The landscape of the TV industry has undergone significant changes in recent years, a transformation that has been accelerated by the pandemic. Broadcasters, facing pressures to reduce costs, are re-evaluating their investments in sporting rights and are becoming more selective when it comes to acquisitions. Similar to the strategies employed by entertainment giants like Disney+ and Netflix, Pay TV Operators are anticipated to further incorporate Sports Direct-to-Consumer (D2C) services into their platforms, likely offering bundled deals to their customers.
The relationship with Pay TV is equally important for D2C services, as it remains the primary distribution channel for building extensive audience reach. It's difficult to envision how Over-The-Top (OTT) challengers can achieve the necessary scale to succeed without strategic distribution partnerships today.
All parties face various obstacles, especially the persistent issue of piracy — a problem that continues despite broadcasters' best efforts, but theres no denying that live sports programming remains a driving force behind global audience engagement.
In our recent Sports Rights survey, we examined what the future of sports distribution ecosystem might look like, and found key trends that point towards a changing landscape.
Sports Rights Inflation
Pay TV has historically been the leading buyer of sports rights but is facing growing uncertainties through increased competition in the entertainment genre, declining ad revenues and pressures on sub numbers and pricing levels. Respondents strongly believe there will be reduced competition from broadcasters for rights and that prices have peaked.
Pay TV Innovation
Pay TV services are increasingly under pressure to innovate, and there is a overarching belief that Pay TV Operators will integrate Sports D2C services into their platform, with bundling deals for their customers. By integrating third-party services, Operators will hope to retain customers within their environment, whilst reducing their own direct investment costs.
The global pandemic has favoured OTT streaming services whose lower priced non-commitment proposition has put pressure on full-fat Pay TV packages, forcing Pay TV to lower its pricing of entertainment services. Less than half of all executives that we surveyed in our report (43%) believe Pay TV can sustain its premium pricing for sports. 75% feel that Pay TV operators will reduce their own spend on sporting rights and instead will integrate more third-party services into their ecosystem.
Anti-Piracy Concerns
Piracy is a major concern for sports. From the Qatar/Saudi Arabia dispute over the pirate beoutQ channel, to the sharing of streams on social media and torrent websites. The lack of content security has yet to be resolved.
Currently, sporting bodies are not aggressive enough with preventative measures for piracy. 79% of executives believe they are too ‘reactionary’ and should do more.
78% of our respondents believe that rights holders will increase their focus on anti-piracy as they themselves launch D2C services.
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