Q: What will be the tipping point for sports rights holders to make the decision to create an all-in O.T.T. distribution model? -Tom B.
A. The answer to an exact tipping point varies as widely as the world of sports. But there are some factors that each rights holder should consider. Over the past 7 years, we’ve asked consumers about their content preferences and demands across a number of platforms - from laptops, to mobile phones, to tv widgets, to OTT video services. The top content requests, unsurprisingly, continue to be the same: news, weather, and sports. While sports demand is significant, we haven’t had the opportunity to dig into the various niches of sports content. We believe, and it would seem self-evident, that the major demand comes from the major sports leagues.
Clearly broadcast is where the money is being made. However, many of the major multi-venue sports franchises (MLB, NHL, NFL) have some aspect of an OTT video service available for out of area games. Single venue sports (racing and golf) utilize the web to provide additional information not covered in the television broadcast. See: OTT Sports: Pit or Get off the Shot.
Notice that in both cases OTT is a viable delivery plan to reach the needs of die-hard fans. This leads to consideration of using OTT to deliver the other content that normally wouldn’t make the broadcast cut. Think NASCAR practice sessions, PGA opening rounds, etc. In this case the model provides content that is valuable to a small niche.
But, as we pointed out almost 5 years ago, OTT will expand one niche at a time. In sports, there are many other niches such as foreign sports leagues, minor leagues, high school and college sports, etc. In these cases, the consideration needs to be about the economies of scale. Can OTT be a viable delivery channel to reach these viewers? Is the niche large or lucrative enough to justify costs? That answer depends on the segment, willingness of the fan to pay, etc.
The beauty of the niche, though, is that it is underserved in today’s broadcast models. These die-hard fans are much more willing to adopt a new system that delivers the content – from simple boxes like the Roku or turn-key systems like NeuLion. Certainly options are available to these rights holders.
Last year, we released a study on the Economics of OTT looking at how television networks like USA could migrate from traditional broadcast to internet delivery using a mixture of free and premium subscriptions including HD. You’ve seen variants of this model applied by niche players like WealthTV. Can these same models be applied to sports? Indeed, we believe so.
Tom, thanks for the question, we are sending you a Roku XD. To the rest of you, please submit your questions for the next OTT Monitor.
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