TV Sports World Struggles to Balance Pay-TV, Digital Models, Panelists Say

Shorter attention spans, competition for entertainment time share and continually rising rights fees are ongoing challenges as the TV sports world straddles traditional pay-TV and over-the-top video models, said panelists on a Thursday FierceVideo webcast on TV monetization in the sports industry.

“It’s a tough world out there,” said Pete Scott, WarnerMedia vice president-emerging media and innovation. Content providers are competing against “time and attention” and increasingly trying to create “hyperpersonalized” information for individual viewers to keep them engaged, Scott said.

Competition for viewing hours -- from video games and user-generated short-form content -- contributed to lower viewing engagement for the Summer Olympics, which traditionally has been a signature prime-time viewing event for NBC, panelists said. The average prime-time viewing audience was about 15.5 million, said nScreenMedia analyst Colin Dixon, compared with an audience about twice that for the 2008 Summer Olympics in Beijing, which “takes out the time zone issue.”

Part of the decrease was due to a dramatic decline in pay-TV subscribers -- about 25 million to 75 million -- in the past 13 years, Dixon said. NBCUniversal revealed that the number of streaming minutes bumped up to 5.5 billion, but Dixon noted the company didn’t provide the number of unique viewers. “There’s just other choices for people to make,” said Scott. “If you can’t do the stories, do the features like they’ve done in the past,” he said, “it’s hard to get people to engage and want to be part of the event.”

The drop in Olympics viewing followed a “tremendous decline in all sports ratings,” even the NFL, said Kosner Media President John Kosner. Putting events on tape delay when results were widely available on Twitter, along with commercials, contributed to fewer viewers, he said. “Everyone who cared knew the results,” he said, citing Twitter’s impact. Empty stadiums due to COVID-19 restrictions also affected the environment for certain sports like gymnastics, as did Simone Biles’ withdrawal from several events, he noted.

The drop in TV viewing hours isn't confined to sports; the drop is even more “precipitous” for entertainment content, where the shift to streaming meant consumers have been able to watch more programs without commercials. “Now, you’re turning on the Olympics, which is chock full of commercials,” and Olympics viewing for younger demographics “dropped off the table,” he said. Sports “are not able to escape all of the key trends that are affecting consumer behavior today.”

NBC’s expansion to streaming with Olympics coverage on Peacock was confusing to viewers, said Kosner. “The plan for Peacock may well have made sense to the folks at NBC; I didn’t think it was easy to follow for most sports fans,” he said. If programming isn’t easy to figure out, “people have alternatives.” It was a good business decision to put men’s basketball on the premium version of Peacock, but it made it difficult to find one of the most popular events of the games, he said. NBC used the Olympics as a business opportunity to get viewers to sign up for Peacock Premium, but “if it takes two or three or four clicks to do something, it’s almost like, OK, this is too difficult for me to find,” Scott added.

In the current landscape, content providers have to distribute to traditional and digital venues because they’re still making money under the traditional model while trying to experiment with digital, Scott said. Advertisers are still spending the money for the exposure to traditional audiences, despite fewer viewers, he said, as they try to reach a balance. The viewer “is the one that suffers” as companies try to put together puzzle pieces of existing and future business models, he said.

Sports remains a strong magnet to bring viewers to TV, as indicated by Fox’s upcoming rollout of 10 livestream sports channels with highlights, studio content and original programming on its free Tubi ad-supported VOD service, said Kosner. It’s possible, too, that AVOD platforms “could make rights acquisitions in sports just as a way to bring audiences in.” Currently, sports are “what’s keeping the lights on within the traditional, linear television business,” he said, saying he expects to see more sports this fall on broadcast and pay TV.

Amazon has used sports to drive Prime memberships with its 10-year NFL agreement for Thursday Night Football. Amazon paid top dollar to get into the NFL -- “probably the sports business story of the year,” Kosner noted. “It’s not clear that the company is going to be a big rights buyer going forward,” he said. Amazon can afford it “because they sell a lot of paper towels,” said Scott. “They’re making a lot of money in other parts of their business to be able to afford these rights.”

Scott considers sports betting’s impact on the market as something “that helps people stay,” comparing it to fantasy football. Disney owns 6% of DraftKings, and Fox owns a large percentage in FanDuel, he noted: “They’re smart. They’re making bets to be associated with betting,” following trends. In two or three years, 80% of the population will have access to betting, he said. Consumers in states with legal betting will see “a zillion ads” over the next few weeks trying to pull them into a betting service, he said.

Kosner was more skeptical about sports betting’s role in the salvation of TV sports. Though the big money now is in sports betting and streaming, “I believe a lot of the audience doesn’t care, and it’s off-putting,” he said, saying some issues will crop up with the increased focus on betting. “It does play to over-the-top and streaming because there’s going to be a demand to have a variety of alternate experiences,” such as megacasts for those interested in betting, he said. He doesn’t see a large market for betting via TV streaming among sports fans.

On the competition for viewers’ eyeballs, Andelan Ventures CEO Jeff Allen said as the world moves to digital, content gets chopped up into people’s attention spans. Streaming providers aren't competing with each other in that category; they're competing with “the time that people have to do other things” such as video games, which takes up a significant part of their time. That’s particularly true for younger audiences, he said.

Kosner observed the “almost unlimited supply” of free, interesting content available on the internet on TikTok, Instagram, YouTube and Snapchat. The phenomenon of user-generated content with an audience of creators is “siphoning away a lot of interest.” Also, time spent with video games isn’t just about playing them but also about watching professional gamers. The audiences for Twitch and YouTube gaming content have been rising steadily as TV ratings decline, he said.