Context
One of the key competitive advantages Pay TV players have had on Over-The-Top (OTT) services run by mobile network operators (MNOs) and independent platforms is the rights to air premium live sports content such as EPL. Historically, this was due to three factors:
The high content acquisition costs of sports content
OTT providers’ absence of long term relationships with subscribers (most offer the option to unsubscribe within one month)
Lack of adequate technology that results in latency issues – a major issue when watching live sports.
Opportunity
Despite the challenges of short term customer relationships and streaming latency still in play, OTT providers have been hungry to get into the game and in 2016, a number of them announced they had secured premium sports broadcasting deals. This was the first signal that their appetite (and ability) to make big investments was real, likely prompted by evidence that consumers are now comfortable consuming sports content via OTT.
According to a survey from the Center for Digital Future USC Annenberg and ThePostGame, 63% of all sports fans are keen to pay for an OTT sports offering. For households with children, this number rises to 70% and to 78% for people who describe themselves as intense sports fans. While consumers tend to deviate from what they tell pollsters, the notion that more than half the respondents are willing to pay for sports OTT subscription is noteworthy.
Looking at real world behaviour, Turner Sports highlighted that the NCAA March Madness Live app they manage, delivered a record 22.5 million live video streams, equating to nearly five million hours of live streaming video consumed during the 2016 tournament openers. Picking up on this trend, Eleven Sports Network, an OTT player in Singapore, has tied up with SingTel in a multi-year agreement to bring "live" coverage of selected EPL matches starting from Aug 2016 at a subscription price of S$19.90 per month (or annual subscription fee of S$214.90).
What Next?
How can MNOs without a PayTV offering capitalize on the emergence of premium live sports on OTT to improve their performance?
MNOs can leverage a premium sports offering on their platform to enhance multiple facets of their strategy across customer acquisition, churn reduction, ARPU and pricing dynamics by pursuing one of the following 2 options:
Partnering with OTT services to provide sports content to consumers
Setting up of a dedicated sports OTT platform and bidding for premium OTT live sports rights
To decide which option is best, MNOs must gain a solid understanding of content rights, content partnership dynamics, and their own content related KPIs. As many of these deals are being made for the first time, it will be difficult for MNOs to assess the parameters of a good deal up front. They will need to consider their expected return not just in gained revenue from content subscriptions but across the entire spectrum of their business in order to frame the terms of a good deal. While challenging, if done right, owning sports content on OTT will be a winning move.