Sports Programming Dominates the Living Room
Recent developments have cast a spotlight on the ever-increasing value of sports content. First, sports are more popular than ever. According to a Kantar Sports Media study in 2012, 170 million adults — 71 percent of the U.S. population — identify themselves as sports fans. Second, given heavy competition from the increasing number of content providers, major networks, such as CBS, ESPN, Fox and NBC, are looking for additional content that can drive advertiser-friendly demographics — read: Sports, in significant numbers. Third, TV service providers, fearful of consumers “cutting the cord” in favor of services such as Netflix, Amazon and Hulu, realize they can get a competitive advantage with both live and differentiated content — again, chiefly sports.
This new sports-centered media landscape has shifted the balance of power between sports broadcasters and TV service providers. Those who hold the rights to broadcast sports programming enjoy tremendous negotiating leverage that they use to extract an increasing amount of money from the television service providers. For example, in the recent public feud between CBS and Time Warner Cable, a dispute over broadcast fees led to a lengthy blackout of CBS content for Time Warner customers. Although a broad swath of CBS programming was at stake, it was clear that the ultimate bargaining chip all along was NFL programming, which CBS held the rights to broadcast. TWC had no choice but to bow to the pressure of CBS before the NFL regular season started.
The TWC-CBS dispute illustrates a larger trend: The sports bill has gone way up for the television service providers, and there’s no apparent end in sight. TV providers collectively will be paying over $17.2 billion for access to sports content this year from the rights holders (source: SNL Kagan). Even more notably, these deals are structured to last multiple years, sometimes decades, so the total liability for providers is well beyond $100 billion. In one well-documented example, DirecTV shelled out $4 billion to the NFL for the exclusive rights to Sunday Ticket for only a four-year term extension. The price for sports rights continues to escalate as these contracts come up for renewal.
Caught in an escalating bidding war for sports content, the TV service providers are passing these costs on to consumers. Across the country the average monthly cable bill is nearing $100 per month, a 79 percent increase over the past ten years alone. Unlike music, TV and movies, where consumers have many options for viewing, if fans want to watch their sports — especially their local teams — they have no choice but to maintain their cable TV subscriptions.
All of these trends have put sports content at the center of the TV landscape — and TV providers realize that to recoup their massive investments in sports content, they need sports fans to watch more sports than ever before. But what would motivate fans to tune in to more sports programming than they do already? The answer hinges on providing individuals with real-time and extremely personalized information about live games so that fans can easily become aware of — and tune in to — games that they otherwise were not planning to watch. This requires real-time, contextual recommendation services.
There are an increasing number of infrastructure vendors (such as Think Analytics, Digitalsmiths, and Jinni) that are helping TV providers offer better general discovery services for their subscribers to tune into movies and TV shows based on personal preferences and past viewing habits. However, none of these services is an ideal fit for sports content, primarily because sports content has a different behavioral model. Sports content is time sensitive (and needs a proactive alerting component). Sports are also about individual moments, not just events. For example, sports fans are often eager to watch a particularly rare, exciting or surprising moment of sports content (the last out of a baseball no-hitter, a World Cup penalty shootout, a record-setting performance, etc.) even if they haven’t watched the rest of the event. Sports fans are drawn to remarkable performances, unexpected results and sublime moments of excitement. An ideal recommendation service for sports content should be able to deliver these remarkable moments as they are happening.
There are also some models for more specific sports recommendation services. The NFL produces the RedZone channel to provide fans with a curated viewing experience that jumps around from one NFL game to another based on which teams are currently in the “red zone” — within twenty yards of the end zone — and thus likely to score. Other networks, such as the MLB Network, have copied this model.
TV providers themselves have all been considering a range of new technologies and approaches. Many TV providers (e.g., Comcast Xfinity and DirectTV) are now offering second-screen apps specific to sports to emphasize their sports programming. These apps not only include sports TV listings, but also provide stats and scores with the ability — in some cases — to link directly to the game from the app, but most of these apps assume a fan is watching a game already.
To help drive additional incremental viewership of sports content, TV providers are now exploring even more direct ways to bring fans into sports programming by moving beyond the traditional sports app metaphor (the best example here is Dish Network with its Game Finder and Dish Explorer Apps). These providers offer (or are in the process of offering) sports-specific discovery services that can rate the “excitement level” of sports events as they’re taking place by analyzing everything from the game’s context to social network buzz to in-game play-by-play to Fantasy player performance. These dynamic ratings help create next generation sports programming guides that don’t just sort games by start times, but can also direct viewers to the most exciting sports events in real time. The ratings information and recommendations can be accessed across multiple platforms — first screen (TV), second screen (tablet) or third screen (smartphone) — or delivered to the user through email, text or push notification.
Many sports entertainment stakeholders are betting that the growth in next-generation sports guides will not only provide a significant boost to incremental viewership but will help drive new business models. One such model is pricing that allows for impulse purchases to supplement revenues associated with longer-term subscriptions. Here more fans would pay directly for single events — or all events for a limited time (day or week) — once they find out they want to watch a particular event. Pricing could even modulate based on the amount of time remaining in a competition or the game’s overall excitement rating. While mainstream American sports have been slow to move in this direction, other sports and networks have moved more quickly. Examples include UFC’s pay-per-view MMA fights, Willow TV’s monthly subscription package for watching cricket and SKY TV’s new experiment with daily passes for their NOW TV platform. On top of impulse pricing, we’re not too far away from “impulse” advertising where major brands will also step in to sponsor (and pay more for) live tune-in of exciting events or personalized highlight reels of the prior day’s best action.
So where does this leave today’s sport fans? It could be that it’s both the best of times and worst of times. Fans have more options than ever before to watch sports — from mainstream football and basketball to growing sports like soccer, cycling and track & field. You can watch your favorite sports on almost any platform in any location, and TV providers are investing in technology to help you find and engage in the best sports programming. The downside is that it will cost you more and more, at least as long as sports remains the king of content.
Warren Packard is founder and CEO of Thuuz Sports, the award-winning mobile and connected TV service that is changing how sports fans discover and connect to sports programming. Prior to founding Thuuz, Warren was managing director at the venture capital firm Draper Fisher Jurvetson, where he was lead investor in more than two dozen technology companies and realized eighteen exits.