Guest contribution from Andy Wasef, EVP, Global Head of OTT Products at Deltatre
The PG Tips diamond encrusted tea bag. A 1963 Ferrari GTO. Exclusive broadcast rights for the NBA.
All of these things exist. They are all incredibly rare. And, most importantly, they are not cheap.
BT splashed $1.45 billion on the UEFA Champions League and UEFA Europa League in 2017, netting all live games, highlights, and in-match clips. Australian telco Optus invested close to $300 million for two cycles of the Premier League to drive market share across its broadband services. And Turner Sports (owned by AT&T) pays on average $1.2 billion a year for the NBA.
The list goes on.
You don’t need us to tell you the advantages of owning sports content. Its appeal to ready-made, loyal fan bases are enough to make even non-traditional players like Facebook, Twitter and Amazon try and carve a slice. And it’s working.
The next three to six years will see many premium sports properties around the world come up for grabs (Variety have put together a very helpful little table) and as such telcos are at a crossroads. How deep should they stretch their pockets to maintain the status quo against disruptive newcomers? What can they do to acquire new customers, keep them engaged and improve ARPU? Does the ROI justify the huge outlay? And are there any untapped opportunities beyond the norm that will prove profitable in the long-term?
Here’s what we think.
#1. Positioning Video as a Core Service
If asked to think of the top five technology brands in the world, it is likely that some combination of Amazon, Apple, Google, Alibaba, Netflix, Samsung, and Facebook would make the list, right? They have mastered the art of fostering the direct customer relationship. They frequently score highly on surveys of the ‘world’s most valuable brands.’
Telecoms – not so much. Indeed, according to the Financial Times, Verizon, AT&T, Vodafone, Movistar and Deutsche Telekom (amongst others) have all seen their brand clout start to drift. Yes, they are vital players in the information technology ecosystem. Yes, they command huge customer bases. But, we think it’s fair to say, the relationship for many became one more of necessity rather than choice.
Video presents an opportunity to change that. The acquisition of premium content rights (and does it get more premium than top tier live sport?) offers a chance to boost the appeal of other portfolio products and stand out against competitors that all now provide services that have become widely commoditized. Faster network speeds? OK. The only place to watch the Champions League final? Sign me up. Or so is the hope…
Hey. Why not read Massive’s white paper ‘How to Win the War in OTT Video.’
With 5G just around the corner, many premium sports rights becoming available to bid on and consumer appetite for premium content delivered at lightning speeds at an all-time high, telcos are at a critical juncture. Yes, Netflix captures the headlines today, and its market penetration (not to mention leadership advantages in critical areas like data application) is deep. But it also has long-term debt and there is a belief that come 2030 it will look very different to what it looks like today. On the other hand, telcos have a thriving business model, built in distribution, and heaps of customer data to aid acquisition, retention and development strategies. Do they continue to let their brand equity devolve to the benefit of pure-play OTT brands or do we take advantage of the moment and stake a claim on the D2C video relationship?
With potentially billions of dollars hanging off the answer to this question, it’s one worth considering - deeply.
#2. You Can Lead a Horse to Water…
Content is king, undisputedly. No amount of exciting features will make an OTT video service profitable if a premium collection of programming does not underpin it. It’s like trying to ride a bike with no wheels. It will always fall over.
But we have a saying at Massive and Deltatre.
"They come for the content; they stay for the experience.”
No other type of video content offers as much potential for user engagement than sports. The appetite and opportunity for in-game statistics, multi-angle footage, live replay, social media integration, virtual reality, interactive graphics and more are endless. And, in the right hands, incredibly monetizable.
Why not check out Massive’s white paper – ‘Staying in the Game: Designing Sports OTT Services’
Achieving this goal is underpinned by two factors:
- Having a firm understanding of your audience – from the casual committed fans to the die-hard fanatics – what drives their viewing habits and how do those habits vary for different sports, teams and athletes?
- Owning the tools and infrastructure needed to activate your insights in real-time.
Let’s start with the first one. Where do OTT players find success? One simple answer is in the communities that form around a specific genre of content, brand or network. And you’d be hard pressed to find larger – or more passionate and dedicated - fan bases than those that build around sports.
Take cricket for instance. Conservative estimates place its fan base at 2.5 billion worldwide. There are over 1 billion tennis aficionados across the globe. Even table tennis enjoys the support of 875 million people.
That’s A LOT of potential revenue to be made.
And telcos, more than any other type of business, are in an elevated position to gain a much more rounded view of their customer than a pure-play broadcaster or video service. Coupling analytics platforms that track mobile and broadband usage can glean insights in purchasing behavior, spending patterns, usage plans, value-added services purchased, roaming data, most visited location, and demographics, plus many more.
But knowing the fact that someone love table tennis is one thing. How much do they love table tennis? Are they waking up at 3am to watch a match play live in China? How much of the game do they consume on mobile over desktop? Do they own a VR headset and have the desire to watch a match through it? How vital are real-time statistics and how do they want these displayed? Will they cringe at the idea of paying a premium fee to watch the hotly anticipated World Table Tennis Championships final?
Only by having this level of granular detail is it possible to truly engage the user, improve your stickiness and make data-driven decisions on content and infrastructure investment. Very few organisations have the potential to understand the broad daily habits of all people than telco’s who literally live in our pockets or within our reach almost all day long (for better or worse!). Events otherwise seen as ‘one-and-done’ opportunities can quickly be turned into a 365-day engagement. Telcos who own content distribution rights, or can provide them as an OTT aggregator, are in the perfect position to capture the data, deliver on fan needs and provide related offerings exclusive to their network.
And that nicely brings us to our third point.
#3. … But You Can’t Make Them Drink (Unless You Sweeten the Deal)
It’s one thing having the knowledge. We all can appreciate an analytics dashboard that tells us Green Bay Packers fans don’t ever want to see content from the Minnesota Vikings (unless it’s of them losing - badly) and supporters of Liverpool will watch Mo Salah hit the net from every conceivable angle – but how do you do something about it?
You need a robust front-end infrastructure. One that is primed and optimized for maximizing user engagement and driving value for fans. One that is built with the non-technical operator in mind. Here’s are some of the components to consider including:
- Targeted UX Platform: to drive highly tailored user experiences based on audience segments. Takes a holistic view of the UX, from content discovery to navigation to list management.
- Next-Generation Player: adds interactivity and context to video consumption, enabling fans to view live stats, jump to meaningful moments in the action, and consume multiple angles or games in real-time.
- Highly Flexible Apps: API-driven so that changes made in the back-end appear instantly to the end user. Every platform where your audience can be found.
- Powerful CMS: supports different types of content and ready to scale to support big editorial teams during the world’s most significant sporting events.
- Best-in-Class UXD: if it doesn’t look good, is there any point?
- And – importantly - all connected to a sophisticated data infrastructure to drive the experience.
With these tools in place, telcos are in prime position to distribute and monetize sports programming. Using advanced, data-driven capabilities, they can deploy solutions that monitor, analyze and execute the ultimate fan experience, driving loyalty and engagement.
They can get back in the driver’s seat.
#4. An Untapped Opportunity
Finally, a few words on eSports.
Not everyone can win the rights to the Champions League. Only a lucky few will have the privilege of being one of the homes to NFL content. And there are relatively few budgets out there that can meet the expectations of FIFA or the NBA.
But eSports? That’s fertile ground. And it’s going to be big.
Worldwide revenue is expected to top $1.65 billion in 2021. Time spent watching eSports will cross 6.5 billion hours this year. Over 300 million people worldwide consider themselves “a fan.”. And when you consider that revenue from gaming sales outstrip the revenue of the music and film industries combined, you can see the scale of the interest and passion for gaming.
These are some difficult numbers to ignore. And to date, few television operators have even begun to stake their claim on this soon-to-be incredibly lucrative market that touches one of the world’s hardest to reach audiences – millennials.
The opportunity is there for telecom provider to carve out their piece of this growing market while content acquisition and production costs are still (relatively) cheap. Acquiring the rights to broadcast a major tournament or league can be viewed as a marketing acquisition tool, a means to forge relationships with new audiences to then upsell other products from the overall portfolio.
Even partnering with one of the many “real” professional sports teams – see the NBA – that have begun investing in this new medium is a tactical first step. It just needs to be taken.
Fans are ready for the future sports viewing experience - are you?
What do you think we’ve missed? Share your thoughts with us directly on Twitter or LinkedIn.