Live sports and entertainment programming, its value long enhanced by technological advances in content distribution, is facing an increasingly turbulent future. Over the last two decades, content providers and media distributors have relied upon live events as the bedrocks of ratings, buy rates and ad sales. The growth of the Internet and wireless only seemed to enhance the value of live events, all safely embargoed by pay and broadcast distributors as the last bastions of appointment television.
Now, the walls are being breached. However, the most immediate threat to live sports content isn’t coming from the advent of over-the-top channels and the increasing urge to unbundle, as these trends offer valuable though complex routes to further enhancing programming value across a range of screens. The most immediate technological hit to live content is emanating from smartphone apps. This year’s introduction of Periscope and Meerkat, two apps that let users live-stream video from their phones’ cameras onto their Twitter feeds, threatens to upend a range of media distribution business models and strategies that depend upon the exclusivity of live sports content.
Meerkat and Periscope were formally introduced to the marketplace this past spring, with the bulk of their videos being personalized, public domain and noncontroversial. However, since smartphone video cameras can just as easily be deployed inside an arena or stadium, or in front of a television screen, these apps can and have been used to offer live, unauthorized broadcasts of events to Twitter users worldwide. Almost overnight, virtually anyone can easily transmit valuable content without expensive equipment, technical knowledge or permission.
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Smartphone apps let users live-stream video from phone cameras onto social media feeds.
Photo by: GETTY IMAGES
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The advent of these apps may not be much of an issue for widely distributed telecasts. Networks like ESPN, FS1, YES and CSN are easily available on a range of screens, and viewers at the margin would prefer to watch games and events in HD on flat screens vs. second-generation transmissions on iPhones. However, when televised events are high-priced and/or limited in distribution, pirating live programming via these apps becomes more tempting and can become highly disruptive to the following businesses and strategies:
■ Pay-per-view events: Relatively expensive single-screen events like championship boxing, UFC and WWE are vulnerable, since at the margin, viewers may increasingly forgo a high-priced buy in favor of a free screen. As the Mayweather-Pacquiao fight demonstrated, one viewer can buy the event and point their video camera at the screen, while many others can watch it on their Twitter feeds.
■ Crowdsourced gamecasts: One attendee live-streaming from a baseball game may not be much of an issue, and MLB has already said so. But what if hundreds of attendees do so and Twitter users can watch a crowdsourced event for free from hundreds of angles?
■ Out-of-market sports packages: If Meerkat and Periscope users point their smartphone video cameras at home market telecasts, displaced fans would be able to watch these out-of-market games without having to pay for out-of-market packages.
■ In-market streaming: If leagues, teams and RSNs are unable to reach agreement on the in-market streaming of home games, then a Meerkat/Periscope-equipped marketplace could impose its own solution just by aiming smartphones at local telecasts.
■ Network-distributor disputes: Negotiations between networks and distributors often hinge upon the threat of withholding live sports and entertainment event programming from subscribers. However, in a Meerkat/Periscope world, what’s to stop viewers in other markets from streaming the withheld programming and breaking the embargo?
The usual response to all of the above scenarios is to prosecute, but what happens when the pace of technology outstrips the legal system? Properties, programmers and distributors can threaten legal action against apps and their users, but that’s just what was done with Napster and YouTube, with sub-optimal results. HBO and Showtime began approaching Twitter before the start of the Mayweather fight to pull down illegal feeds, and Twitter complied. Yet as the music and movie industries discovered, pulling down illegal feeds is a never-ending game of Whac-A-Mole. Dozens of feeds sprung up during the PPV telecast with one being watched by 10,000 users, because it’s easy to set up these feeds and for banned users to set up new accounts and go back online.
What about shutting these apps down? Other similar apps are being launched, as well as higher-quality smartphone video cameras and screens to enhance viewing. Live-streamed smartphone video is here to stay. Resistance, at least by itself, is futile. To get ahead of the curve, all parties involved have to change their behaviors to keep pace with technology, prevent legal harm and stop the erosion of ratings, revenue, business models and copyrights:
■ As did YouTube, Twitter will have to demonstrate that it is willing to aggressively support content providers’ copyrights and may need to evolve into a content provider — acquiring and developing its own marquee events that drive usage and sponsorship revenue.
■ Content providers should be using these apps as important new distribution platforms for sports and entertainment content. NBC, Fox and a range of sports properties have already begun offering pregame and postgame shows, press conferences and behind-the-scenes interactive tours that turn smartphones into extensions, rather than substitutes for multiplatform experiences.
■ Properties and distributors need to aggressively accelerate their TV Everywhere and OTT plans by offering up multiscreen programming at attractive price points that reduce the appeal of illegal single-screen retransmissions, actions that will also address the erosion of pay TV bundling.
Ultimately, the media business is built upon volatile technologies and audience behaviors that can change within a daypart. While prosecution has its place, the real challenge is to continually reinvent the business as these changes come upon us. For live sports and entertainment telecasts, the changes have arrived and the time for reinvention is now.
Lee H. Berke (lhberke@lhbmedia.com) is president and CEO of LHB Sports, Entertainment & Media. Follow him on Twitter at @LHB_SportsMedia.
