Where should sports sit within an operator’s digital strategy?

Where should sports sit within an operator’s digital strategy? An important question, not least because of the continued disruption to sports and sports viewing;

• the impact of Covid is ongoing (matches cancelled, players unavailable)
• the pay tv bundle - the ‘traditional’ model for sports viewing - is under attack by new market entrants (e.g. FANG, DAZN)
  and,
• there is a generation of younger viewers who have shown they aren’t interested in watching something that happens at a set date and time and lasts for 90 minutes, e.g. a football match.

We are starting to see light at the end of the Covid tunnel. Will the 2022 sporting calendar take place as scheduled, without the late / last minute cancellations that continue to mar the 2021 calendar? Let's hope so. But what about our viewing habits? How have they changed over the last 18 months? We’ve all spent, and continue to spend, a lot more time at home. Our daily routine looks a lot different and flexibility is more important than ever. This works well with the ‘On Demand’ viewing model and it’s no surprise therefore that VOD streaming has flourished.

We are also more interested in different content formats. According to a recent PWC survey, the top three fastest growing sports media content types are;

1. Highlights
2. Team/athlete-generated
3. Originals/documentaries

All three of the above content types can be consumed on demand and are well suited to viewing on a mobile device. For the younger generation of sports fans, short-form content viewed on Instagram and Snapchat has become their preferred way of watching their favourite sport, team or, more likely, player.

In spite of the above, live sports remains the most popular, and therefore most valuable, content type on the TV screen. In the UK, the first race of the 2021 Formula season, the Bahrain Grand Prix, set a record for Sky Sports viewing figures. It was watched by an average of 1.98m viewers and became the first race to peak at more than 2m viewers (it reached 2.23m). NFL games represent 41 of the 50 most-watched programmes on US television in 2020.

This enduring value is why live sports rights continue to be valued so highly by cable networks, big tech companies and the new breed of sports broadcaster, e.g. DAZN. As former AOL CEO Jonathan Miller put it recently, “The only thing left holding the (pay tv) bundle together today is sports...”.

So where does this leave operators when they consider whether and how to invest in sports?

Perhaps we should start by thinking about what the end customer wants? Well clearly live sports, but also different types of sports content. Also flexibility and availability (e.g. cross-device). And what about privacy and/or security? In a recent YouGov survey, tech (9%) and social media (8%) companies came bottom of the list when consumers were asked which industries they would trust with their personal data.

What are the pain points for today’s consumer? Price, availability (i.e. where can I watch the sport/team I support) and increasingly, fragmentation top the list. Price and fragmentation can go hand in hand. If you’re not a cost-conscious consumer then you may be happy to continue spending pay tv prices to watch your favorite sports. If you are cost-conscious, then you’ll shop around for the streaming service that provides what you’re looking for. The catch is that this a) may come in the form of more than one service and/or b) may tip your “digital wallet” into the red when added to the list of other services you already subscribe to (e.g. Netflix, Spotify, Disney+ etc.).

But fragmentation is an issue even if you’re not worried about the cost of subscribing to multiple services. Navigating between multiple services which have a different feature-set (service X doesn’t support picture in picture, service Y doesn’t support captions etc.) isn’t a great user experience.

In summary, consumers are looking for a simple, secure way to access their services. They want a great, consistent user experience. And they want sports content, whether it’s the big global brands like the NFL and the Premier League or national and local leagues or team, live matches, catch up clips or documentaries.

Operators are well placed to deliver on all of the above. They have a single billing relationship with their subscribers, often developed over several years. As a result, they are trusted and will deliver benefits to monetisation and product development. When it comes to the content, there are several options;

Act as the trusted aggregator, bringing together streaming and social media applications into one easy-to-navigate interface.

Form partnerships with the OTT players that best serve your subscriber-base, e.g Telecom Italia and DAZN (who acquired Serie A rights earlier this year)

License rights directly (or via a 3rd-party, e.g. an OTT streamer) for the sports interesting to your subscriber base but ill-served by the OTT players.

Sports content continues to deliver higher engagement, which should lead to happier customers and better ARPU. In spite of the increased competition for rights and eyeballs, operators can themselves continue to extract value from sports by focusing on their core business value and the benefits that it can bring to today’s sports fan.