SBJ/Aug. 4-10, 2014/MediaPrint All
It’s the platform that most frightens today’s major distributors and programmers of prime-time television, but also excites executives from most of the major sports leagues.
New offerings from Netflix, Hulu, Apple TV, Roku and a slew of others offer top entertainment programming directly to consumers. It’s easy, on demand, and threatens to shake up the traditional marketplace for the major distributors.
It even fits into industry jargon: OTT — or “over-the-top” — programming that is digitally delivered and does not require a companion cable or satellite TV subscription. A cable industry already terrified about cord cutters is now seeing more OTT services appealing directly to the consumer.
Over the last five months, OTT has crossed over in a major way into sports, first with the ambitious launch of WWE Network and followed by the debut of 120 Sports in June. Later this week, the NFL is expected to roll out NFL Now, a customizable offering that will mix news-oriented material with game highlights and archival material; next month, ESPN and ESPN2 will be part of an OTT service from Dish Network that will be sold to 8 million broadband-only customers; and next year the International Olympic Committee could launch its version of an OTT service internationally (see related story).
Many of the major U.S. sports leagues, notably MLB, the NBA and NHL, also offer their out-of-market game packages to digital-only subscribers, and ESPN is planning to sell MLS’s out-of-market package in a similar fashion.
The advent of the new digital services are each designed to allow leagues to extend their brands, bypass the middleman and take their content directly to fans.
While Netflix and Hulu have been effective at disrupting the status quo of entertainment programming, questions persist about whether sports offerings will have a similar effect on the business, particularly since these initial entries do not include live, in-market game rights.
Previous ventures — think ESPN3 — were viewed as complementary to the established TV business. So, too, is WatchESPN, FoxSportsGo and NBC Sports Live Extra, each of which requires users to prove that they subscribe to a pay-TV service before allowing access to live digital streams.
But the OTT offerings are fundamentally different, and the digital landscape has become powerful enough that large-scale OTT efforts now present potentially more troubling questions. Will OTT take away viewers from established networks? Will it cut into networks’ ad revenue? Will the rise of OTT present the beginning of the end of the golden age of cable TV?
Not surprisingly, most sports programmers don’t believe so, but the industry remains years away from knowing for sure.
“Over-the-top is not a threat,” said ESPN President John Skipper. “Ultimately, it will be an opportunity for us.”
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Later this week, just before the first slate of NFL preseason games, NFL Now will launch directly to fans with plenty of on-demand content, highlights, news segments and features, delivered to a wide array of online, mobile and streaming platforms — including Xbox and PlayStation video gaming devices, Roku and Amazon’s new Fire TV.
The NFL is positioning NFL Now as a complement to
How the service will play out remains unknown.
“Because this has never really been done, you don’t know exactly how it’s going to turn out,” said Perkins Miller, the NFL’s new chief digital officer. “But there’s a great foundation of content from the teams and the league, and the fans obviously have a voracious appetite for NFL content.”
Miller particularly refutes the notion that it could be disruptive to current league partners. “Looking at what we’ve already done in mobile and social media, it’s been a situation of a rising tide lifting all boats in terms of overall consumption,” he said. “Our data supports this, and we would expect the same here.”
The league’s existing media partners, however, were unaware of the service until it was announced during Super Bowl week; in fact, none of them were at the announcement at New York’s Marriott Marquis. NFL Media COO Brian Rolapp has tried to ease concern, saying recently, “It is designed to be complementary to NFL Network, NFL.com and our other assets. A rundown of the top television programs each year proves there is no substitute for live NFL football, and NFL Network and the league broadcast partners are the only sources for that coveted programming.”
The NFL’s Perkins Miller said NFL Now will help satisfy fans’ “voracious appetite” for content. He refutes the notion that it could be disruptive to current league television partners.
Photo by:MARC BRYAN-BROWN
So far, big-market clubs have opted to sell advertising around the digital programming service on their own, even though some clubs have opted to sit on the rights rather than actively market them.
“It’s pretty tough for me to sell a new asset if I don’t know how many eyeballs it will get or exactly what it will look like,” said a senior marketer at a team in a top-10 market. “But we’d rather have control of it, even if it means we are taking more of a wait-and-see attitude.”
Smaller-market NFL teams have veered more toward the shared-revenue option, with league executives pricing the NFL Now inventory at between $30 to $40 per thousand ad views (CPM), a level that is between a typical YouTube video ($25) and a Hulu video ($35), industry sources said.
Other pre-launch issues between the leagues and teams for NFL Now required sorting out over the offseason. After initial questions from many clubs, the league supplemented its weekly content submission requirements to allow particularly long segments to count more against baseline obligations, and is allowing teams to post any content it creates for NFL Now on their own websites as well.
“This platform has incredible potential to further engage NFL and Falcons fans and also creates a platform to reach a younger demographic on their schedules and their devices,” said Jim Smith, Atlanta Falcons executive vice president and chief marketing and revenue officer.
The desire to engage younger consumers and react to a fast-changing media marketplace and audience also lies at the root of the birth of 120 Sports, the new service involving Silver Chalice New Media, MLB Advanced Media, Sports Illustrated and the NHL, among other sports entities. An unusual marriage between multiple sports leagues, a brand best known for its print publication and a side venture of the Chicago White Sox, 120 Sports is specifically designed for the short attention span of young viewers. Each segment is designed to be 120 seconds or less, hence the name, and the digital video is supplemented with adjoining “data cards” that provide statistics, headlines, advertising and other material.
120 Sports, backed by multiple sports entities, is specifically designed for the short attention span of young viewers.
It’s had strong initial sponsor support, launching with Geico, Verizon Wireless, Nissan and Transamerica. In addition, like many of the other major sports OTT launches, 120 Sports has been backed with a multimillion-dollar marketing launch campaign, driven by the venture’s equity partners. Initial activation has included print and digital ads across the broad portfolio of Sports Illustrated parent Time Inc., a billboard near Madison Square Garden and widespread subway ads in New York, and an outfield sign at the White Sox’s U.S. Cellular Field, among other activities. Nightly live programming was soon supplemented by a regular live morning show that adds to the available on-demand content.
“We’re not looking to displace or disrupt anyone,” said Jason Coyle, Silver Chalice co-founder and vice chairman and 120 Sports president. “We need to find our own niche.”
Because the venture has direct involvement of multiple leagues, Coyle said 120 Sports will fundamentally differ from many other OTT ventures and actively promote the availability of live sports programming on regular TV. For example, an in-game highlight segment will include directory information on where fans can find that game being televised, and outside online content will be directly linked from 120 Sports.
“We need to take great care to not interfere with the core business of our partners and find a complementary place,” Coyle said.
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If they truly are going to be successful, OTT services will have to siphon viewers from the established networks that are paying hundreds of millions in rights fees.
It’s clear that some competitive positioning already is occurring.
When the owner of the Capitals, Mystics and Wizards held a sponsor summit in Washington, D.C., several weeks ago, most of the conversations revolved around its OTT service, Monumental Network. There was talk of programming, advertising opportunities and technology.
The teams’ main local TV rights holder, Comcast SportsNet, was barely mentioned.
“Now, especially for young people, it’s important that you create, craft and think digitally and socially,” Monumental Sports Chairman and CEO Ted Leonsis said at the event. “The other media are important, but a part of that mix.”
A similar scene played out during Super Bowl week at the NFL’s press conference to announce its NFL Now service. The league’s TV partners — the ones that pay the NFL more than $5 billion per year — were not mentioned, underscoring the belief that these services already are built to compete with established players.
ESPN’s Skipper said that he already has had several discussions with the NFL, NBA and MLB to outline where he thinks their OTT services are competitive and where they are complementary.
“We have coexisted nicely to date with the leagues who have wanted to have some of their own media properties,” he said. “It’s always a little bit of a dance where the appropriate complementary nature is and where it becomes competitive.”
Photo by:GETTY IMAGES
“To the extent that the leagues create more interest, we tend to benefit more than anybody because we have the most content,” Skipper said.
So far, the general view among TV executives is that OTT services based on highlights and interviews do not
“With what the over-the-top services are currently offering, they are not going to drive much viewership,” Skipper said. “My concern is where people become invested in their success and they decide they have to keep putting more and more compelling content on until it gets to where it is potentially a problem.”
Distribution executives hold a similar view, and several such executives largely seemed to be ignoring the launches of 120 Sports and NFL Now. Distributors are never shy about railing against programmers that give their content away online. But they have not noticed a lot of activity around 120 Sports, and they are not expecting NFL Now to threaten their video business, at least not yet.
“Distributors never talk about them,” one cable executive said. “It has never once come up with me.”
The lack of interest among cable and satellite operators is surprising given the long history of tough negotiations they have had with sports networks. It’s also a surprise given how much time and effort they are spending on trying to figure out how to counter entertainment-based OTT services such as Netflix and Hulu.
Former NFL media executive and current industry consultant Chris Russo understands the distributors’ viewpoint. He does not believe OTT services will encourage consumers to drop their pay-TV subscriptions.
“Sports is providing a valuable proposition to cable and satellite because it is keeping its core live product there and preventing a lot of cord cutting,” Russo said. “For right now they are going to be able to have their cake and eat it, too.”
The current OTT programming is basic and no in-market live games are planned yet. The offerings clearly seek to take advantage of the shifting media consumption patterns and follow the lead paved by the success of Netflix and Hulu — that is, to engage younger consumers that are using digital platforms.
Jimmy Lynn, a co-founder and vice president of Kiswe Mobile, said mobile and OTT services are the most direct strategy to reach younger fans.
“One situation facing the major leagues is the youth market,” he said. “They are losing the youth market because there are so many mobile devices, social networking and gaming.”
The question remains if this heavy pursuit of new digital viewers also means losing — or upsetting — the traditional business models.
Staff writers Terry Lefton and John Lombardo contributed to this report.
Even for a property that subsists on story lines constructed for maximum drama, the World Wrestling Entertainment’s initial experience with its OTT WWE Network has been tumultuous.
WWE announced the initiative to grand spectacle in January at the International Consumer Electronics Show in Las Vegas. Backed by the video streaming infrastructure of MLB Advanced Media and priced at $9.99 per month with a minimum six-month commitment, the WWE Network debuted Feb. 24 with a 24-hour-per-day feed of live and on-demand wrestling programming to online, mobile and connected TV devices. Programming included all of its series of pay-per-view specials that typically cost $60 each.
WWE Network has grown to 700,000 subscribers.
The main factor in Wall Street’s reaction was the negative impact the digitally focused WWE Network had on its traditional TV business. Soon after the debut of the online service, WWE announced a new TV deal with NBC Universal that delivered only a 50 percent increase in its prior rights package, far less than investors anticipated.
Second-quarter earnings announced last week did not do much to reverse Wall Street opinion. WWE disclosed that the WWE Network has grown to 700,000 subscribers, representing minimal net growth since early April and also a sharply increasing amount of user churn. WWE is still pressing forward with its broad redefinition of its media model. Among the coming moves are an aggressive international expansion that will bring the service to more than 170 countries and territories and a new pricing plan that will offer a $19.99 per month option with no minimum commitment.
“This is a really big deal for us. We’re essentially talking about the transformation of the company and how our fans consume our content,” said Michelle Wilson, WWE chief revenue and marketing officer, of the WWE Network. “There’s not really a direct comparable out there. To have a paid, 24/7 OTT channel out there with both live and on-demand programming, and available across so many different platforms, that’s not really been done.”
Because WWE was the first out of the box in offering a full-service, 24-hour OTT sports network, it also has some of the first glimpses into its actual consumption patterns. More than 90 percent of WWE Network subscribers have logged into the service at least once a week, more than initial company projections that suggested a higher percentage of consumers would use it simply as a cheaper means to watch pay-per-view specials.
The Xbox and PlayStation gaming consoles have been the most popular platforms to access the service.
In addition, WWE internal research has found wrestling fans consume five times the amount of digital content as an average consumer and are twice as likely to subscribe to Netflix or Hulu Plus. And customer polling has found 90 percent of subscribers either somewhat satisfied or extremely satisfied.
When Ross Greenburg left HBO Sports in July 2011, the normally upbeat executive sounded as down as I’ve ever heard him.
He had just gone through a series of bruising boxing negotiations that led to HBO losing the Manny Pacquiao-Shane Mosley bout to Showtime. In an exit interview at the time, Greenburg pointed to those negotiations as the main reason for his departure from a network where he had spent 33 years.
“Boxing just got to me,” he said wearily.
Fast-forward three years, and Greenburg’s demeanor has completely changed. He got into the business to produce, and that’s what he’s doing now. He certainly seems more energized, especially when he talks about his upcoming projects, documentaries from “Forgotten Four,” on the integration of the NFL, to one on Jack Nicklaus for the U.S. Golf Association.
As for boxing, nowadays he only dabbles in the sport as a consultant to Stephen Espinoza, executive vice president and general manager of Showtime Sports.
“It’s more as a consult to help Steve through the maze and the mess that is negotiations for boxing,” Greenburg said last week. “It really doesn’t take up the percentage of time for me that would wear me down. I don’t have to get in the middle of the fights in the boardroom. That’s been really a nice part of this new world that I live in.”
As his Ross Greenburg Productions comes up on its third anniversary, Greenburg has been able to concentrate on the part of the business he truly loves: producing documentaries and reality series.
Trading on his relationships and reputation, Greenburg’s slate of productions is as full now as it was when he was running HBO, averaging about three or four documentaries per year and some reality series. Greenburg has produced docs for networks such as NBC Sports Group and Showtime and leagues like the NHL and USGA.
He’s even had conversations with ESPN about potential “30 for 30” topics, meeting with ESPN Films executive producer Connor Schell and producer Libby Geist. “I threw out some ideas,” he said. “Hopefully, one of them will hit.”
Greenburg already had plans to launch his own production company before he left HBO Sports. As a guide, he looked to Don Ohlmeyer Productions, the company run by the legendary broadcast executive that was behind “The Skins Game” and “The Superstars.”
“When he left NBC, Don went into the live world, which was his forte, and put together a heck of a company,” Greenburg said. “I’m hitting different programming genres, some of them didn’t exist back then, like reality programming. He built a huge business. I’m not there yet.”
Greenburg still isn’t sure that he wants to get there. While he’s open to growing his business, he said he appreciates the “boutique mentality” that he currently has with his company.
“If you spread yourself too thin, you can wear away at the quality of the product,” he said.
Greenburg was the most energized when he discussed “Forgotten Four,” a documentary he is producing for the premium channel Epix. It tells the story of the Los Angeles Rams’ Woody Strode and Kenny Washington and the Cleveland Browns’ Bill Willis and Marion Motley — African-Americans who started in the league in 1946 — a year before Jackie Robinson put on a Dodgers uniform in Major League Baseball.
Pro Arts Management executive Wes Smith came to Greenburg with the idea of a documentary on the history of African-Americans in pro football. Smith is the executive producer for the film, which debuts on Epix Sept. 23.
“When I found out that there were these four icons who had busted through in pro football, I said, ‘My gosh, what a story. We have to end the story right there. I don’t want to take it into the 1960s,’” Greenburg said. “I knew that I picked a gem.”
In catching up with Greenburg last week, it was easy to see that he was doing what he loves to do. Topics didn’t stray to boxing or corporate politics. He was just a producer talking about his films.
“My first love is to produce — whether it is reality shows or documentaries or any live productions that would come along,” he said. “I knew that was what was in my heart. That was how I started in the business.” n
John Ourand can be reached at email@example.com. Follow him on Twitter @Ourand_SBJ.