Winning in Nextgen Sports Media: The RockWater Playbook (Part 3/3)
RockWater has developed a playbook for sports rights sellers and buyers to navigate the evolving media landscape. The playbook is based on the marketplace dynamics examined in Part One of our Sports Media Industry Report, and the nextgen case studies outlined in Part Two.
We break it down into three categories:
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Content distribution
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Content experience
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Alternative monetization
Content Distribution
Use non-live rights to generate top-of-funnel awareness for casual fans. Create an “Ecosystem of Fandom” and generate “Star Power” for athletes. Leverage multiple platforms.
Be where your fans are.
60% of sports fans say that supplemental digital content is important to them. Each social platform must therefore be utilized to deepen the league’s connection with audiences. Digitally native content can be monetized directly via advertising and platform sales, and also indirectly by maximizing the revenue potential of a league’s live broadcasts through increasing reach and engagement.
Gen-Z fans favor individual athletes over teams and leagues at twice the rate of Baby Boomers. Supplemental content can be used to cultivate stardom for individual athletes, strengthening nextgen fandom.
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Short-form, original, socially native content enhances the cultural currency of leagues, teams, and players. It also makes athletes more personable, visible, and accessible to young fans. Forging connections between athletes and fans ultimately translates to increased viewership and live game engagement. Execution can be via partnership (e.g. NASCAR + Barstool, DAZN + Logan Paul / KSI), or internally (e.g. NFL’s “The Checkdown”). The CEO of WAVE (3B video views / month), and friend of RockWater, Brian Verne told us,
“WAVE partners with leagues and rights-holders to transform their great IP into programming for core and emerging digital…At the end of the day, sports entertainment is about uncovering the unscripted drama that has always been, and will always be, laying in plain sight. Our job is to uncover these moments and deliver them to fans, wherever and whenever they want to be entertained, and we certainly believe in a world in which we can serve as this rising tide of sorts for our league and rights holder partners, helping them re-imagine their IP into formats and narratives built for the platforms where today’s fans live.“
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Highlight clips and user-generated content (UGC) play a pivotal role for leagues seeking to engage young fans. Highlight and UGC-driven publishers and platforms such as House of Highlights, WAVE Sports, and Snapchat, have emerged as valuable league partners by amplifying must-see moments and the fandom that surrounds them.
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Long-form documentary storytelling on linear and / or premium OTT builds dramatic stakes and anticipation around league broadcasts, and helps build stardom around athletes (e.g. Formula 1 + Netflix, NFL + Amazon, WWE + ESPN, Boxing + HBO).
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Podcasts starring league’s athletes and personalities: Owned IP does not provide the same advantage in the podcast space as it does in video mediums. ESPN would not be the “Worldwide Leader in Sports” without licensing game footage, but Barstool and The Ringer can have the top sports podcast networks without any league IP, which is why the NFL can launch a successful cable network with 24/7 programming but struggles to compete in audio. Sports podcasts level the playing field in a way that rights-owners aren’t used to. However, leagues still have an advantage over independent podcasters due to their access to premium league talent. Leagues can utilize their star athletes and broadcasters to develop effective “shoulder programming” to cultivate fan interest around their personalities and events (e.g. WWE, NASCAR + Barstool).
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Traditional leagues can generate revenue and nextgen fandom through eSports leagues built upon their IP. Traditional rights-owners have the opportunity to generate significant value by A) monetizing eSports leagues directly (e.g. eSports licensing fees, tickets, sponsorships, media rights, etc.), and B) cultivating nextgen fandom by using eSports to introduce young fans to their league, sport, teams, and players. (E.g. NBA 2K League: 373M cross-platform video views, 94M copies of 2K game series sold).
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Use the “Metaverse” to create buzz and engage younger fans “Metaverse” games like Fortnite, Roblox, Minecraft, and Animal Crossing each aggregate between 70-120M monthly active players. Meaning, to properly execute a “fish where the fish are” content strategy, metaverse platforms must be a part of any league’s nextgen content strategy. Young audiences are spending more and more time in these virtual universes, so that’s where leagues need to meet them (e.g. NFL + Fortnite).
For live games, maximize reach and revenue by segmenting rights packages:
Digital / social content is a tool to move fans up the value chain; converting casual fans into engaged live viewers, and converting existing live viewers into “super fans” (which can manifest in paid subscriptions, season tickets, merch, and more). The ROI on these initiatives doesn’t come through the advertising dollars that they generate directly, but instead through live media rights fees (40% of total revenue for the top US sports leagues), which they boost indirectly.
As discussed in Part Two of this report, to maximize live media rights revenues, traditional leagues need to segment their live packages by licensing live content to exclusive platforms across several categories. As new category-specific streamers emerge, the opportunities to expand media revenues will multiply.
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Don’t count out TV yet: Brian Rolapp (NFL’s Chief Media and Business Officer) explained, “Television isn’t going away. Television, and broadcast specifically, will play a very strong role…We still think the best way to get reach for our NFL games is broadcast television. Nothing has supplanted that, and I don’t think it’s a binary decision to go to television or go to digital”. It’s important to not overlook the present in pursuit of the future. Traditional TV is dying but it’s not dead yet. No other medium offers the level of audience penetration and live reach of linear TV. Additionally, as we advocate for a “fan first” content strategy, it’s important to note that reaching the next generation of fans should not be done at the expense of existing long-term fans. In order to maximize reach and avoid alienating existing fans, traditional TV should still be a core component of a league’s live rights portfolio.
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OTT partners will need to improve live-streaming infrastructure before playing a larger role in live sports broadcasting. Although traditional broadcasters lack many of the engaging features that delight young fans (outlined below), they are still best-in-class at the simplest, yet most crucial, aspect of the live content experience: frictionless live broadcasting at scale. Last month, Twitch and Fortnite both set new records for concurrent live streamers (4M and 12.3M respectively). This past season, the NFL averaged 17M viewers per game on linear television alone. With a plethora of entertainment options at their fingertips, today’s young “Fluid Fans” have high expectations and low patience – 60% of consumers would watch live sports online only if the stream is not delayed from the broadcast, and 66% of viewers say they tune out of a live sports stream if it buffers more than twice. As Facebook, Youtube, DAZN, Twitter, Amazon/Twitch and others continue to bid on live sports rights, rights-owners will need to feel assured that not only can these platforms deliver a scaled audience and engaging features (outlined below), but also that they’ll do so while delivering the latency-free viewing experience that fans have come to expect. These capabilities will be put to the test when Amazon Prime carries its first fully exclusive NFL broadcast this upcoming season. Additionally, in order to maximize their value proposition to rights-owners, streaming platforms need to prove that they can not only distribute, but also produce, live sports broadcasts. This is no small task. Traditional broadcasters have become indispensable league partners by developing their sports broadcasting infrastructure and capabilities. Amazon Prime simply provides a simulcast of NFL Network’s cable feed, while DAZN has verticalized by investing in premium production capabilities.
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Embrace DTC: Subscription OTT should be the lynchpin of a league’s content ecosystem, and a must-have touchpoint for any true fan. In addition to being a hub for live game broadcasts and shoulder programming, OTT services provide the direct customer proximity to power ancillary revenue streams (e.g. international expansion, ticket sales, merchandise, and subscription sell-throughs like NFL Redzone or NBA League Pass). These centralized hubs of fandom can be O&O (e.g. WWE Network) or partner-enabled (e.g. NBA / Microsoft). As the most recent major league to announce a DTC initiative, we’re particularly excited to see the NBA’s new OTT platform (powered by Microsoft), which Adam Silver says will “redefine the way our fans experience NBA basketball“. League-owned DTC services can ultimately serve as a personalized hub that provides the optimal experience for each fan. The NBA’s use of Microsoft’s AI technology is an exciting step in this direction.
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Embrace mobile distribution: The average millennial spends over five hours per day on a mobile device. A “be where your fan is” distribution strategy therefore must include broad mobile access. 37% of sports fans now watch live-sports on mobile devices, however that figure may be a better indicator of supply, not demand. As live sports become more widely accessible across phones and tablets, viewership across these devices is rising exponentially. After the NFL extended its mobile distribution via a partnership with Verizon, mobile viewership increased by 147% YoY. With a growing percentage of fans experiencing game broadcasts through their phones, leagues and their partners will need to apply a Quibi-esque dedication to optimizing the mobile viewing experience.
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Embrace the “Metaverse” for live distribution: With the top “Metaverse” platforms each commanding 1-1.5B hours of playtime per month, these gaming platforms have evolved into the virtual “social squares” for Gen-Z. It’s become less about the gameplay, and more about a communal space to interact and share experiences. Matthew Ball explains, “Fortnite began as a game, but it quickly evolved into a social square. Its players aren’t logging in to ‘play’, per se, but to be with their virtual and real-world friends. Teenagers in the 1970s to 2010s would come home and spend three hours talking on the phone. Now they talk to their friends on Fortnite…about school, movies, sports, news, boys, girls and more. After all, Fortnite doesn’t have a story or IP – the plot is what happens on it and who is there”. Consequently, the metaverse has become a viable distribution platform for immersive and socially interactive live events targeted at younger viewers (Travis Scott recently performed a live virtual concert on Fortnite and Christopher Nolan recently announced he’ll be debuting his next film on the platform). Live sports are often the impetus for communal gatherings around social squares (at the bar, stadium, or at a friend’s house). Now, as the social square extends into the virtual realm for an entire generation, rights-owners should work with metaverse platforms to merge nextgen “watercooler” with the content fans gather around it to discuss.
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In addition to TV, OTT, Mobile, and metaverse broadcasts, there should also be distinct rights packages sold to Gambling, Fantasy, VR, and Whip-Around stream (e.g. NFL RedZone), and audio partners. Each partner should tailor the content experience to fit their audience/platform (outlined below).
Content Experience
Different content experiences for different audiences on different platforms:
By segmenting live-rights packages, leagues can provide innovative content experiences to engage younger fans without alienating the existing fanbase on traditional platforms. For example, a gambling-centric stream on the Action Network will be designed to appeal to gamblers (from the commentary, to customized graphical overlays based on a viewer’s bets, and interactive live-betting capabilities), while a stream of the same game on Twitch, targeting young eSports fans, will have unique features designed to best engage that audience.
In 1956, ABC debuted the instant “slo-mo” replay. In 1996, Fox introduced the real-time scoreboard graphic to the corner of its sports broadcasts, and in 1998 it debuted the yellow first-down line to its football telecasts. Today, we may take these features for granted, but they were game-changing innovations that improved accessibility and engagement for viewers at home. Now, with the advent of digital streaming, we expect the next generation of distributors to usher in a new wave of broadcast innovations that enhance the at-home viewing experience.
Digital broadcasts should enable:
Personalization
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Customized camera angles. Empower viewers to control their own replays, choose their preferred visual interface, and camera feeds (e.g. NBA + Twitter, NFL + Twitch, Flo Sports).
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Customized audio feeds. Viewers can choose their preferred broadcast team, or even co-stream live games with commentary from popular Twitch and/or social media personalities (e.g. NFL + Amazon, NBA + ESPN)
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Interactive graphical overlays providing real-time stats, info, and even biometric data on specific players (e.g. NFL + Twitch, NBA + ESPN, NBA G-League, NBA + Microsoft, Karate Combat). These overlays can be customized based on the viewer’s rooting interests (e.g. team-based, player-based, fantasy-based, gambling-based, Xs & O’s strategy-based)
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Follow a feed of a specific player throughout the game based on fantasy, gambling, or personal rooting interests (e.g. NBA + Twitter)
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Artificial Intelligence can be implemented to power personalized game broadcasts (e.g. NBA / Microsoft).
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Even on traditional TV, rights-holders with broad portfolios of networks can enhance personalization by providing different streams for different viewers on different networks (e.g. ViacomCBS can broadcast a traditional NFL game on CBS, a broadcast designed for young kids on Nickelodeon, one designed for teens on MTV and/or Pluto, and a stream with irreverent “Barstool-esque” commentary on Comedy Central). E.g: NBA + ESPN, NFL + Nickeloden.
Gamification / Gambling / Fantasy
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In-stream extensions can allow fans to answer custom real-time questions to predict what will happen next during the game (e.g. “Which player will score the next goal?”, “Will the next point be a touchdown or a field goal?”, “which team will win the next quarter?”, etc), test their knowledge with trivia, and give feedback by answering polls. Participants can score points, rank on a leaderboard, and even win prizes without leaving the broadcast. These contests can be offered as gambling and daily fantasy integrations for adults, while younger audiences can play to win prizes and rewards provided by teams or sponsors (e.g. Washington Wizards, NBC Sports, Sacramento Kings + MGM / Xperiel).
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Allow fans to win “loyalty points” for watching games, engaging with streams, sharing content, and buying merchandise. Leagues and distributors can implement video game reward systems, encouraging fans to unlock status badges and rewards, and track personal fandom streaks and achievements. Rewards could include discounts on tickets, merch, subscription products, or exclusive content (NBA + Microsoft).
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Partner with gambling and fantasy companies to incorporate real time gaming into the broadcast to maintain and enhance narrative tension, even during lopsided matches. Use real-time graphic overlays or CNBC-style news crawls to communicate options for real-time bets. In Europe, gambling interest has been proven to double or even triple when real-time betting odds are presented alongside a live broadcast. And in the US, 68% of digital media consumers believe that betting information enhances the programming, even if they never wager.
Social Interactivity
38% of Gen-Z viewers use a second screen while watching live sports. Social integrations into broadcasts keep young viewers engaged by merging their first screen content and second screen interactions.
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Provide tools to let fans clip, edit, and share their own game highlights across social media in real time, turning viewers into evangelists.
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Create team-specific Bits and Emotes inside a chat window to let fans celebrate teams, players, and moments.
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Reward engagement by allowing participants to unlock special Emotes and Bits to cheer for their team and increase friendly competition in the chat (e.g. The Overwatch League).
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Integrate message boards, and one-on-one or group chat features into the stream.
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Implement co-viewing video chat features into the stream (e.g. House Party) so friends can watch the game together even when they can’t physically be together….this will be increasingly crucial in the post-COVID era.
Immersive Reality (Augmented Reality, Virtual Reality, Mixed Reality, 3D)
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Augmented Reality / Mixed Reality (popularized by Magic Leap and Pokemon Go) can be utilized to produce enhanced, personalized, and immersive graphic overlays powered by real-time stats to bring the game to life (NBCU + Tour De France, Fox / NASCAR + Epic Games).
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Virtual Reality / Volumetric Video can be implemented to create a more immersive viewing experience that bring fans closer to the action by providing unprecedented access and personalization (e.g. bringing fans into the locker room or team huddle, and empowering to walk out onto the field or watch from any vantage point in the stadium). Presently, a significant limitation to VR is the isolating experience of consuming live sports through a headset. However, as VR technology develops social tentacles, VR adoption and consumption will rise, making it a valuable tool for rights-owners seeking to provide an immersive and engaging content experience. (E.g. NBA + NextVR, Fox Sports)
Alternative revenue streams enabled by digital distribution
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Micro-transactions / A-La-Carte Marketplace: Flexible pay-per-view style purchasing of single games, overtimes / final periods, or playoff rounds, etc. (e.g. NBA). For example, if a game that you don’t have access to just went into overtime and you want to get in on the action, you could rent the duration of the game for $5, or if you’re a cord-cutter who is only interested once the playoffs start, you could opt to purchase a playoffs package or even just a single game.
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Commerce Integrations: Enable purchases directly through the broadcast (e.g. NFL + Twitch, NBCU) – including physical products (tickets, official merchandise, sponsored products), and even “virtual items” (which have generated $1B+ through in-app transactions in Fortnite.
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Premium Extensions: Sell upgraded features to enhance the personalization, gamification, interactivity, and social features of their stream.
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Shoppable Sponsored Integrations: Layer in digital call-to-actions within interactive sponsored activations throughout the broadcast (NBCU).
Conclusion: Find your fans
Fragmentation of the media landscape and shifting consumption habits of younger audiences have disrupted the traditional media models of legacy sports leagues. Although this has led to a decline in viewership and increased competition for the loyalty of younger viewers, these same dynamics have also increased the value of live viewership and engagement, making sports IP more valuable than ever.
As legacy rights deals expire, leagues will need to transform their strategies in order to maximize the near-term revenue provided by unprecedented media rights values, while also cultivating a sustainable long-term future by engaging the generation of digitally-native fans.
How can leagues navigate disruption and emerge stronger than ever? Be where your fans are!
To win in today’s fragmented media ecosystem, leagues (and all content providers) must be FAN FIRST. Today’s fans (and especially tomorrow’s fans) will not adapt their consumption habits to accommodate sports leagues. Rights-owners must instead adapt their media strategy to accommodate consumers.
Sports content (live and non-live) is incredibly valuable IP. To maximize this value, in the near and long-term, it is essential to provide the right content to the right audiences on the right platforms at the right times. It sounds simple, but each platform in today’s ever-expanding content universe represents both an opportunity and a threat.
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