Monetising sports for sustained growth: A game every OTT platform can play

Just about a year ago, cricket’s biggest franchise, the star-laden Indian Premier League, struck a record $6.02bn broadcast and streaming rights deal for the next five years. This was over twice what it had received for the previous five years but, besides the huge figures involved, the deal also marked the passing of a baton. For the first time ever, the streaming rights for the tournament cost more than its TV rights ($3.05bn vs $3.02bn, respectively).

The deal was not an outlier. Across the world, TV is steadily giving way to streaming video. A month after the IPL deal, in July 2022, streaming services outdid both cable and broadcast TV in the US for the first time.

Sports and OTT: Made for each other?

How sports content is consumed has played a huge role in this switch. Unlike, say, movies, live sports events happen at times when it’s impossible to sit oneself down in front of a TV. OTT platforms, in contrast, let viewers catch the live action just about anywhere, over a variety of devices.

But, for increasingly digital-savvy audiences, streaming isn’t just convenient, but also offers them a different viewing experience. While TV puts viewers in the middle of the sporting action, digital streaming platforms go much further. Viewers can now change camera angles or call up replays, match, team and player statistics on demand. Some platforms, like the NFL, now offer a multi-view option, letting viewers watch more than one live game at a time. Internet-enabled Smart TVs complete the cycle, slowly but surely making inroads into the broadcast and cable TV markets. With the roll out of 5G services worldwide, that gap is set to widen, as the possibilities of what streaming platforms can offer increases.

The big boys are already playing. Can smaller OTT players compete?

While purely sports platforms like DAZN and Eleven Sports were the first off the block, big general entertainment players have been quick to hitch a ride on the sports bandwagon. Amazon’s 11 year deal with the NFL, starting 2023, cost it an estimated $1 billion a year. Disney’s acquisition of ESPN gave it a foothold in the sports TV market, but it is now shifting its focus to making ESPN a completely standalone OTT platform. Most recently, the PGA merging with LIV Golf promises to cause a seismic shift in how golf as a sport is consumed around the world.

While it may seem that only brands with deep pockets can corner a chunk of the sports OTT pie, there are ways that every OTT platform can successfully monetise live sports streaming.

1) Go beyond the usual suspects: It’s true that hugely popular sports, like football in the US, soccer in the UK and Europe, or cricket in the Indian subcontinent, garner a large viewership. That’s why they command big ticket deals that only OTT behemoths can afford. At the same time, lesser-known sports also command smaller, but intensely loyal audiences, who are often underserved by both TV and OTT. The North American Premier Lacrosse League, for example, has seen viewership increase by 26% in 2022. Its average viewership per game is now nearly 1,60,000 and, with close to 60,000 official downloads, its app was among the top 10 sports apps on the App Store. Meanwhile, the 2023 Cazoo World Snooker Championship clocked over 23 million streams in just 17 days. Tapping into these sports can give an OTT platform a captive audience, since they often slip under the radar of big OTT brands.

2) Get local: While top-tier leagues in any sport hog the limelight, the lower leagues offer huge monetization potential for OTT brands willing to serve them. So, too, do college and school sports events – in fact, the first live sports event on TV was a college baseball game in 1939. As with lesser-known sports, lower leagues have smaller, but equally ardent fan bases. For a parent, for example, missing a child’s school football game may feel worse than missing a key NFL fixture. Similarly, while India’s soccer standings may not be anywhere near the top globally, its Indian Soccer League is the fifth biggest soccer league in the world. Local sports, if tapped effectively, can deliver as well as their national and international counterparts – in soccer-crazy Kolkata in India, ISL viewership has grown by 85% year on year. And, once in a while, even smaller teams can spring a surprise – little Luton Town, whose stadium holds just around 10,000 people, is now in the EPL, bringing outsized returns for its backers.

3) Choose an appropriate monetisation model: Sports streaming presents OTT platforms with multiple ways to monetise their content. Sports with large audiences, therefore, may find substantial Pay Per View customers. But this may not be so for a Tier 2 sport or league. In which case, platforms streaming these games could find an AVOD model more suitable. Going further, streaming offers advertisers a big advantage – real time, hyper-personalised and targeted advertising - something that was impossible with linear TV, no matter the amount of interest the sporting event generated. This makes getting a large title sponsor or many brands on board easier, as these brands get a larger ROI than those following a scattergun approach. A mix of AVOD and sponsorship can help small and medium platforms draw in larger audiences, who may not be willing to subscribe to watch a single sporting event.

4) Make data work for you: Tracking linear or cable TV’s viewership and reach is at best an imprecise process, largely dependent on third-party trackers like Nielsen. Streaming services, on the other hand, have a huge advantage over TV, in that they can accurately collect granular data – names, emails, locations, favourite teams, viewing duration and times and much more. This lets them and their advertisers target viewers with razor-sharp focus. So, for example, fans can be offered deals on stadium tickets based on their team preferences. Sports equipment makers and merchandisers can know exactly who is a hardcore fan and tailor their offerings for them. Even offline marketing, like using social media to connect fans with on-ground events like fan meetups or match nights at their local pub can bring in additional revenue for platforms and rights owners. This makes smaller and niche sports streaming extremely attractive for advertisers, as they get good returns for a lesser advertising outlay than major sporting events on linear TV.

To sum up, expanding an OTT’s bouquet of offerings to include sports is a strategy that every OTT platform can adopt to maximise its monetisation opportunities. While the OTT industry’s movers and shakers have already made sports their engine of growth, small and mid-sized platforms have inherent advantages – local reach, untapped sports and leagues and the possibilities of hyper-focused advertising – to grab a share of the sports pie. By adopting an optimum mix of monetisation models to draw viewers to them, streaming services can turn sports into a game changer that drives both their short and long term profitability.

Disclaimer: This article is generated and published by the Insider Studios team. You can get in touch with them on insiderstudios@businessinsider.in