In only the last several years, sports broadcast rights have ballooned in value, setting record-high TV deals, particularly the NBA’s $76bn and the English Premier League’s £6.7bn deals last year.
But why are sports rights surging in value? How has the landscape evolved even as early as post-COVID when it pertains to technology transforming sports broadcasts, and who are the distributors causing the most impact in the industry?
Speaking to Insider Sport, Jonathan Smith, Business Development Director at Net Insight, believes that streaming services have been the “catalyst” for the growth of rights values. Smith also explored how automation holds the key for broadcasters to receive return on investment for rights fees, as well as the fundamental technology that will shape the broadcast industry for years to come.
Insider Sport: How large of a contributor has the emergence of streaming services since post-Covid been to sports broadcast rights fee exploding over the past several years?
Jonathan Smith: I think streaming services have been absolutely the catalyst for the rise because they’re hyperscale platforms and, in all cases, they represent some of the largest broadcast platforms in the world.
If you look at the emergence of Netflix or YouTube, these are, if you compare them to the scale of traditional television channels, by far the biggest channels we’ve ever seen. They’ve realised that in order to gain market traction, the enablers for that are buying content and one of the best commodities in the media market is sports content.
We found that they have been able to throw caution to the wind and bid for rights at unprecedented levels, and you would have seen certain rights changing hands over the last few years for numbers that we probably wouldn’t have imagined.
I think (streaming services) are absolutely at the core of why that’s happened. I think they’re doing it to stress the market that they want and to try and corner those consumers.
IS: How are traditional cable/TV networks looking to compete against the streaming model, not just financially, but also for audience share?
JS: The audiences that are on streaming platforms are predominantly younger audiences, and the way they’re consuming media is changing. Traditional broadcasters haven’t done as much to bridge that gap as the streaming platforms.
There is definitely a shift from the way we’re engaging fans, and the demographics like young people aren’t watching traditional long form live sports in the same way. They’ll take soundbites, clips and highlights packages and streaming platforms are in a really good position to expand on this.
Traditional broadcasters don’t yet fully understand this. They talk about engagement, but they talk about engagement for ultimate angles, player cams, etc., it’s not necessarily about grabbing the younger demographic. You only have to walk around and look at how people are consuming media on their phones, out with their friends and looking at 30 second clips of just the highlights from a game and that doesn’t mean they’re any less engaged, it just means they’re not consuming it in the same way.
The broadcast networks have to transform the way they’re engaging and if they want to be able to compete, they have to make a shift in their thought process and the technology that they’re using, because the traditional broadcast stack isn’t going to work.
You have to do so much more to create that short form content. It starts to lead into how we use automation tools, such as AI.
IS: How is AI set to shape the future of live sports programming in the coming years when it comes to integrating data into live broadcasts?
Broadcasters certainly need to think about digital short-form and social media presence as it’s forming part of their marketing team, not just their broadcast team. They’re always hanging off the back of the traditional broadcast flow, and I think we’re going to need to see a convergence and we are seeing tools that do this already that are able to take the live stream automatically, create clips and detect highlights.
In order to be able to do that efficiently, we can’t afford to have operators looking at every single monetisable property that’s out there. There are a huge number of sports and fans that expect to be able to have access to that sport and that needs to be automated.
But we’ve done this before. We went from a tape-based media landscape through the 1980s and 90s, into a fully file-based automated play out system for creating linear chains. It’s just the next phase of reimagining what automation means to broadcast. Part of that is throwing away the old broadcast chain and reimagining what it’s going to be.
If you’ve got a piece of content you want to maximise your return on investment, you then have to talk about how you do that efficiently as a business, or else you will get crushed
There is a huge amount of people within the data-driven content generation and this all comes down to, again, automation. You have to automate this process and make it happen. We can’t afford to do all this by hand, and we can’t produce all this stuff with people.
The monetisation opportunity doesn’t scale in a linear way to the amount of feeds you produce. You want to capture the biggest market you can. If you’ve got a piece of content you want to maximise your return on investment, you then have to talk about how you do that efficiently as a business, or else you will get crushed, which is kind of what we’re seeing some of the traditional broadcasters juggle with at the moment.
IS: What is the Return on Investment now for TV networks and streaming platforms with the surge in rights fees? Are networks becoming more selective in which sports they want to broadcast, going against traditional norms? Warner Bros Discovery losing NBA rights would be an example.
JS: I believe this is an effect of price elevation. Networks can’t afford to deliver in the way they’re delivering all of the rights at any cost. They haven’t yet undergone that technology transformation. They can’t do that efficiently enough to get the return on investment back for the amount of work it takes them to do it.
The networks are having to be selective, and if that’s not a warning sign to those traditional broadcasters that they have to start doing something differently, then I don’t know what is.
In the value chain, where you’re selecting the technology from a portfolio, there are places where you might use traditional broadcast tech for the tier one highest level quality contribution. But as you move down the chain, rather than using that quality all the way through, you’re asking ‘how can I be more cost effective? How can I scale up in a better way and choose more efficient components?’
We’re seeing businesses do this in different ways. We’re also seeing, interestingly, the rights holders starting to look at direct engagement opportunities. They’re very careful with this because it is very valuable and being sold to different distribution deals around the world, but they also see that broadcasters aren’t growing and engaging their fan base in the right way. That’s how that business and sports business is going to grow.
IS: How can networks utilise a multi-hybrid distribution model to go straight to market to cut costs without sacrificing quality, whilst also addressing consumer concerns regarding the
JS: We have seen some attempts. We saw the failed launch of the ESPN, FOX and Warner Bros Discovery joint streaming service fail due to the lawsuit from Fubo.
We’ve seen various packaged packaged platform offerings from some of the UK broadcasters that have had a go and it doesn’t seem, as of yet, that anything’s quite come off yet. What has to happen at some point however is that not everyone will succeed.We will find out who succeeds in the battle for those rights and maybe that will be a natural aggregation as some people fall by the wayside and some others rise to the top.
In theory, it seems like a good idea, right? It seems like a good idea to have an aggregation platform that allows a consumer to lead that desire to to get everything all in one place. But the reality of that is different because everyone’s hungry and everyone’s changing their positioning and vying for that market share.
