In Broadcast - July 2021 - 26

26
www.inbroadcast.com | July 2021
Summer of Sports
Convergence and data -
the future of live sports
A
By Lorenzo Zanni, Head of Knowledge, IABM...
s we have seen over many
years now, where Live Sports
goes first, the rest of the industry
often
follows.
So
the way the
sports industry reacted so rapidly
and positively to the coronavirus
lockdowns last spring will come as
no surprise to industry-watchers -
particularly in the way it adapted
to remote production, workflows
and collaboration, about which
much has already been written. So
I will be concentrating on other,
perhaps less visible, developments
in Live Sports, many of which have
nonetheless also been existing trends
accelerated by the pandemic, and may
prove equally or more impactful on the
industry.
COVID-19 accelerated long-standing
drivers of innovation and disruption in
the sports industry. Innovation in areas
such as remote production,
Data Analytics is the fastest growing
area of investment in Monetize/
Consume, mentioned by more than a
third of companies operating in live
sports sector as a priority investment
area in these segments.
cloudbased
infrastructure, data analytics,
and immersive experiences has been
propelled by the constraints posed by
the pandemic. However, the drivers of
disruption including changing viewing
habits, the changing sports rights
landscape, and the growth of e-sports
have probably also been quickened.
COVID-19 had a dramatic effect
on UHD production, particularly on
live sports, making 4K live content
extremely difficult and expensive to
produce, and it continues to impact
UHD production throughout 2021. The
Ultra HD Forum reports a significant
decline in the number of new UHD
channels launched in 2020 and 2021
compared with the pre-pandemic
times.
Instead, media companies
are investing more in content
monetization and consumption as
they move to direct-to-consumer.
According to the IABM Media Tech
Business Tracker, Consume and
Monetize are the fastest growing
segments of the Content Supply
Chain®, with 58% and 57% of
companies operating in the Live
Sports sector respectively saying
investment in the segment is
growing.
Media convergence was of course
already underway pre-pandemic, but
it was significantly accelerated by the
events that unfolded in early 2020. By
media convergence, I mean the coming
ever-closer of technology and business
models, with sports, gaming and
betting at the forefront. The endgame
for sports media organizations is to
increase engagement, reduce churn
and pre-dispose subscribers to pay
more for add-ons. And to do this, they
need data - lots of it, in both breadth
and depth.
The desire for increased engagement
by sports broadcasters has been
met in the middle by a demand for
interactivity from consumers due
to enforced social isolation caused
by stay-at-home mandates - they
needed to feel engaged somehow,
even if they couldn't do it in person.
The explosion of Twitch usage by both
consumers and media organizations
early in the pandemic was a clear
indicator of this desire. Sports media
companies have responded to this
need for interactivity by developing
tools to improve viewer experiences by
gathering more granular data on their
subscribers' preferences to enable
them to deliver more personalisation,
and so, differentiate their offering in
the consumers' eyes.
Let's just take a step back to
assess what has been going on, and
why. A perfect storm, accelerated
by the pandemic, was breaking: a
combination of financial pressure
from cord-cutting, sports rights costs
and
tanking
advertising
revenues;
changing viewing habits; and the move
to DTC.
The pandemic hit sports
broadcasters' business models
hard as advertising revenues
plummeted. NBC lost an estimated
$1.25 billion in advertising revenue
due to the postponement of the
2020 Tokyo Summer Games. PayTV
revenue was also hit, depending
on the specific company's reliance
on sports content, particularly
in the second quarter of 2020.
As an example of this, revenues
at Rogers Media division stayed
relatively flat (declining slightly)
in Q1 and Q3 2020 but declined by
about 50% in Q2 2020. Some PayTV
broadcasters decided to suspend
rights payments in Q2 due to the
cancellation of sports events and the
uncertainty that this created for sports
broadcasters' financial sustainability.
At the same time, companies such
as Disney and NBC were already
reallocating funds away from their
sports networks, switching them to
fund the DTC transitions.
The cost for sports leagues was
also gigantic. A Bloomberg article
published in November 2020
estimated this to have been about
$13bn for major professional leagues
in the US. The interplay of these trends
begs the question of sustainability in
the economics of sports which have
survived the impact of COVID-19
in 2020 but may need to adjust to
some of the changes brought by the
pandemic in the coming years.
Before the COVID-19 pandemic,
technology giants such as Facebook,
Google, and Amazon had already
shown interest in sports rights. The
National Football League (NFL) is
expecting a significant increase in
rights fees in the upcoming round
of negotiations in 2022. According
to the NFL commissioner Roger
Goodell, NFL's revenue could
double as more digital outlets bid
for the rights. In the second quarter
of 2020, the NFL extended its
Thursday Night Football streaming
deal with Amazon for three years,
including the exclusive rights for
one regular game per year. The
value of the new deal has not
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