Sports Viewership Declines Seen Having Wide-Reaching Impact

Declines in sports viewership during the COVID-19 pandemic are a “cause for concern,” blogged Lightshed Partners Wednesday (password needed), saying sports viewership is “getting slaughtered” in the competition for time and attention. Sports leagues “may have to evolve their media strategies to avoid the more existential risks ahead for their partners,” said analysts.

The return of professional sports after a COVID-19 pause promised “massive ratings,” but the opposite occurred with viewership of the NBA and Stanley Cup finals, down 49% and 61%, said Lightshed. Meanwhile, engagement remains “elevated across video games and streaming platforms." COVID-19 accelerated trends including the digital economy and interactive media, and viewership declines could have wide-reaching consequences, “including a future that is less profitable for sports leagues, rights holders and distributors.”

Among possible drivers for sports ratings declines are lack of live audiences, a crowded sports schedule, competition from the 2020 news cycle, and some sports’ embrace of social issues, Lightshed said. As life returns to “normal,” it doesn’t expect sports viewership to return to pre-2020 levels, noting trends were in progress pre-COVID-19 when NBA ratings declines lengthened to 12% from single digits in 2019. The 49% NBA Finals drop this year followed back-to-back double-digit viewership declines, it said.

Television is the economic foundation of sports, and the associated rights packages are at the center of every league’s strategy, analysts noted. Even amid cord-cutting trends, the relationship has continued to the “near-term benefit of the leagues and their stakeholders.” Networks have been able to focus advertisers on sports ratings, "which have generally held up far better than non-sports entertainment television programming,” Lightshed said. That relationship will be further solidified when the NFL completes rights renewals in the next several months, with annual media rights expected to climb from $8 billion to $13-$14 billion and Sunday packages doubling to $2 billion each, it said.

Significant changes in viewership “will have a cascading affect -- hampering advertising revenues to the detriment of networks and accelerating affiliate fee declines,” Lightshed said. Sports could face smaller audiences and bidders that can no longer afford national or local sports rights, they said. Current struggles of some regional sports networks could portend bigger problems facing leagues and teams, they said.

The assumption that tech platforms will eventually become bidders for sports rights, along with Disney’s ESPN+, may not play out, analysts said: “While Amazon has dabbled with some rights, there has been little evidence the tech giants believe buying sports rights at scale makes economic sense,” and “smaller audiences are not going to help make the case.”

The growing popularity of subscription video on demand, meanwhile, at the expense of cable and satellite TV subscriptions, could take the casual fan away from the sports world, analysts said, noting cord cutters “rarely stumble across live sports content the way you do with legacy cable/satellite experiences.”

Video game engagement is up “massively” in the number of players and time spent, Lightshed said, noting games provide immediate satisfaction for interactivity and social connection. “The result has been the rise of deeply social but more casual games across platforms, such as Among Us, with appeal beyond who we think of as ‘gamers.’” Livestreaming on Twitch and other services has nearly doubled year on year, with non-gaming categories having the most dramatic rise: “Communities continue to form around streamers," it said.

Leagues and broadcast partners have to evolve with new ways consumers can experience sports, said Lightshed. It referenced experiments with sports betting-focused broadcasts and influencer-led content on interactive platforms. Local broadcast may have to move “off cable and onto more widely distributed platforms,” it said. This year’s dramatic ratings declines for sports shouldn’t be dismissed because of the unique challenges of 2020, analysts said: They should serve as a “wakeup call to networks, streamers, leagues, teams and players.”