let’s geographically dispersed fans unify in one place.
There are many opportunities which can be achieve with OTT and live streaming services that linear TV can’t offer like real time statistics, change of different camera views, interactive displays etc. Young audiences love when their viewing is more of an entertaining and interactive experience. And this deeper interaction and audience engagement in return is more compelling to advertisers and event sponsors.
This social experience can also be achieved with a display of live comments from friends or friends-of-friends. The discussion groups on a specific live stream with others is a central feature on Twitch, for instance.
OTT First Sports
There is huge potential in sports that are entirely new and have zero existing fanbase like a new league such as the 3-year-old Drone Racing League (DRL), which has raised $21M in venture capital to develop the sport of competitive drone racing. It has tried to artificially stimulate the development of a fanbase and not wait for years for competitions to create a critical mass of fans even for a niche OTT service.
DRL has focused on making TV deals with ESPN, Sky Sports, ProSiebenSat.1 to secure large audiences from the start, much like a new game appearing on the market hoping to entice enough people to take interest.
The rise of high-quality live streaming and subscription OTT services will definitely allow room for a lot more sports leagues to build huge audiences and revenue securing their future. There is different offer and resources for consumers both old and new than ever, for those with a rapidly growing league to attract fans worldwide.