As Betting Expands in TV Sports, Latency Could Limit Possibilities: LightShed

Sports leagues, facing flagging TV viewership, have placed hope in sports betting “to help secure the future of engagement, the value of rights and open new avenues of monetization,” LightShed Partners wrote investors Tuesday.

With more competition for consumers’ attention, “even historically resilient sports TV viewership has been hard hit over the past year,” which LightShed analysts called surprising, since “most consumers were stuck at home” during COVID-19 lockdowns. “With viewership fading and linear TV demographics aging up fast, the pace of advertising dollars shifting away from TV toward digital will undoubtedly accelerate," they said.

Sports wagering could change that trajectory. State-by-state legalization of sports wagering is expanding the total available market by making it easier to bet, especially on mobile devices, analysts noted. More engagement with linear sports TV would be positive for advertising and boost the long-term value of sports rights, even as cord cutting accelerates, they said.

A “far bigger benefit” to sports media from legalized sports betting appears to be “micro-wagering” -- enabling audiences to bet in real time on upcoming action, such as whether the next play in a football game will be a first down, LightShed said: That would “meaningfully increase time spent with live sports media.” Simplebet has been working with FanDuel to enable micro-wagering with free-to-play games for the NBA and NFL, they noted.

But technology isn’t there yet due to latency, said LightShed. Analysts cited a “significant delay” between broadcast TV over cable and satellite vs. over-the-top video streaming, “on top of a delay between what is happening on the field and the broadcast feed itself." Lags were significant and varied among CBS’ streaming app, YouTube TV and fuboTV during the Super Bowl last month, they noted.

Phenix, a startup focused on real-time video transmission, has technology that addresses latency, LightShed said. “Without enabling Phenix technology or dramatically improving their own technology, it is hard to see how [virtual] MVPDs have any role to play in sports micro-wagering,” they said. During the Super Bowl, latency between when the play occurred in real time and when it was viewed on fubo was 45 seconds, vs. Phenix’s technology at under half a second, they said.

Following a year of continual discussions about COVID-19 accelerating trends, “we fear these viewership declines could also be exactly that for sports, with wide reaching consequences -- including a future that is less profitable for sports leagues, rights holders and distributors,” said LightShed analyst Brandon Ross. “The leagues may have to evolve their media strategies to avoid the more existential risks ahead for their partners.”