Sunday 16 December 2018

TV still rules sport, but tech firms will look to enter field

Irish households now have three pay-TV sports offerings - Sky, eirSports and Virgin Media Sports. For some sports-mad households this could mean a whopping €172 a month if they want to cover all bases. Stock picture
Irish households now have three pay-TV sports offerings - Sky, eirSports and Virgin Media Sports. For some sports-mad households this could mean a whopping €172 a month if they want to cover all bases. Stock picture

John McGee

With the World Cup now a distant memory and the All-Ireland Championships in full flow, it's been an exciting few months for sports fans. With the summer soon coming to a close - yes, the 'back to school' ads are starting to appear - sports fans looking forward to an action-packed autumn and winter will need to do their sums when it comes to choosing pay-TV sports channels following the imminent arrival of Virgin Sports in September.

This means Irish households now have three pay-TV sports offerings - Sky, eirSports and Virgin Media Sports. For some sports-mad households this could mean a whopping €172 a month if they want to cover all bases.

Clearly, there is a huge appetite for watching live sports in Ireland. Figures from Kantar Media's TGI 2017 study, for example, show that 77pc of adults have watched live sport on TV in the past year. While this is down from 89pc in 2014, it is still a sizeable chunk of the population.

When it actually comes to watching a particular sport on a regular basis - as opposed to just big-ticket events like a World Cup final - the Kantar Media figures show that 22pc of adults watch football, followed by rugby at 18pc, Gaelic football at 17pc and hurling at 13pc. Golf, meanwhile, is watched by around 7pc of all adults, according to Kantar.

"Live sport and unscripted TV in general has never been as popular. In an increasingly online, and possibly unreal, world people are seeking out more and more real experiences. Sport delivers that," says David Hayes, joint managing director of the GroupM agency Wavemaker. "So, with more and more televised live sport and more and more viewers looking to watch sport it's a bonanza for broadcasters.

"Almost one million people, for example, watched the England World Cup semi-final; it's very difficult to get any programme these days to deliver those type of numbers. Traditional TV content such as soaps, news and current affairs are in decline and under threat.

"Sport, however, is one of the few TV genres that is showing growth. The amount of sport that is going behind pay walls is a concern, as it will inevitably limit the widespread appeal that sport has on free-to-air. I wonder how many people would have watched the England game if it was not free-to-air?" says Hayes.

Unfortunately for most sports fans, the free-to-air concept may soon become a thing of the past as pay-TV broadcasters - most of which are owned by large multinational telecommunications and entertainment behemoths - fall over themselves in the race to acquire TV rights in the hope of wooing new customers to their platforms while, at the same time, reducing the churn by locking in existing ones.

The race for sports rights has led to rampant inflation in the wider marketplace. In the case of the English Premier League for example - often regarded as the litmus paper by which rights are viewed - the cost of TV rights has spiralled by a staggering 2,500pc since they first went on the market in 1992.

By the time the last round of negotiations closed for the period 2016-2019, the English Premier League managed to raise £5.13bn from TV rights. That's a lot of money to claw back from subscribers and advertisers.

But the question has to be asked whether or not the pay-TV model is there to be disrupted by upstart players like Amazon or Facebook.

Earlier this week, the UK regulator Ofcom, for example, reported that the number of UK subscriptions to streaming services such as Netflix has overtaken those to traditional pay-TV for the first time, marking a major shift in viewing habits.

According to its Media Nations report, pay-TV revenues declined for first time, by 2.7pc to £6.4bn. In contrast, the increasing number of streaming subscriptions contributed to a 28pc growth to £2.3bn in 2017, Ofcom noted. In the US, meanwhile, pay-TV revenues are forecast to decline by 26pc to $26.6bn between 2015 - when they peaked - and 2023, according to the North America Pay TV Forecasts report.

This, of course, has not gone unnoticed by hybrid mediatech companies like Amazon and Facebook which have considerable live-streaming expertise and capacity. Both have already dipped their toes in the live streaming of sporting events and once they figure out how to monetise it, all bets may well be off.

"Live streaming is a godsend for rights-holders. The big advantage of live streaming is that you can just about stream any event to any audience size," says Hayes.

"For rights-holders this is a fantastic way to engage further with your fanbase and expand the footprint of your franchise. For the likes of Facebook, in particular, live streaming of sporting events offers huge potential and a possible lifeline. Facebook badly needs content on its platform that is more engaging and that will make people spend more time with it.

"I don't think live streaming is an immediate threat to traditional broadcasters. However, both Facebook and Amazon are considerable adversaries so if I was a broadcaster I wouldn't welcome them onto my front lawn," he says.

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business