Listen to industry naysayers and you’d be forgiven for believing that the days of live broadcast are well and truly over.
“Viewers want to watch what they want, when they want, where they want. Mark my words, Netflix has knocked the last nail in the coffin of linear broadcast!” is what you may hear from a conference panel on the state-of-the-industry.
Enabling commercial skipping was one of the first reasons attributed to this shifting trend. This was then followed by the concept of cord-cutting – new age millennials abandoning their pay-TV subscriptions in droves for more cost-effective, online alternatives. One of the more recent explanations is the shift of advertising dollars from offline (TV, print, radio) to online (streaming, websites, podcasts).
But we have some good news for you – the reality couldn’t be further from this supposed truth. Live broadcast isn’t going away, it’s just moving online. According to a study conducted by Level 3, it’s expected that within the next five years, viewing hours of live linear content streamed over the web will surpass those of traditional broadcast TV.
Ultimately, the desire of audiences to tune in, sit back and experience live programming remains as strong as ever. Only two things have changed:
- Delivery. It’d be foolish to deny cord-cutting exists – most reports point to a world where young consumers are abandoning (or indeed, never signing up for) a cable/satellite subscription in favor of services delivered over-the-top. But advances in live streaming technologies mean that it’s now easier than ever to broadcast live content via IP and attract huge audiences – for the right price.
- Format. While typical day-time programming leading into evening prime time is still an attractive viewing experience for many, there are many new exciting opportunities in live beginning to emerge. eSports, ‘lifestreaming’ and virtual reality are all examples of new-age types of content that, when wielded correctly, can generate bumper profits.
In the following paragraphs, we take a dive into ways that operators can maximize the profitability of their streaming service with investment into live content.
Over the last few years, there has been a lot of talk about the “death of TV” as consumers abandon their pay-TV subscriptions in droves for more cost-effective, online-only alternatives. But we think of it more like an evolution. Like a phoenix rising from the ashes, the prevalence of cord-cutting has nurtured an environment where legacy operators have been encouraged to innovate their distribution model in order to stay relevant.
Dish, AT&T, and Verizon – all examples of companies who, in an effort to retain grow market share have launched live streaming TV services. Look at the numbers and you can see why more and more entrenched players are seriously looking at following suit. ABI Research pegs the live-linear OTT market to be worth $7 billion by 2021, compared to around $1 billion today. Despite the technical challenges, this move is considered a no-brainer by many who see rising numbers of viewers opting for cheaper, online-only alternatives to get their content fix.
This move is also grounded in the idea that live television is still relevant in a world where customers want the control to watch what they want, when they want. Studies conducted by IAB in 2017 found streaming-only viewership of live content actually doubled in the previous two years. Sports (which we talk about in a bit more detail below), political debates, reality TV and game shows all continue to attract huge audiences who want to experience content as it happens in real-time.
Yes, there is a view held by some that in launching these online-only services, businesses set themselves up for cannibalization. But here at Massive, we take the view that it’s better to eat yourself than let someone else have a nibble.
The fact that consumer tastes have shifted to IP-delivered video opens up a world of opportunities for legacy players to grow market share, including:
- First Run of Programming. Live-linear OTT platforms offered by pay-TV providers are still able to offer first-run TV shows at the same time as traditional TV. This is a key differentiator to pure-play SVOD services, like Netflix, and doesn’t look set to change anytime soon.
- Flexible Monetisation. One of the more attractive attributes of IP-delivered video is the cost savings. Take Sling TV, for instance, which offers a premium TV package for as little as $25 per month – a far cry from the $100+ otherwise paid for regular cable. Thanks to the advanced analytics offered by live-linear OTT, operators can rapidly A/B test tailored channel upsell bundles to different audience segments who select a basic package or offer a ‘free content’ row to entice non-subscribed viewers to sign up.
- Easier to Scale. Shifting a service online means that businesses are not restricted by the hefty upfront CAPEX cost associated with placing hardware into people’s homes. As long as the end user has an internet connection, they’re good to go, opening up significant headroom for operators to increase their market share domestically and, subject to any rights restrictions, abroad.
Perhaps more than any other type of content, sports rights sit on top of the wish lists of TV businesses across the globe. This is reflected in the eye-watering sums often paid to acquire the programming. It’s expected that sports media rights will be worth almost $23 billion in 2021, up $19.1 billion this year.
The reasons why this type of content is often thought of as the shiniest gem in a programming crown are obvious – immediate sway with some of the most loyal and content-hungry fans in the world; a clear point of distinction between yourself and the competition; and, of course, an opportunity to turbocharge streaming revenues.
And while sports have historically been seen as the last bastion of traditional linear broadcast, the reality is that today it’s commonplace to find operators who don’t break a sweat delivering a 4K stream of a match to millions of users concurrently. Take Massive customer, DAZN, for example – the ‘Netflix of Sports’ handles over 10,000 live events per year, across multiple devices and countries, distributed exclusively over IP.
Companies who offer video streaming of live sports events are afforded a number of advantages over their cable or satellite counterparts. For instance, OTT opens up greater opportunities to take control of the consumer experience. Integrating a front-end management platform, like our own Massive AXIS, into the back-end technology stack greatly reduces the complexity and engineering time needed to roll out targeted user experiences (e.g. one that caters for a casual-committed sports fan and another for a die-hard fanatic) that better serve your business objectives.
Finally, compared to traditional television, OTT is much more capable of delivering sophisticated advertising campaigns. Digital platforms give brands not only a much deeper sense of who is watching the content but also more effective tools in which to target the viewers they are most interested in.
And in a world where sporting events are still considered the holy grail for advertisers (it accounts for over a third of all TV ad spending), this seems a huge win-win.
You can try to pass it off as a fad, but the writing is on the wall – eSports are on a fast track to become the next big thing in OTT. Approximately 300 million people worldwide tune in regularly to watch gamers compete on an international level today – by 2020, it’ll be closer to 500 million. By 2019, Goldman Sachs pegs the industry as being worth more than $1 billion.
For the uninitiated, the concept is relatively straightforward. Fans follow their favorite athletes or teams as they compete against one another in leagues for what multi-million-dollar prizes. Only, instead of having to kick a ball into a net or put one through a hoop, contestants battle it out on their favorite video games. The events often attract massive in-person crowds, but more impressive still is the huge number of people who tune in to watch online.
Household brands have helped drag what was once a niche entertainment business into the big leagues. Vodafone became a premium partner of ESL last year, the world’s largest eSports company and tournament organizer. Coca-Cola, Bud Light, and Gillette have all poured money into the phenomenon in an attempt to capture the loyalty of gamers. Even the sports organizations themselves have jumped on the bandwagon – the NBA announced last year the launch of an annual 2K eSports league that brings together the world’s greatest gamers.
So, the time seems ripe for TV operators to seriously consider integrating an eSports element into their roadmaps. What do they stand to gain if they take the leap? Perhaps the most obvious is a direct route to one of the most elusive audiences in broadcast – young, global, tech-savvy millennials – who have a growing distaste for more conventional means of consuming content.
From a UX perspective, over-the-top affords the greatest opportunity for networks to engage with fans. Examples exist of operators buying the rights to an eSports tournament and broadcasting via a linear channel, but we feel that this strips away some of the key elements that make the content so attractive to end users – the ability to engage with fellow fans via a chatroom in real-time, switch seamlessly between concurrent games and, of course, watch on any device from any location. Twitch, was acquired by Amazon back in 2014, has nailed all of these elements.
Delivery via IP also enhances the ability to monetize. eSports audiences are fickle – you won’t be forgiven for playing a commercial over a live match, nor if you adopt the traditional linear form of advertising (ten minutes of ads for every sixty minutes of content). You need something less intrusive, yet still majorly impactful for brands.
For us, this is something we call ‘Sponsored UI’. Brands are offered premium real estate in the user interface through the form of sponsored rows, backgrounds, categories and landing pages. The concept itself isn’t new (display advertising has been around as long as the internet) yet there are startlingly few video services around the globe that leverage their video service to generate additional income in this way.
This also helps combat a major problem facing not just eSports, but the entire advertising industry – blockers. According to PageFair, over 615 million devices worldwide now have ad-blocking software on them, up 30% year-on-year.
If you’re now convinced it’s worth taking the plunge into eSports – great! But before you go ahead and sign a cheque over to the ESL, here’s a couple of final considerations:
- Brands who will experience the most success in eSports are the ones that spend the time getting to know the fans. Credibility and authenticity trumps gimmicks and ‘business speak’ every day of the week. Influencer marketing is key here – partnering with players and creators who have a voice will add legitimacy to your proposition.
- eSports can still be considered as a little like the Wild West. The lines are blurred between where opportunities for the leagues begin and how this plays into the rights of the player and broadcasters. This will settle down over the coming years, as it has done in traditional sports, but for now, keep it front of mind.
The television landscape today is more competitive than it has ever been, and it’s easy to get caught up in the doomsday prophesy that the era of live programming has come to an end. But here at Massive, we believe that this couldn’t be further from the truth.
Never before has there been such an opportunity for operators to capitalize on multiple means of content delivery to get in front of eyeballs, diversify their content offering and, above all else, generate a deep understanding of their audience. The biggest challenge will lie in tying these three components into a cohesive package that’s primed for profitability.
Learn how Massive AXIS helps you build targeted user experiences – without changing a single line of code.