Broadcasters weigh up controversial means to maximise sports revenues

24 April 2024 Consultancy.uk 5 min. read
Profile
More news on

Broadcasting revenues for leading sports events have ballooned since the turn of the century, and while this has broadly paid off for established broadcasters, a new generation of content providers are looking disrupt the industry by finding new ways to ‘refinance’ sports subscriptions. Part of this includes an enhanced emphasis on ‘indirect monetisation’ such as gambling – even as pressure mounts on sport to reduce the influence of betting advertising on its fans.

The sports media industry is experiencing unprecedented changes – with the economic basis on which they built their current empires seemingly on the verge of disintegrating. Sports broadcasters such as Sky, TNT and Viaplay have leveraged a subscription model, charging fans a rising amount (though still less than a season ticket for the in-stadium experience) each year to follow their beloved teams from the comfort of their own homes. This has enabled them to outbid rivals for the rights to elite events, including football’s English Premier League and UEFA Champions League, as well as Formula One racing, the Cricket World Cup, and the European Rugby Champions Cup. 

However, the sustained economic slowdown of the last decade has placed increasing pressure on consumer spending power – and amid the record rates of inflation and stagnant wage-growth that caused a cost-of-living crisis in Britain, more customers are finding they simply don’t have the money to keep up this habit. A new poll by Altman Solon spoke to 2,500 fans across the UK, France, Germany, Spain, Italy, Mexico, the US and China, and found that 59% of those people now have trouble finding or affording sports content they want to watch. 

By 2030, which platforms will be better placed than they are today to exploit the potential of live sports media rights

With so much of legacy sports media having depended on that source of income to help bankroll its service – either directly via subscription fees, or indirectly by offering up huge, dedicated audiences to prospective advertisers – this could prove to be a huge source of disruption in the industry. Especially as 56% of those polled added they would watch more sports video content if it were available – and they could afford it.

There is a clear opportunity for new challengers to disrupt the sports broadcasting sector, then. It’s something that many executives in the industry are already anticipating. When Altman Solon spoke to 150 top sports executives, the consultancy found that only 16% thought traditional broadcasters will be best positioned to exploit the potential of live sports media rights by 2030.

In just six years, that means the executives see potential for other operators to over-run the sector. Leading among these are technology groups and content aggregators (tools which could aggregate different content types and are often customisable to enable users to focus on specific types of content; a sporting equivalent of what Apple Podcasts does for podcasts) at 68% – and over-the-top (OTT) rights owners, like Netflix, Amazon Prime and YouTube. The question is, how might they offer up the content people want for a lower price, while still turning a profit?

Which of the following monetization strategies will contribute the most to refinance sports rights in the next 5-7 years

When asked this, the sports executives broadly suggested that the challengers might rely on a streamlined version of the subscription model industry incumbents already use. Their subscription models might be more responsive to user-demand, however, coming as part of a bundle of other relevant services and content – from behind-the-scenes footage, to easy access of historic footage and events. Similarly, 59% of executives said that advertising-supported models could subsidise packages – a model OTT providers like Netflix are already deploying to avoid further price-hikes as they struggle to maintain subscription growth in the cost-of-living crisis. 

But there are other potential trends which could give challengers a leg up – though they may also raise a few eyebrows in the process. While only a 37% minority of respondents said they expected ‘microtransactions’ (a controversial tactic already used by the video-games industry to milk customers of extra funds, billing for small pieces of service that were once supplied for free) to become a part of the broadcasting experience, a majority suggested ‘indirect monetisation’ was likely to be a big part of the sector’s future. A 61% portion of sporting executives said ecommerce, ticketing and gambling could help bring new competitors in the sports broadcasting sector maximise returns on their media rights investments. 

This may cause consternation in the UK, where increasing public pressure is mounting to reduce the influence of gambling at leading sports events. According to the UK Gambling Commission’s latest figures, as many as 1.3 million adults in the UK suffer from problem betting. That is eight-times higher than previously estimated – and in football alone, fans were bombarded with 11,000 gambling messages during the opening weekend of the latest Premier League season. Broadcasters further wetting their beaks in the ‘gaming sector’ is therefore unlikely to be a popular move among campaigners or MPs.