Four OTTs. Four strategies.
When it comes to the future of streaming services, media executives are completely aligned. They all have bold predictions for how big these services will grow.
There’s much less agreement, however, on the best way to deploy a direct-to-consumer business. For every streaming service offered these days — and there are a lot of them — there seems to be an equal number of strategies media companies are using to develop them.
To highlight these differences, Sports Business Journal picked four of the most popular streaming services that are approaching the market in four different ways.
ESPN is relying on sheer volume for ESPN+. Turner Sports is not as active in picking up live sports rights for its B/R Live platform as ESPN is for ESPN+. But Turner wants to enhance its offerings in areas such as gambling to keep consumers coming back.
NBC is using NBC Sports Gold as an extension of its linear TV relationships, providing games that don’t fit on NBC or NBCSN’s schedules. And DAZN has depended primarily on boxing matches to expand its audience until more substantial rights come to market in the next few years.
It’s possible all of these strategies will be successful. It’s possible all will fail. A successful streaming strategy is critically important to media executives, who want to make sure they stay ahead of the curve as these services get more popular. They view the migration of entertainment programming and music to digital as a potential road map for sports programming.
“It is the way sports will go,” said Joe Markowski, DAZN’s executive vice president of North America. “People are consuming content in a different way now. They’re not as tied to linear television.”
Rick Cordella, NBC Sports executive vice president and general manager of digital media, agreed.
“The media winds continue to shift pretty quickly, and everyone’s trying to figure out whatever it is, the next big media strategy,” he said. “We’ve been really surprised and surpassed our budgets on NBC Sports Gold each of the last two or three years. People are willing, they’re able, they know the product exists, they know where to find it and they want to spend money on it.”
By the time ESPN+ kicked off its first UFC card in January — nine months after the service launched — its direct-to-consumer strategy already had started to emerge. ESPN committed to buy as many rights as it could for its streaming service — from big properties including UFC and Top Rank to smaller ones like the Ivy League.
Combined with its ESPN linear channels, almost all of ESPN’s rights deals involve an ESPN+ component. As the cable and satellite business continues to lose subscribers, ESPN can use its direct-to-consumer service as a proverbial lifeboat where it could, potentially, move more substantial rights over to the service, or at least stream non-exclusive rights from there.
ESPN’s activity in the rights business has been substantial. The streaming service holds the rights to more than 12,000 live events per year. ESPN+ also focuses on non-game content with shows such as “Peyton’s Places” with Peyton Manning and “Detail” with Kobe Bryant. And it offers rich news and feature pieces through ESPN Insider, which was folded into ESPN+ in August 2018.
“The ESPN brand is what sets ESPN+ apart,” said Russell Wolff, executive vice president and general manager of ESPN+. “We’ve done a good job of carving out a must-have position in sports, whether it’s soccer or college sports or combat. If you’re a fan who wants more from MLB or NHL, we offer more than anybody else.”
It’s that relationship between ESPN and ESPN+ that Wolff said has helped the direct-to-consumer service grow. ESPN+ uses the marketing might from ESPN’s linear channel to drive subscriptions, which hit 2.4 million as of June.
“We were very purposeful about integrating ESPN+ into the ESPN app when we launched,” Wolff said. “We have a promotional window with ESPN linear television that is unique. We are running parallel paths with direct-to-consumer and TV and linear. That approach is creating flexibility and control over our future. We see them not only as co-existing but also strongly complementary.”
ESPN has found success through its $4.99 per month price point (see chart). Starting Nov. 12, ESPN+ will be bundled with Disney’s Disney+ streaming service and Hulu, which should help subscriptions grow even more.
“We’re really excited about what happens starting Nov. 12,” Wolff said.
B/R Live launched in March 2018 as a subscription service with games from the UEFA Champions League and UEFA Europa League. In the ensuing nine months, the service added sports programming from the National Lacrosse League and The Spring League.
B/R produced a pay-per-view golf match In November with Tiger Woods and Phil Mickelson that appeared to offer a blueprint for how Turner Sports planned to develop the service. But with AT&T assuming full control of Turner Sports’ parent, Time Warner, that strategy is changing.
“While we’re still committed to the idea of a platform and the idea of helping sports fans live in this fragmented world, we are pivoting to focus on the next step,” said Hania Poole, senior vice president of digital for Turner Sports and general manager for B/R Live. “For us, it’s going to be partially about those live sports rights because there’s nothing better for the top of the funnel. But it really is going to be focused on user experience.”
That includes more gambling-related content and services. It also means more free content that exists outside of B/R Live’s paywall, Poole said. Customers will pay for most content on B/R Live as part of its $9.99 per month fee.
“We’ve done a fair amount of free content, and we’re going to continue to explore that,” she said. “In some cases, it’s more valuable to expose the content and build viewership than it is necessarily to charge discreetly.”
To that end, Poole said Turner plans to merge B/R Live and Bleacher Report over the next two years. The fact that Bleacher Report and B/R Live are separate has more to do with the timing of the direct-to-consumer launch than any business strategy.
“Ideally, had we not been pressed for time, we would have always had kind of a live direct-to-consumer functionality within the Bleacher Report app,” she said. “Because of this need to speed to the market, we needed to be quick and launched two separate experiences. Now we’re in the mid stages of integrating those two experiences together under the Bleacher Report brand.”
NBC Sports Gold launched in 2016 to complement the sports programming that NBC has on its linear TV channels, including the Premier League and Olympic sports. The network launched NBC Sports Gold as a place to stream its overflow programming that did not fit on television.
“For the most part, we’re not out there buying our own digital rights,” said NBC Sports’ Rick Cordella. “Probably in the last 18 to 24 months, there’s not a deal we’ve done that hasn’t had a Gold component to it. A lot of the leagues are looking for a place to put their rights.”
As an example, Cordella pointed to PGA Tour Live, which had carried programming on its own direct-to-consumer service before NBC convinced it to move to NBC Sports Gold. From NBC’s standpoint, the deal allows the network to deepen its programming relationships with some of its most important league partners.
Cordella said the leagues also benefit from the arrangement. One of NBC Sports’ selling points for decades has been that NBC promotes league brands over its own. That started in the 1990s with the NBA on NBC and continues through today. That’s been a mantra for NBC’s direct-to-consumer service, Cordella said, pointing to golf. NBC Sports Gold’s golf offering is marketed as PGA Tour Live, not NBC Golf.
“That’s an advantage that we have with the leagues — we market their brands,” Cordella said. “We always try to put the league brand first, and I think we do that with Gold.”
NBC would not comment on how many people pay between $9.99 and $99.99 (depending on the sport) to subscribe to NBC Sports Gold. But Cordella believes the service has been helped by the promotion it receives from the broadcast channel. He pointed to the Premier League as an example.
“The fact is that every Saturday at 10 a.m. we’re saying, ‘Go watch NBC Sports Gold,’” he said. “We’re not limited in the cross promotion like you would be if you were required to be digital only. There’s some big advantages to that.”
NBC Sports Gold is unique in that it does not have a one-size-fits all strategy with pricing. It charges different prices for different sports (see chart).
“Depending upon the exclusivity and interest in a particular sport, we can price it high or low depending upon that particular fan base, and what we think makes economic sense,” Cordella said.
DAZN achieved success as a streaming service in Austria, Germany, Japan and Switzerland — its first four markets — by gobbling up big-time sports rights such as soccer that had been on linear TV. In Canada, where it launched in July 2017, it has the rights to the popular NFL Sunday Ticket package.
The United States is a tougher, much more saturated market. Rights deals with the bigger leagues are tied up long term. When DAZN launched in the U.S. last September, it did so with an Anthony Joshua-Alexander Povetkin boxing match, not with the NFL or NBA.
“We couldn’t jump in and immediately command a package of multisports rights like we did everywhere else,” said DAZN’s Joe Markowski. “So we needed to get creative.”
Boxing was the one sport that was not tied down in long-term packages, which attracted DAZN’s interest. Adding to the allure, the boxing audience already was used to paying for content through various pay-per-view events.
“Our strategy in the United States really is to use boxing as an entry point to establish ourselves in the market, make a lot of noise and generate a transactional relationship with a large audience of boxing fans,” Markowski said. “If we’re successful in doing that in the next 12 to 18 months, we will put ourselves in a fantastic position to make aggressive plays for a domestic top-three rights package when they come back to market.”
DAZN made a pricing change soon after it launched at $9.99 per month. It set up an annual pass of $99.99, which averages out to $8.33 per month, and upped its monthly offering to $19.99.
“We saw two distinct groups. The hardcore boxing fans who are going to watch all of our 100-plus fights,” Markowski said. “We wanted to reward their loyalty. The second set of consumers were more casual fans who came in for major fight nights and then stepped away. This group would have bought the pay-per-view package previously. We wanted to serve those guys at $19.99. We’re serving two masters with that pricing strategy.”