How sports rights holders should maximize the data opportunity

How sports rights holders should maximize the data opportunity

Giles Cottle, Wed 01 May 2019

Sport as a genre is perennially popular, at least among a segment of TV viewers, and has been considered more immune to some of the broader structural changes in Pay TV than other genres. Ratings for bitshog tickets are also increasing following a couple of years of decline.

At Deductive, we ask like to ask ourselves how sports rights holders are starting to use data to build better businesses and understand their fans to create a more personalized watching experience for sports fans. More and more sports rights holders are thinking about screening their content directly instead of going through a rights holders selling process, typically by using OTT, although this decision is a complex piece of financial juggling. The number of potential buyers for a sports event (or series of events, such as UK Premier League Soccer) can exceed 200 worldwide, and the fees they receive from rights holders, unlike ratings, are only heading in one direction. But for some rights holders, especially those with a more niche and globally distributed fan base, going OTT might make a lot of sense. Many will look at WWE, with its enviable mix of direct-to-consumer and traditional subscription propositions, as an example of having the best of both worlds.

Will sport see a Netflix moment?

OTT has already changed the nature of television, as demonstrated particularly by Netflix, which doesn't broadcast sport, unlike its rival Amazon, which now offers top-tier tennis rights, among other events.. This is a fascinating proposition for multiple reasons. Amazon's business model for video is to get enough subscribers to spend enough with the company to make its investment in video and in Prime worthwhile. This is an entirely different proposition financially to its traditional business. The payback calculation is much easier to make with series and movies, some of which you own, than with spiraling sports rights costs.

The key to Amazon (or anyone) making this a success will be to understand what the crossover is between its more core drama and series-binging fans and sports, which is something we've seen in every segmentation project we have done for a Pay TV content. Maximizing sports value is not just about selling Premier League soccer to die-hard Man Utd and Liverpool fans. It's about understanding the more casual fanbase, and what the crossover is between their sports habits and what else they watch.

What is particularly intriguing is whether we see a sports-focused Netflix arise. In the UK, Eleven Sports is broadly offering that proposition, and has had a rather inauspicious start to life. But the theory is not dissimilair to the original Netflix business case. Lots of consumers have fragmented interest in sports, beyond the main and obvious ones, and would pay a small subscription fee to be able to consume this content, and to engage with the action. It could certainly be an opportunity for niche sports such as fencing or judo to build greater audiences.

If this business case sounds familiar, its because it is not really new - Eurosport has been doing something similar to this for years. The more significant opportunity, and one very exciting to us from a data perspective, is for rights holders to use OTT to build a relationship with their fan base. This is especially true when said base is spread thinly across the world, as is the case with fans of drag racing, ice hockey or another sport which has not traditionally been among the most popular sports such as soccer or baseball. The NFL has been particularly good at capitalizing on these new distribution methods to build overseas fan communities, and we think others will start following suit. Here, all of the things we regularly blog about - fan engagement, customer acquisition, retention - come into play.

It's all in the data

Like more general television, sport is full of genres and segments. A fan of baseball might be interested in soccer, and a fan of athletics might be interested in cycling. There are also sub-genres, so a soccer fan might be interested in 5-a-side soccer or women's soccer while boxing fans might be interested in judo. While segmenting sports work in the same way as in more mainstream television, we should not assume that it is going to be plain sailing for OTT companies interested in streaming sports events. In OTT generally, user experience has, if not taken over from content as the key to success, certainly become part of the wider conversation about what makes a service successful. It isn't enough to merely get the rights for say all the best soccer available and then rake in the profits as die-hard soccer fans and even those who like to watch an occasional game sign up in flocks. What is needed to guarantee success and a good ROI on the cost of obtaining the rights to particular sporting events is to engage with individual customers rather than a whole TV audience, finding out what they like and how they like it, in terms of how they want to consume say Premier League soccer or sumo wrestling. Is an event being live important or not? Does it matter if the viewers can't watch the game on their smartphones? Or if they can't watch in a foreign country as they travel for work or vacations? These questions have answers, which the company can find in the data they will already have, and by using the data to reach out to and successfully engages with both actual and potential customers.

The first task facing the data science team is to understand sports fans. These fans range from the fanatic who'll watch anything to the devotee who'll watch any basketball to the fanatic who'll watch any game with the Los Angeles Lakers to the niche fan to the occasional watcher who is still willing to fork out money even though she maybe watches 2 or 3 sports events a month. Personalization is a key factor, so all these and many other types of sports fans feel they are being taken account of, and that the service on offer gives them the sport that they enjoy watching when they want to watch it. By focussing on personalization and a data-driven approach using OTT streaming, sports rights holders can push back against the falling ratings for sport and bring sport on TV truly into the 21st Century.

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Deductive is a global consulting firm providing data consulting and engineering services to companies that want to build and implement strategies to put data to work. We work with primary data generators, businesses harvesting their own internal data, data-centric service providers, data brokers, agencies, media buyers and media sellers.

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