Apropos of my post yesterday, it was announced that NBC will air the 2018 Winter Games from South Korea completely live. As noted in this article – and the source of my blog title – it was mentioned:
“Live viewers are more likely to sit through commercials.”
And that is the point. It is all about the advertising. As a few cable companies are learning, if you make sports programming a paid exercise, you may lose quite a few viewers. Just witness what has happened here in Los Angeles with both the Dodgers and the Lakers. Plus, getting viewers onto your platform gives a great advantage to promoting other programs that the public might not otherwise be aware of.
There’s also this predictable tidbit about the value of airing awards shows live:
“Awards shows — which have become major drivers of traffic on social media — have increasingly moved to live telecasts across the country. The Golden Globe Awards on NBC have aired live coast to coast since 2010. CBS gave its West Coast stations and affiliates the option to take the Grammy Awards live starting in 2016.”
The question of expanding sports programming into things like e-games may not hold for awards shows. There seems to be a intrinsic limit to what the public appetite is for more awards programs. I guess we’ll just have to wait and see.
I’ve commented on this many times before, but with March Madness almost concluded – and being a graduate of two ACC schools – this article simply reinforces what I’ve been saying time and again. If you need advertisers, and said advertisers don’t want viewers skipping their ads, then sports seem to be the best cure-all for that.
Of course, this is no secret, and the leagues know that. Disney, which owns ESPN, has been feeling the pinch of greater competition and, in turn, higher programming costs. Disney’s stock price peaked in 2015, and pressure from the likes of Facebook, Twitter and even Snapchat has been driving sports programming costs up. Here’s one example of that.
With the advent of so-called “e-sports,” other digital players are seeking out new area’s that will eventually compete with legacy sports. Here, you can read about YouTube’s investment in this new arena, following the lead of singular startups like PewDiePie (which is an incredible story in and of itself). Perhaps we should have seen this coming when watching people play high-stakes poker entered the scene a few years ago.
Granted, the very definition of sports is in flux right now, but it is clear that the drive for viewers that won’t skip commercials are in great demand, and unless we are prepared for a completely ala carte world of consuming content – and that doesn’t seem realistic – we must prepare and predict the future of sports programming.
As television continues to splinter, with more entrants into the fray on a regular basis (see YouTube TV), what is becoming clear is the struggle of broadcast networks to maintain a hold on their traditional audiences. And the power of popular sports to attract viewers that will sit through advertising is almost unquestionable. There are two recent articles in Ad Age that echo this sentiment.
First, in this article about the IPO of Snapchat (aka, Snap) makes clear that their dependence on sports programming is a paramount concern. The revenue stream depends almost solely on advertisers, and Snapchat has devised a way to make it a preferred source for watching sports.
“In many ways, the NFL is the quintessential example of Snapchat’s dream of becoming the next TV — top media partners producing original content and selling that to advertisers in upfront multimillion-dollar deals.”
For broadcasters, the news just keeps getting worse. As this other article mentions, every traditional broadcast network has seen a decline in viewership, with the sole exception of Fox. And in their case, this is revealed:
“Pull sports out of the mix and Fox’s ratings struggles become even more self-evident.”
So, what does all this mean? It’s not entirely surprising, and with digital platforms like Twitter and Facebook, as well as mobile providers like Verizon, all trying to get a piece of the sports action, it is no wonder that Disney stock is suffering mainly due to ESPN, which must now face higher license fees for sports because of the competitive bidding.
The real winners continue to be the owners, and I expect the players will also get a taste. The question becomes, what sport will emerge as demand for programming grows? UFC? Drone racing? Spelling bees? One can only speculate…
I’ve been watching with deep interest the progress of various video platforms as they emerge and develop, from YouTube and Netflix to Twitter and DirecTV Now. Here’s a brief rundown of a few of them from eMarketer that should give you an appreciation for the current state of flux, as well as the huge potential for coming disruption in the marketplace.
It seems that first we had simple websites that provided a platform, notably YouTube and Vimeo. Then we saw the TV Everywhere approach from HBO Now, as well as non-cable providers like Netflix, Hulu and Amazon. There’s a move to applications that can provide video content, from sports leagues to Twitter and Facebook. But it is such a tangled web that there is no clear indication as to where it will all shake out.
I suspect that a combination of advertising strength with high-demand content will drive this initially. Those platforms with which advertisers are comfortable (YouTube, Facebook, etc.), and content that is both timely and popular (primarily sports), will be the leaders in the transition that is currently underway. This is a chapter that is very much being written, and companies will rise and fall depending on their ability to forecast and anticipate the trends. But this much continues to be clear: Those who control the rights to this content (sports, awards) will control much of the destiny, and those who must pay for licensing those rights will face increased price pressure in the coming days (witness ESPN’s effect on Disney stock).
It seems that, with every passing day, the importance of traditional content distributors is on the wane. Nowhere is this more stark than the plight of sports programming. As the stock price of Disney continues to fight the inexorable gravity of ESPN’s fate, these kind of comments are exhibit A for the future of not just sports, but all content on the internet:
“The NFL is constantly looking to serve our fans premium NFL content where and how they want to see it,” said Hans Schroeder, senior VP, media strategy, business development, & sales for the NFL.
With the emphasis now on OTT distribution and mobile devices, the status of ESPN and DirecTV’s NFL package are being seen as bloat. In the past, broadcast networks and cable stations were essential links to the public, today’s growing number of alternatives make these programming middlemen unnecessary. As stated in this article, the leagues can now turn to multiple distributors, such as PlayStation Vue:
“PlayStation Vue offers more than 100 live TV channels. It has deals with programmers including AMC, CBS, Discovery, Disney, Fox, NBCUniversal, Scripps Networks, Turner Broadcasting and Viacom.”
So, instead of set-top boxes turning to ESPN for sports, they can turn to the leagues themselves and eliminate the middlemen (and its accompanying fees) to provide the same experience with added savings. And I would think that it won’t be long before Warner Brothers Television, Alcon Entertainment, and the other myriad scripted content providers completely bypass the networks and just license their wares directly to OTT services, or other online streaming companies.