Opportunities and Challenges in the Future of Sports Broadcasting Rights

Current trends in sports broadcasting rights

Current trends in sports broadcasting rights are characterized by a focus on securing global rights for international growth (Disney), strategic partnerships with major leagues to enhance subscription offerings (Google), and the expansion of streaming services into live sports (Netflix). Additionally, financial challenges arise from not renewing key rights, impacting revenue (Disney).

"Bob, back to sports just maybe more broadly. As you think about which sports rights to invest in, how important is securing global rights to drive the international growth for ESPN or even Disney+ as part of your analysis to drive returns to combat the sports rights increases?" --- (DIS, earning call, 2024/Q2)

"Philipp Schindler: And with regard to your sports rights question, look, I mean, we've had long standing and significant partnerships with the most popular sports league here in the US around the globe, Federation's teams, athletes, broadcasters, and obviously these partnerships in combination with a very vast audience of sports fans drives investment and subscription experiences across many offerings, NFL Sunday ticket, YouTube TV, YouTube primetime channels and so on." --- (GOOG, earning call, 2024/Q1)

"and territories through its rightsholders including ESPN, TNT Sports and NHL Network in the U.S.; Sportsnet and TVA Sports in Canada; Viaplay in the Nordics, Baltics, Poland and the UK; MTV3 in Finland; Nova in Czech Republic and Slovakia; Sky Sports and ProSieben in Germany; MySports in Switzerland; and CCTV5+ in China; and reaches fans worldwide with games available to stream in every country." --- (AMZN, press release, 2024/04/25)

"We got more live events, games and we want to translate that more effectively into revenue, so we can continue to invest and keep that flywheel spinning.And if we can keep improving that value translation mechanism each quarter and keep improving the entertainment offering that it operates on top of, those two things compound and drive the business, will drive-through '25 and beyond.And that really allows us to more effectively get more of those 500 million plus and growing Smart TV households around the world that aren't currently members to sign-up. And it also drives our other levers of growth like plan." --- (NFLX, earning call, 2024/Q2)

"Revenues - Other Other revenue decreased $32 million, to $267 million from $299 million, due to the comparison to sub-licensing fees from Board of Control for Cricket in India (BCCI) programming in the prior-year quarter as we did not renew the rights for the current fiscal year, and lower Ultimate Fighting Championship (UFC) pay-per-view fees primarily attributable to the impact of airing one less event in the current quarter compared to the prior-year quarter." --- (DIS, sec filing, 2024/Q2)

Competition among broadcasters for sports rights

Competition among broadcasters for sports rights is intensifying, with ESPN reporting record viewership and strategic acquisitions bolstering its position. Meanwhile, Netflix navigates licensing challenges while gaining market share, highlighting the fierce battle for audience attention and advertising revenue in this dynamic landscape.

"I mean, what you saw with obviously the women's NCAA basketball championships, but across the board I mentioned in my comments what the April numbers look like, highest April on record as for instance in primetime at ESPN." --- (DIS, earning call, 2024/Q2)

"Spencer Wang: Thank you, Ted. Rich has a part two to this question, not surprisingly, how do you thread the needle on licensing sports to drive advertising spend without becoming beholden to leagues at renewal?" --- (NFLX, earning call, 2024/Q2)

"So, I feel very bullish about it. You also have to look at the menu of sports rights that ESPN has bought." --- (DIS, earning call, 2024/Q2)

"And we've actually seen in that Nielsen data, our share tick up a little bit even in this incredibly competitive space, where you've got a lot of folks competing for attention, for time and for money." --- (NFLX, earning call, 2024/Q1)

Impact of technology and emerging platforms

Technology and emerging platforms are reshaping sports broadcasting rights, with companies like Google and Amazon noting positive performance and growth trajectories. Netflix emphasizes the rise of new voices and ad revenue opportunities, indicating a shift towards innovative storytelling and monetization strategies in the evolving landscape.

"The impact will persist through the balance of the year. Second, with regard to platforms. We are pleased with the performance in play driven by an increase in buyers." --- (GOOG, earning call, 2024/Q2)

"The art of this has always been finding the right balance of both. So and also would point out that these platforms have been a way to have new voices emerge, and we've got our eye on them as well to try to develop them into the next-generation of great storytellers on Netflix." --- (NFLX, earning call, 2024/Q1)

"So we're seeing both the emerging and the established improving, and we like the trajectory. And I think you'll see more of as we move forward." --- (AMZN, earning call, 2024/Q1)

"With regard to platforms, we are pleased with the performance and play driven by an increase in buyers." --- (GOOG, earning call, 2024/Q1)

"The rate of growth, it just happens to be growing off of a relatively small base because we're starting from only 18 months into ads so to have the kind of a primary revenue impact across a business that has been primarily subscription for a long-time that just takes some time. So we're scaling well through reach, through engagement, through growing inventory and that represents opportunity for us over a multiyear trajectory to have a big and increasing revenue and profit impact on the business." --- (NFLX, earning call, 2024/Q2)

Changing consumer behavior in sports viewership

Changing consumer behavior in sports viewership is marked by declining average viewership and increased competition, as highlighted by Disney's lower impressions and Netflix's password-sharing policies. Additionally, platforms like YouTube are adapting with new advertising strategies, reflecting a shift towards more customized and dynamic user experiences.

"The decrease in impressions was due to lower average viewership. Higher international advertising revenue was attributable to an increase of 10% from higher rates, partially offset by a decrease of 3% from an unfavorable foreign exchange impact." --- (DIS, sec filing, 2024/Q2)

"Ted Sarandos: I'm going to close with that two. Greg Peters: So as we have said, due to the work that we're doing on password sharing, we're essentially cutting off some viewers who are not payers and therefore, we're going to lose some viewing associated with that." --- (NFLX, earning call, 2024/Q1)

"Just last week, we introduced new ways for brands to get the most out of their shorts ads with new lineups on YouTube Select, including sports, beauty, fashion and lifestyle, and entertainment." --- (GOOG, earning call, 2024/Q1)

"the user, to serve the consumer, really. And it's some of it is really subtle but really important, which is that first screen experience needs to be really customized and dynamic and constantly changing." --- (DIS, conference, 2024/05/15)

"But again, it's competitive everywhere. And in a way, it's good for the market in the sense that consumers just have more and more choice and different options." --- (NFLX, conference, 2024/05/15)

International opportunities in sports broadcasting

International sports broadcasting presents both challenges and opportunities. Disney's ESPN faces revenue declines due to foreign exchange impacts but sees potential growth from higher rates and increased attendance. Meanwhile, Amazon is expanding its innovative sports offerings in Latin America and Canada, indicating strong international prospects.

"The decrease in international ESPN affiliate revenue was due to decreases of 47% from an unfavorable foreign exchange impact and 7% from fewer subscribers, partially offset by an increase of 46% from higher contractual rates." --- (DIS, sec filing, 2024/Q2)

"It offers high-quality content live and on demand through DIRECTV Latin America, SKY Brasil, DGO and SKY+, with sporting events, international events and exclusive programming in Brazil through the SKY brand and in Argentina, Barbados, Chile, Colombia, Curacao, Ecuador, Peru, Trinidad and Tobago and Uruguay through the DIRECTV brand." --- (AMZN, press release, 2024/06/13)

"The increase in international ESPN affiliate revenue was attributable to higher effective rates." --- (DIS, sec filing, 2024/Q3)

"Amazon has a strong track record of presenting sports on Prime Video in a highly innovative and viewer-friendly manner, said David Proper, NHL Senior Executive Vice President, Media & International Strategy." --- (AMZN, press release, 2024/04/25)

"With a business with that profile, you invest in it. We know there are lots of opportunities to continue to grow attendance, both domestically and internationally." --- (DIS, earning call, 2024/Q2)

Future of digital streaming in sports

The future of digital streaming in sports is marked by innovation and growth. Companies like Netflix are exploring interactive experiences, while YouTube sees massive viewership, indicating a shift towards immersive content. Additionally, Amazon's rising costs for NFL streaming highlight the financial dynamics shaping this evolving landscape.

"The show, written and executive produced by Ayer (Fast and the Furious, Training Day, Fury, The Beekeeper) alongside Chris Long and their Cedar Park Studios, is a bold next-generation storytelling experience that will combine elements of episodic streaming, gaming and professional sports, and will invite audiences to actively participate in virtual racing linked to the plot." --- (NFLX, press release, 2024/06/25)

"Turning next to YouTube, which continues to grow and lead in streaming. We announced that on average, viewers are watching over 1 billion hours of YouTube content on TVs daily." --- (GOOG, earning call, 2024/Q1)

"And lastly, we expect an increase in digital content cost quarter-over-quarter from the return of our NFL Thursday Night Football." --- (AMZN, earning call, 2024/Q2)

"So really what we're focused on here is focusing ourselves on that other 80% of total TV time that isn't going to either us or YouTube. So that's a ton -- even that's both streaming continuing to expand, which it did in June, so that share of TV time grew against linear." --- (NFLX, earning call, 2024/Q2)

The role of data analytics in broadcasting rights

Data analytics is increasingly vital in sports broadcasting rights, with companies like IBM and Amazon emphasizing the need for organized data to leverage AI effectively. Their technologies enhance productivity and fan engagement, shaping how broadcasting rights are negotiated and executed.

"Clients continue to prioritize large data and technology transformation projects focused on driving productivity with AI and analytics, which is also reflected in our year-to-year growth in Consulting signings this quarter." --- (IBM, sec filing, 2024/Q1)

"Andy Jassy : On the second part of your question, Brent, what I would say is that it's true in analytics, but it's even maybe more so true in AI, which is that it's quite difficult to be able to do AI effectively if your data is not organized in such a way that you can access that data and run the models on top of them and then build the application." --- (AMZN, earning call, 2024/Q2)

"We continue to see clients prioritizing large data and technology transformation projects focused on driving productivity with AI and analytics." --- (IBM, earning call, 2024/Q1)

"Companies are also starting to talk about the eye-opening results they're getting using SageMaker, our managed end-to-end service has been a game changer for developers in preparing their data for AI, managing experiments, training models faster, lowering inference latency, and improving developer productivity." --- (AMZN, earning call, 2024/Q1)

"IBM's longstanding portfolio of Sports and Entertainment partnerships aims to deliver on these expectations from fans by putting in the hands of our partners the most advanced IBM technologies from our AI and data platform watsonx. Other key study findings include:" --- (IBM, press release, 2024/06/26)