Joint ventures and consolidated services may be stealing the OTT headlines but live sports will be the next battleground as streamers look to shore up engagement and revenue. Adrian Pennington reports.

In a media landscape of rapid change, live sports offer a measure of relative certainty. Consumer appetite is arguably at an all-time high with almost half of us spending more time watching live sports content last year than we did the year before, according to Accenture. Advertising-led streaming services lead the march to profitability and sports offer the most predictable audience. It’s why rights remain in high demand as streamers and broadcasters compete for the most valuable content on the planet.

Streamers are increasingly looking to secure rights to live sporting events

Streamers are increasingly looking to secure rights to live sporting events

Netflix’s global deal to air live NFL matches for the next three Christmases should be seen in this light. Sports remain light among the platform’s library but it has made repeat recent moves to test the appetite for live events. This includes November’s inaugural Netflix Cup - which pitted leading golfers against F1 drivers, and the clash between boxer Mike Tyson and social media star Jake Paul coming in July. Earlier this year the company paid more than $5bn to be the home of WWE which it is billing as “sports entertainment.”

Tellingly, Netflix bosses have said live programming creates “cultural moments”, relevant not only to viewers but to advertisers, a new revenue stream that Netflix hopes to scale.

That’s the same as the “watercooler moments” that broadcasters have long used to differentiate their one-time monopoly of mass-appeal sports events from OTT competition.

At a recent earnings call, Netflix joint CEO Ted Sarandos said: “Our North Star is to grow engagement, revenue and profit, and if we find opportunities we will do that across an increasingly wide variety of quality entertainment… including sports.”

Bloomberg reported that Netflix is paying less than $150m for each NFL game, which is less than it spends on original movies like The Gray Man but with the advantage of a built-in audience to target ads to.

The company’s huge content repository can also help retain viewers who might have only subscribed for live sports, according to Parrot Analytics strategist Brandon Katz.

That may give Netflix an edge but it is far from the only streamer widening their live portfolio to stem churn with the stickiness of live sports.

Global sports streaming

Amazon Prime Video already streams NFL games and YouTube has paid around $14bn to stream NFL Sunday games until 2029. AppleTV is in year two of a 10-year $2.5bn deal to stream MLS games.

Amazon Prime Video and YouTube already stream NFL games

Amazon Prime Video and YouTube already stream NFL games

The NBA is the next major US sports property up for grabs. The current deal with Disney and Warner Bros. Discovery expires after the 2024–25 season and valuations for rights run as high as $8bn a year.

That’s because, with over 32 billion views across social media last season, the NBA has a proven ability to secure valuable younger demographics. Moreover, the league performs far better overseas than even the NFL which is why Ampere Analysis has dubbed it “America’s most globally relevant sports property.”

For legacy media like Warner Bros. Discovery, Disney and Fox which are allying to create uber-sports streamer Venu, live sports is seen as near a surefire way as possible to retain and grow subscribers.

There’s a pronounced halo effect for streaming platforms that offer live sports. Ampere Analysis picked up on this with startling data that showed all streaming platforms with NFL rights grew their monthly viewers 4% more between Q3 2023 and Q1 2024, over other SVOD platforms. Paramount+, which had rights to Super Bowl LVIII, saw the biggest boost, with its overall monthly viewer base growing 22% in the six months to February 2024.

The data showed how important tier-1 sports rights can be to streaming platforms. Ampere analyst Minal Modha, Research Director - Consumer Lead at Ampere Analysis, said: “As streamers try to diversify revenue streams through advertising, live sports will play a bigger role in helping to guarantee large audiences, thereby pushing up advertising value.”

NBCU will be hoping its SVOD platform Peacock exhibits the same boost when streaming the Paris Olympics this summer.

Over a quarter of all SVOD subscribers will sign up to a new streaming service just to watch the Games from Paris, according to research from Bango. Its report also found that a vast majority (87%) of those paying for sports VOD subscriptions want a single platform to centralise all their sports interests into one place.

“As some of the highest value customers in the subscription service market, sports fans are a lucrative audience worth acquiring and retaining. But with higher costs come higher expectations, and there’s only so far that subscribers can be pushed before they hit the unsubscribe button,” the report advised.

Adam Silver, who heads negotiations for rights for the NBA, has said there will be more changes in media technology over the next five years than the last 30 years. In particular, fans will be increasingly able to tailor their viewing via personalisation.

“To the extent you want to follow a particular player, you want more data as you’re watching the game, you want to be chatting with your friends or part of a larger conversation with experts,” Silver said. “All of those things are beginning to happen now in sports, but I feel like we’re just scratching the surface.”

Another sign of the heated demand for sports is that piracy is growing at its fastest rate since 2018, according to research published by consultants Kearney in January.

Last week’s Fury vs Usyk became one of the most illegally streamed sports events in history with 20 million viewers illegally streaming the fight costing broadcasters an estimated £95m.

Kearney advised rights holders to distinguish themselves from illegal free live streams by offering additional viewer experiences, such as interactive features.

Mega-events at a crossroads

Huge sports events themselves such as the Olympics, the ICC Cricket World Cup, Rugby World Cup, and FIFA World Cup, also need to make big decisions if they are to remain viable.

The Tokyo Olympics 2021 cost a reported US$13bn

The Tokyo Olympics 2021 cost a reported US$13bn

A report by Deloitte last month noted that while such events can bring people together “in global solidarity and fair play” their complexity and cost “may be reaching a breaking point.”

Though these goals appear to be at odds, technology integration and digitalisation may be key to achieving both objectives concurrently, said Deloitte, pointing to the Paris Olympics as a potential blueprint.

The most significant challenge to bidding for, and hosting, sports mega-events is cost. Such events have a long history of “overspending and building waste that is often seen as unsustainable, both economically and ecologically,” Deloitte noted.

The cost of the Tokyo Olympics 2021 was US$13bn, while Qatar spent roughly US$200bn preparing to host the FIFA World Cup in 2022.

By comparison, the current estimate for the capex associated with Paris is around US$4bn, split half and half between private and public finance.

Among other efforts the Paris Games will use primarily preexisting or temporary venues for competition, keeping costs down and limiting the event’s overall carbon footprint.

New builds, like the athlete village and an aquatics centre in Saint-Denis, just outside the capital, stand to benefit from the facilities and housing long term.

On the production side, Paris will be the first Olympics where Cloud is the main distribution method. Alibaba, the Chinese group partnered with Olympic Broadcaster Services, anticipate that physical space at the IBC will be reduced by 13% from Tokyo, and power consumption will be 44% less. OBS had seen a 279% increase in bookings by rights holders for cloud services over 2020.

Yet cutting costs must not come at the expense of the fan experience if such events are going to last.

Getting spectators involved is a key recommendation from the IOC - ­one that the Paris Games is honouring with a mass participation Olympic marathon.

Technology is expected to play a key role in this objective, too: “Digitalisation can help make these experiences accessible to fans, both in the crowd and at home, with enhanced and expanded broadcast coverage, athlete performance data displayed in real-time, and “digital twins” of major Olympic venues,” said Deloitte.

Future events should build on this by investing in digital experiences that draw crowds, both in-venue and at home. Deloitte points to virtual experiences in venues and expects AI integrations to become commonplace: “revolutionising sports broadcasting, amplifying digital engagement and campaigns, and improving how mega-events are planned and organised.”

But questions remain: how can these experiences that bring global audiences together be replicated, with minimal costs and complexity? And how can technological capabilities make these efforts a reality?

“If successful, the Paris Games may illustrate a new model for the future,” said Deloitte. “Potential host countries and organising committees around the world will be watching.”