• LinkedIn
  • WhatsApp

The rise of D2C - Untangling the web

The 'digital revolution' of sports broadcasting continues to reshape the industry, leading to a rush of new online services and the revamping of pay-TV broadcasters' business models, while sports organisations launch their own fan-focused platforms to increase their media footprint. With all that noise, it can be hard to figure out what this means - in the big picture, but also for you as a content rights holder in the long tail of football.

The rise of D2C

Hi,
Here is your MyCujoo team and we present to you the “Sports Industry Brief”, offering perspectives on the wider trends of sports and business across the world.
The world of sports is moving fast, and evolving rapidly. It can be daunting to try to keep with the times and stay informed of all the news out there - especially with a lot of noise, a generalised focus on the premium, and not many resources dedicated to the long tail stakeholders. Once a month, we’ll zoom in on one particular trend or topic and decypher it with you, so that you can make sense out of it and understand its possible repercussions on your own activities.
This month, we’ll focus on “the rise of D2C”, a subject close to our own home…

Decoding the language

It is a massively prevalent trend: subscription-based TV broadcasters have become increasingly affected by the 'cord cutting' younger generation (those cancelling cable or satellite pay-TV subscriptions in favour of cheaper internet-based services). And it is that 'OTT' (over-the-top) delivery - content providers going direct to consumer via streaming technology - that continues to generate the most noise.

How have rights-holders - be it premium or smaller bodies - embraced OTT? In truth, the battle between linear television (real-time television that broadcasts scheduled programmes over the air or through cable/satellite), and OTT is often oversimplified. The two still co-exist, but the digital transformation continues to represent challenges, and opportunities, for sport.

For now, 'big ticket' sports events are still mainly consumed on traditional free-to-air linear television, as shown by viewing figures for last year's FIFA World Cup (see page 6 of Sportcal Insight).

Getting into the streaming Zone

Given the reluctance of Millennials and Generation Z to spend on (or simply watch) linear television, media companies continue to attack the OTT space.

Start-up costs and significant rights investments make profitability a long way off for DAZN. News that it will double its monthly subscription in the USA shows that it believes premium content (in this case, boxing) will encourage a younger generation to spend more, despite the effect of piracy or near-live social media clips. But not all OTT players embrace the subscription model. Eleven Sports has entered Japan with an ad-supported free streaming model.

Formula 1's OTT service has been hit by glitches and the issue of exclusivity. F1TV owners admit that it may never compete with other leading OTT offerings given the lack of exclusive content.

Outside of the premium space, different thinking modes must apply. If subscriptions and advertising-based models are already unproven models around premium content, long tail stakeholders need already to start thinking outside this box. Replicating premium models of content production and distribution won’t do it - focus should instead be on content production scaling coupled with engagement, retention and community-building around participants (players and fans alike). MyCujoo offers this alternative to premium models.

Build a paywall?

Of the 33 Summer Olympic sports to feature at Tokyo 2020, just seven have their own subscription OTT service (that includes the FIH and their MyCujoo powered FIH.live). The lion's share opt for free live streaming, via their official YouTube page or embedded on their website.

The International Triathlon Union and Infront unveiled the revamped TriathlonLive.tv (driving sponsorship revenues) while BWF's BadmintonWorld.TV distributes all the international federation’s content on YouTube. The ITU and the BWF adopt very different strategies, with the former swapping modest shared advertising revenues offered by YouTube and Facebook for guaranteed subscriber revenue and data-driven advertising. Smaller sports seeking to monetise their content should avoid being seduced by social networks' broadcast distribution.

The potential to reap greater financial reward exists in building a long-term digital fanbase by driving content to controlled networks such as MyCujoo where content rights holders can take control of the data themselves, instead of giving this up, almost for free, to huge data networks.

FAST FACT : 7 OF 33 SUMMER OLYMPIC SPORTS FEDERATIONS HAVE SUBSCRIPTION OTT PLATFORMS

Basketball's FIBA is one federation that has adopted a 'hybrid' approach. While the premium LiveBasketball.TV carries a €8.99 monthly fee and showcases FIBA's top properties, over 1,200 age-grade games per year are made available live on Facebook and YouTube through an initiative that still fails to deliver a profit with a share of YouTube advertising the only direct income.

FIBA's experience poses the question: how many games should stakeholders produce and in what quality? Production costs on MyCujoo are close to none as rights-holders can stream using just a smartphone and an internet connection, making the OTT space a cost-effective one while adding as well the community-building component that social networks fail to share with content rights holders.

Stemming the flow

On the premium side, it remains too soon for broadcasters, agencies and sports stakeholders to put all their eggs in the OTT basket, but, as David Murray, the BBC's former head of sports rights, predicts, "that time is coming."

Further down the food chain, smaller-size federations, leagues and clubs should learn from these challenges still faced by premium properties. Now is the time to experiment and learn with solutions provided by MyCujoo. Among the many elements we can already figure out: transitioning linear TV to more of the same, just in a digital space, is not an answer, particularly to the question of “how do we build relations with younger generations?”.

This shouldn’t be about simply taking the same content to different ecosystems - the digital transformation begs questions about the content itself - what is its articulation besides the live event - and the audience - this isn’t a “viewership” anymore, but a community, a communities asking other questions than just where to watch.