A Trillion Hours! Why Community Is The Game Behind The Games
Original Article: Medium, by John Kosner and J Moses, February 7th, 2021
Tonight, again, will be the Tale of Two Rooms.
In our living rooms, we will watch the Super Bowl, while jury rigging together a Twitter/Zoom solution (laptop in front of the couch) so each of us can interact with our friends during the game. Given latency issues for sports broadcasts offered by multiple distributors, we will not all be watching the same feed at the same time. Some of us will see, say, Patrick Mahomes’ TD pass as much as 30-seconds in advance of others. We will not be able to buy a champion’s hat as part of our hacked-together digital viewing party.
Meanwhile, in their bedrooms, our 13-year-old sons will be playing video games on their big screens or laptops as part of a fully-integrated platform – maneuvering, plotting, yelling and screaming at each other in real-time. A true modern community experience made possible by the game’s publisher. To understand why gaming is ascendant in our culture, especially among the young, look no further.
In our first piece published on Jan. 1, 2021, we wrote that the world’s fastest-growing game is … TikTok, and how gaming mechanics is building the most popular media property for young audiences. This is part of our broader POV that there is much that Sports, Media, Investors … all of us in business … can learn from games.
In part II of our series, we explore a key feature of the popularity of games: how they naturally promote and benefit from super-engaged communities.
Super Bowl Sunday is perhaps the biggest community activity day in our country. John Ourand of Sports Business Journal estimates that tonight, CBS will get 95.1M TV-only viewers (before approximately 5MM out-of-home and streaming numbers are added).
And yet, the shared “Watch Party” technology available to us right now is inferior. The pay TV industry has not advanced “TV Everywhere.” As we see with Games, now is the perfect opportunity.
The Games business is differentiated:
It engages its community in real time;
It enables its community to share in bits and bytes;
It mines its community to create stupendous value in virtual goods.
Achieving these three should be possible for Sports and Entertainment too. But both industries must figure out how to do them effectively.
Games publishers are fully vertically-integrated from an ownership standpoint. They own the code, the data and, in most cases, the customer singularly. The result: an end-to-end experience that lets gamers pick and choose what they want, engage with each other as they want – all in real time all over the world. For gamers, it is easy to share clips, purchase virtual goods and interact with celebrity streamers.
The resulting participant numbers in Games are mind-boggling as are the revenues. On an average day, concurrent usage for gamers at peak times is approaching 100MM globally. Per Newzoo, in 2020, Gamers (between community and streaming):
generated practically a trillion hours of activity! One trillion hours.
spent an estimated $79B on the purchase of virtual goods and other merchandise — a category that is growing 8% a year.
That’s a stark contrast with Sports. The sports broadcast (even the Super Bowl) remains (like the linear world in which we grew up) a “push” experience where we watch the game and then talk about it afterwards. COVID has eliminated traditional “water cooler moments,” at least for the time being (few of us will be headed into an office tomorrow morning to chat up our colleagues). Yes, through second-screen experiences like Twitter, Zoom, iMessage, Verizon Mobile, we can all talk about the games globally and watch and share highlights, memes, etc.
But it’s all actually and structurally limited, especially compared to games. For Sports, it used to be that showing the game was community. Now it is enabling fans not just to watch in real time but to do whatever they would like, in whatever-size group. But leagues and rightsholders are not inclined to give their customers to third part social networks and messaging platforms. You can find NFL clips of J’s favorite Steelers WR JuJu Smith-Shuster on YouTube ... but you are not permitted to share them.
The limiter is the historical approach to granting rights. We appreciate the issues — both for rightsholders and licensees — many of whom have, or are negotiating currently, long-term agreements in a period of accelerating change especially with younger audiences. But think about: $79B in virtual goods sales annually for Games. Sports gets about $0. The total cost of U.S. sports rights this year is approximately 25B. We think loosening the reins on sharing activity at the expense of traditional “exclusivities” is actually a win/win. Using the Super Bowl as an example, the NFL could jumpstart a significant new revenue stream with virtual goods and live in-game activities for purchase; CBS would benefit from a much more engaged audience, probably larger at the younger end.
Lessons to take away:
Like game publishers, Rightsholders need to vastly improve their co-viewing and sharing experience. That is the way to own and mine your customer. To start, imagine tonight’s CBS viewing experience with a “+” button where you could easily add friends and then “share your screen” for the synched game telecast plus access to merch, prop betting and fantasy and other streamers. For the Super Bowl, the NFL should offer this and more as its own “Super Viewing” experience — every bit as compelling as what gamers can do right now on Fortnite, Minecraft or World of War Craft (now a $3B business on its own – for Activision Blizzard!). Efforts are underway at Yahoo and startups like Teleparty and LiveLike.
The same opportunity exists for Entertainment. For Disney+, for example, a truly dynamic Watch Party experience for the next installment of “The Mandalorian” opens many new options to surprise and delight an already passionate audience. Once you figure out your community, you can mine it.
And there is an investment thesis here too (elucidated in “The Content Trap” by Bharat Anand) – pay attention to activities and businesses that breed connections. For example, as the sports industry prioritizes betting, don’t forget about fantasy sports.
For sports fans, we believe true co-viewing is when not if. Cable TV pioneer Ted Turner recognized the power of distribution and (community) with the advent of satellites he introduced WTBS, our first nationally-distributed “superstation” in 1976. That caused lots of problems for rightsholders but we overcame them, before TBS became just another national cable network. In 1982, legendary advertising Hall of Famer George Lois famously coined the phrase “I want my MTV” to get carriage on the burgeoning cable distributors shortly after ... and we got our MTV. Forty years later, fans want community watching. We all win by giving them what they want!
John Kosner is President of Kosner Media (www.kosnermedia.com), a digital and media consultancy, and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 20 years. J Moses has been in and around the Sports, Games, and Tech businesses for over 40 years. He has been a Director at T2 since 2007, and is currently an Executive Producer on a scripted Esports show for the CW (www.optinstudios.com). Both John and J are disciples of the legendary Roone Arledge of ABC Sports.
Netflix of Sports hasn’t arrived but…
Original Article: Sports Business Journal, by Ed Desser and John Kosner, January 18th, 2021
In the five years since Ed wrote “Handicapping the Netflix of sports” ( SBJ, 3/28/16 ), streaming has boomed: Disney+, HBO Max and Apple TV+ have joined Netflix and Amazon and “over-the-top” is now materially affecting traditional cable. As predicted for sports, BAM and Disney…
The Fourth Quarter of Sports Media, Part II with Ed Desser
Original Article: Sportico, by Ed Desser and John Kosner, January 15th, 2021
Last week, we wrote about electronic sports media heading into its “fourth quarter”—a new streaming epoch driven by developments in tech and entertainment. Today, we examine how the business will further evolve this decade.
We expect the incumbent sports networks to lock in historical advantages (existing rights, relationships, distribution, revenue and brand names) with expensive new NFL agreements, in time for a 17-game regular season.
However, sports will also start to make sense for entertainment streamers, because it offers compelling, day-to-day, original content that provides continuity to help businesses built around hit-driven binge viewing and shows to fit everyone’s filter bubble of taste. (Recall USA Network launched with entertainment—plus MLB, NBA and NHL). In fact, other than gaming and the occasional blockbuster movie, sports may be the last category with broad enough appeal to attract the remaining streaming holdouts. Sports is appointment viewing, an advertising magnet and a means of counter-programming against services with stronger libraries like Netflix. Managing churn is also likely to drive seasonal sports acquisitions (e.g., The Masters), particularly for non-football months.
To integrate sports successfully, entertainment streamers will have to upgrade their home-screen experiences originally designed for video-on-demand (VOD). They’ll also need to add live curated scheduling (as they do for shows/movies), and personalized real-time scores, stats and highlights, to serve sports fans.
The path to follow is fairly well worn. TNT grew quickly with just a half-season of NFL Sunday nights, NBA rights and the MGM library. Then Fox Broadcasting hit its stride with Married with Children, The Simpsons and Sunday afternoon NFL. The same process was reinvented over the past 20 years with HBO offering movies, boxing, The Sopranos and Game of Thrones to justify $15/month. Netflix did it, originally with movies and TV shows (delivered via mail!), and now on-demand streaming hits such as House of Cards and The Crown, a vast global library, and a content budget equivalent of everyone else’s combined. The profitable formula: Offer high-demand, exclusive, promotable content (such as sports) to attract new subscribers, multiply by a price increase, plus ad sales.
Major SVOD platforms are approaching critical mass distribution thresholds, thanks to U.S. broadband penetration that’s greater than conventional linear cable networks, enabling them to provide similar or superior exposure for sports. While Netflix and Apple have abstained thus far from live sports, focusing on long-tail evergreen content, will they reconsider? If these digital goliaths choose to invest, they will be able to pick off packages from traditional sports platforms while barely denting their earnings per share. They can justify outspending linear TV because of their scale, applications for data, and superior monetization capabilities. More commerce via Amazon, more engagement from Netflix, more services revenue for Apple. However, they don’t have to do any of this; they already possess billions of active customers.
And, as Lightshed’s Walt Piecyk points out, “The one thing you’re never going to disconnect is your cellphone.” That makes AT&T (177 MM subs), Verizon (120 MM), and T-Mobile (102 MM), potentially the “new bundle(s).” Do the carriers now move to acquire live rights themselves to motivate 5G upgrades and book sports subscriptions as their own “services” revenue?
Do players like Roku and Google’s Chromecast get into sports, with their combination of TV browsers and app stores, making them owners of exceptionally valuable home screens? Will retailers like Walmart and Target concede the combined retail/media field to Amazon alone?
The upshot: The bundle is melting, but there are more logical buyers of the resulting sports rights icebergs, with bigger balance sheets and loftier motivations.
This leads us to predict that the traditional bundle will morph into mini-bundles. Some sports including the NFL will remain mostly on conventional networks via multichannel video program distributors (MVPDs), while others will be streamed. Think ESPN+/Disney+/Hulu, which together account for more than 100 million U.S. subs, or perhaps Peacock, HBO Max and Paramount+ selling as a package.
Amazon already is its own 112-million-sub bundle, combining shipping, video, music and book content, and the Fire TV Stick, and it could use Twitch (the most popular free live-streaming service) as a modern alternative to national “broadcast” distribution with a much younger audience.
For rights holders to embrace streaming as a primary distribution platform, the magic “critical mass” number might be 50 million active subscribers. Here, growing direct-to-consumer services and mini-bundled subscriber bases begin to approach the shrinking pay TV universe size. And with the growing threat of piracy, rights holders will value partners like tech giants who can provide high-quality streaming.
Rather than buy a single pay TV bundle, future fans will likely subscribe to three or four streaming services that include sports, switching some of them out during off-seasons (especially football), making 12-month programming calendars critical. This is little different than those of us who still subscribe to a traditional MVPD, but also buy at least one streamer.
International streaming will also help justify the migration. Amazon, YouTube, Netflix and Apple all play well overseas, and Disney’s Star has significant penetration—and cricket rights—in Asia, potentially providing U.S.-based sports (think NFL, college, NASCAR) with wider worldwide exposure on prestige platforms than current small-dollar foreign syndication deals. It’s a backstop with a global backdrop.
Google’s YouTube is the biggest free video platform, and it’s still growing, while Facebook/Instagram has a huge user base. They can all easily play in sports that prioritize exposure, generating the bulk of their revenue from gate and sponsorship. They are also more focused on reaching younger viewers, which could birth new subscription models.
Thus, we do not anticipate one dominant sports player in the 2020s, but several: each platform with certain sports, with its own unique selling proposition, and major customization. Sports fans will no longer be forced to take all or none, as with cable, but rather will be able to select those of greatest interest.
This will present new challenges for sports owners. Leagues will struggle to replace the automatic inertia-viewing that linear networks historically provided. Meanwhile, services will compete to have their unique package of rights, much as networks have done in earlier quarters of the sports media game.
The new fourth-quarter world will call into question how rights are apportioned. Will league inner- (regional sports network) and outer- (national network) market rights continue to be sold separately? Will leagues choose to do several separate packages or combine rights to increase leverage across multiple services? Will digital companies choose to invest big bucks only if all rights (linear and digital worldwide) are available? Long underutilized, league libraries will become more attractive as the source for new sports documentaries and “inside access” shows to stream. Also look for ubiquitous use of world feeds for TV production.
For fans, who will no longer have automatic access to everything through a single subscription, progress will come at a cost. Gone are the days of TV Guide and newspaper listings; content discovery will be a curation sport unto itself. Leagues will align with the platforms able to pay them the most money while providing sufficient exposure (to grow their young fan base), an ominous development for legacy cable sports and broadcast networks that no longer deliver the massive promotion, huge audience and desirable demographics they once did.
It is unlikely to be cheaper in total for fans and may make some pine for the “good old days.” But ultimately the fourth quarter of sports media will bring true competition, with a greater diversity of offerings such as megacasts, group viewing, sub-second latency (true “live live”) betting, personalized highlights products—and better service for tomorrow’s sports fans.
We can’t wait!
Desser, a senior media executive at the NBA for 23 years, founded Desser Media, a sports media consultancy that provides valuation, negotiations and expert witness services. Kosner was the senior digital executive at ESPN for 20 years. In addition to managing Kosner Media, a digital and media consultancy, he is an investor and advisor in sports tech startups. Together, Desser and Kosner ran NBA Broadcasting in the 1980s and ’90s.
The Fourth Quarter of Sports Media, Part I
Original Article: John Wall Street, by Ed Desser and John Kosner, January 8th, 2021
The advent of electronic sports media’s “first quarter” started a century ago, first as radio game recreations from press reports in 1920, and then as live on-site play-by-play (boxing and Pirates-Phillies baseball) in 1921 on KDKA in Pittsburgh. In the second quarter, broadcast TV ascended, with live sports becoming national weekend daytime and local primetime TV staples in the 1960s and ’70s. The third quarter came via cable TV, adding huge programming volume and bringing to fruition in 1979 the previously unthinkable notion of a 24/7 sports network: ESPN.
Today, as platforms like Netflix, Disney+ and Amazon lead entertainment, and now have higher penetration of broadband than pay TV, we are entering the sports media’s “fourth quarter” and its impending inclusion into the new mainstream—emphasis on stream.
With the annual Consumer Electronics Show (CES) taking place virtually next week for the first time, we thought this would be the perfect opportunity to look out into the digital future and project what the next phase will look like. First, let’s recap the scores….
ESPN+ is the highest-profile sports streamer today. Amazon has invested in top brands like NFL and EPL rights. New streaming entrants FloSports and DAZN bought up niche sports and boxing, respectively, while fuboTV offers a streaming package of multiple linear sports and entertainment networks. However, none has yet become a true aggregator (think cable TV for the past 40 years), and we do not believe any single entity or platform will—at least for the next decade. Instead, we see a confluence of factors leading to a multiverse of sports viewing options for the remainder of the 2020s.
In entertainment, AT&T launched HBO Max, Comcast unfurled Peacock, and Disney has built the first true Netflix challenger with Disney+ (after consolidating Hulu and Star from Fox). CBS was early with All Access, but streaming remains a relatively small side business for CBS and Viacom, and essentially nonexistent at Fox. Meanwhile, Netflix expanded its domination during COVID and now claims 195 million non-sports global subscribers. Netflix has not only redefined the streaming viewer experience; critically, it has done so at price points that for now undercut the rest of the entertainment industry. Otherwise, it’s hard to imagine that Disney+ would price itself at $7.99 (as of this March), especially with first-run Disney movie content. Or that HBO Max would be bringing blockbuster Warner Bros. movies direct to subscribers in 2021 at no extra charge. Or that each of these services would be subsidized and magnified through wireless carrier bundles (T-Mobile, Verizon and AT&T, respectively). The super low (to zero) prices for high-end entertainment fare create a significant challenge for high-priced sports content purchases by streamers going forward.
In sports, ESPN/ABC, Fox/FS1, Warner/Turner, CBS/CBSSN, and NBC and its cable channels still remain the kings of live major U.S. properties, holding the pay TV bundle together.
However, that bundle is fraying:
Cord-cutting continues unabated. Another 5 million subs exited in 2020;
More than one-third (37%) of the 121 million U.S. TV homes have cumulatively eschewed or abandoned traditional pay TV;
Cord-shaving, or cutting back on service, has further eroded the penetration of expensive top sports networks, shrinking available audiences;
Virtual MVPDs (like YouTube TV, fuboTV and Hulu Live) no longer pick up the slack;
COVID-19 stopped sports cold last spring and posed formidable challenges upon their return—no crowds, scrambled schedules and huge additional expenses (though with some production-efficiency savings);
According to Roku’s 2020 study, 28% of cord-cutter households ranked the loss of live televised sports as their top reason for cutting the cord;
Entertainment streaming services filled the void with extended free trials and special events such as Hamilton on Disney+ on July 4;
Perhaps most important, a generation of younger viewers who have grown up with smartphones (an entertainment ecosystem in their pocket) has accelerated the bundle’s decline by being “nevers”—new households that have never had linear pay TV.
Sports media’s third quarter is ending with a level of uncertainty we’ve never seen before. Besides the NFL, there are no sure things. Perhaps that is why we expect essentially one last “traditional” rights acquisition cycle, where the “surviving” sports TV networks reach for still-richer NFL agreements to maintain relevance and boost their own asset value, with consolidation likely to follow.
But in making bigger and bigger rights commitments, the leading networks will find themselves in a paradoxical trap. The digital platforms that command the most attention from young sports fans—YouTube, Instagram, Twitter, Snap and increasingly TikTok—pay practically nothing in rights fees. None carry live games, and all flaunt fairly comprehensive highlights on their platforms (both through league deals and user-generated content). Going forward, those paying the most (ESPN, Fox, Warners, NBC and CBS) will have the least financial flexibility to invest in new approaches necessary to attract young audiences, who are less likely to watch live three-hour game “marathons.”
For over three decades, the traditional pay-TV bundle powered non-gate revenue growth for pro and college teams on a scale never before experienced. But on Dec. 10, 2020, at a four-hour Investor Day presentation, the biggest beneficiary of traditional bundle economics, the Walt Disney Co., laid out an unequivocal path forward: streaming. Disney is effectively betting a world-renowned $325 billion company on it. We may look back at that date as the demarcation between the old and the new sports media worlds.
In Part II of this series, we will look at what we expect the fourth quarter of sports media to look like. How will the MVPD bundle morph? What moves are the linear stalwarts of the industry likely to take in their next acquisitions? Will a new bundle emerge, or will the business further disaggregate? How will sports fans navigate the new world’s options and alternatives? What benefits are in store for tomorrow’s fan in return? Look for those answers here next Friday.
Desser, a senior media executive at the NBA for 23 years, founded Desser Media, a sports media consultancy that provides valuation, negotiations and expert witness services. Kosner was the senior digital executive at ESPN for 20 years. In addition to managing Kosner Media, a digital and media consultancy, he is an investor and advisor in sports tech startups. Together, Desser and Kosner ran NBA Broadcasting in the 1980s and ’90s.
The World’s Fastest Growing Game
Original Article: Medium, by John Kosner and J Moses, January 1st, 2021
Both of us are big NFL fans and fathers of 13-year-old boys. But on Sunday, when we watch our favorite teams – the Steelers and the Giants – play on CBS and Fox respectively, our boys will be in their bedrooms with mobile devices on their laps, connected to friends and playing Minecraft, Fortnite or TikTok while they track the NFL scores in real time on a gamecast app.
Yes, playing TikTok. It is the fastest growing game in the world, and our boys are part of an entire generation expecting game mechanics to power their preferred entertainment.
Considered by many the mobile YouTube, TikTok is the most intriguing and fastest growing media property in the world. Because, it was designed to be something else. TikTok is built on game mechanics. It is a game featuring content (which can be any content, far broader than just funny dance videos). TikTok rewards people for posting popular videos and watching them; in fact, it tells you how to do it. And it’s all easy. On TikTok, your video’s views are points. TikTok’ers are rewarded with TikTok’s they love. Users create their own individualized experience. It is addictive.
Also, it is not social media as we have traditionally defined it. Instead, it fits on a continuum as our social interactions become more digital and spread over more platforms especially messaging. TikTok is not centered on your friends, but rather Chinese parent company ByteDance’s nonpareil algorithm.
As Ben Thompson points out in his newsletter, Stratechery:
“The chances of your typical Facebook user having a network full of accomplished videographers is slim, and remember, when it comes to showing user-generated content, Facebook is constrained by who your friends are …
ByteDance’s 2016 launch of Douyin – the Chinese version of TikTok – revealed another, even more important benefit to relying purely on the algorithm: by expanding the library of available video from those made by your network to any video made by anyone on the service [emphasis: ours], Douyin/TikTok leverages the sheer scale of user-generated content to generate far more compelling content than professionals could ever generate, and relies on its algorithms to ensure that users are only seeing the cream of the crop.”
Now, it is true that you can follow celebrities and brands on Instagram, and the quality of their posts is often of higher quality. Nonetheless, TikTok is designed to give you the most compelling video at any given time. Turner Novak of early stage VC firm Gelt notes, “on TikTik, the best videos could instantly reach the entire user base.”
Last summer in Bloomberg Opinion, Tim Culpan described TikTok’s touted algorithm as its “secret sauce,” the mobile version of the “Colonel’s 11 secret herbs and spices.” But it’s more than that. Developed as well with ByteDance’s massively popular Chinese news site Toutiao, the TikTok algorithm generates personalization at unmatched scale. Per Novak: TikTok’s “hyper-personalized algorithm recommends content based on thousands of objects and tags analyzed in each individual video, along with an individual’s view history, re-watches, likes, comments, shares, and even post-view activity.”
That’s the very basis of connected game play too – whether it be Candy Crush or Fortnite – an algorithm. Like the leading games, TikTok is not static. Every single user has a unique experience every time and every keystroke builds the TikTok algorithm. Minecraft, Fortnite and Roblox (and World of Warcraft Online for that matter) are each closed platforms – they give players the tools to tailor how they want to play. By following the videographers they like most, TikTok gives viewers that same degree of customization. Dynamic, constantly adjusting to new preferences and signals (such as our sons in their bedrooms connected with their friends), TikTok has produced mesmerizing effects in the U.S. and around the world.
The game has changed the game.
Compare TikTok to Quibi:
Both started in the U.S. in 2018;
TikTok has game mechanics. A bottoms-up approach built around a constantly expanding and dynamically curated user generated content selection;
Quibi was the traditional, time-honored Hollywood media model. Top down. Expensive, professionally produced, high quality content with stars on both sides of the camera. No game mechanics.
Today: TikTok’s market cap is $60B (Parent ByteDance’s is 180B). Quibi is defunct.
Consider JuJu Smith-Schuster, the Steelers’ outstanding wide receiver and, perhaps, the most accomplished gamer and social media performer in sports. Last month, Smith-Schuster found himself under fire because of his viral videos showing him dancing on the logos of Pittsburgh’s opponents. As the Steelers lost three straight after an 11-0 start, he was accused, among other things, of having more posted TikToks than yards per game this season. JuJu says he’s done with the dances (at least for now) but he and other star athletes recognize the power of TikTok. The game has changed the games.
No doubt aided by its data collection and algorithm, TikTok management has also proven to be a quick study of the game business by identifying its audience, giving them what they want, and monetizing it:
TikTok built out its audience – by knowing where to buy it. Earlier this year, TikTok was Snap’s biggest advertiser. It’s the top brand to run app install ads on Snapchat after having been the top app installer on Facebook in early 2019. Per the Financial Times, TikTok has reached 1B users much faster than any other social media app;
In the same way that another fast-growing digital media company, Twitch (Amazon) has broadened beyond its gamer roots into several other content categories plus “Just Chatting” and “IRL” (“in real life”) channels, TikTok has evolved from silly dance videos. Per Tiffany Zhong of Zebra IQ, a Gen Z research company, TikTok is the biggest producer of short-form online video education (on a multitude of topics). And critically for a young, impatient audience, she says, “its videos are no longer than they have to be.” If a TikTok can tell a story in 21 seconds, it does so. Novak: “Short-form video reduces the friction of both creation and consumption. Most TikTok videos are produced by the creator alone, and many post multiple videos per day”;
While many linear TV networks rue not taking a financial position in the licensing businesses of the young, unknown talent they helped popularize (many of whom are now more popular than their sponsor networks), TikTok has been quick to launch its Tiktok Creator Marketplace (TCM). How big will this become? Two weeks ago, Walmart hosted the first-ever shoppable livestream on TikTok. That Walmart was aggressively pursuing TikTok as an owner last summer tells you everything about the audience.
If you are a media company without the benefit of Bytedance’s visionary engineers and world-changing algorithm, what to do?
Make TikTok’s approach a central strategy, not an “extension” of what you do.
Collect data and use it: When we watch the NFL games on Sunday, neither CBS nor Fox will get any data; their revenue is limited to retransmission consent and TV sponsorship advertising. That’s a problem. Creating systems, hiring data-focused executives (many of whom are young) moves companies to a place where they are using data to make decisions. Once you start you never turn back
Give the audience what they want: Sports leagues and other content companies should be more aggressive in allowing these connected audiences on TikTok to follow games in progress, including by putting real-time highlights onto the platform. Otherwise, its audience might not know the games are even happening! Content discovery is a growing challenge; you need to be where your audience is;
Monetize the audience: On Christmas Day, millions of people around the world watched Pixar’s “Soul” on Disney+. Disney has used informed research and data about its addressable audience to establish itself as a retail streaming channel. Now, its actual usage is powering how the service moves forward. Disney+ has also levitated the company’s stock.
Perhaps most important, media companies must heed what makes gaming such a compelling format: we each have our own customized experience, every time is different, and we and our friends are active participants.
John Kosner is President of Kosner Media (www.kosnermedia.com), a digital and media consultancy, and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 20 years. J Moses has been in and around the Sports, Games, and Tech businesses for over 40 years. He has been a Director at T2 since 2007, and is currently an Executive Producer on a scripted Esports show for the CW (www.optinstudios.com). Both John and J are disciples of the legendary Roone Arledge of ABC Sports.
Sports Will Rise Again in 2021 - If There’s Change
Original Article: Sportico, by Ed Desser & John Kosner, December 1st, 2020
The Netflix documentary, The Social Dilemma, demonstrates how social media has profited exponentially by aligning the population at different extremes—utilizing content we ourselves create online to divide us further. Pre-COVID-19, these divisive efforts had considerable momentum; the virus has only accelerated them.
If ever there were a moment that our country (in fact, the world) needed the unifying power of sports, it’s right now. Every month we spend in isolation turns us inward and reinforces the thought that engaging with the people around us is dangerous. Sports can help us not only overcome the anxiety of gathering in a group but also return us to the interactions that help us heal and grow together as a society. But sports has never faced the obstacles it does now. The industry must get to work.
When we grew up, following our local team was practically a shared civic duty. Kids and adults alike engaged in highly topical “water cooler” discussions. It was an era of media (bandwidth) scarcity; we watched and listened to the games, read about them in the newspaper (remember those?), saw highlights on the 11 p.m. local news, discussed them at meals and as a shared family experience on our living room couches. Very little of that “shared world” experience still exists today. Instead, everyone carries an entertainment ecosystem in their pocket.
And yet, in 2020, nothing unifies Pittsburgh like the undefeated Steelers. Even when, because of COVID, we can’t gather together as much as we long to.
That said, sports needs to update its user experience dramatically. As leaders, we must:
Reinvigorate sports’ place in the community. Tod Leiweke, one of the sports industry’s most accomplished executives, has made an impact in multiple leagues across North America, and the former Seahawks CEO is now back in Seattle with the NHL expansion Kraken. Back in 2010, when he was with the then-struggling Tampa Bay Lightning, Leiweke, his colleagues and team owner Jeff Vinik created a program that honored a local hero every game during the first timeout in the first period, including a $50,000 donation supporting the hero’s work. The Vinik family stepped up, providing $10 million in funding for the program, double what the staff originally requested. The program bound Tampa and the Lightning and is a powerful example of why our former boss, ex-NBA Commissioner David Stern, championed sports and community service—“doing well by doing good.” We need much more of this going forward.
Prioritize getting young fans back into our stadiums and arenas. Rich Luker, founder of the original ESPN Sports Poll (now the Luker on Trends Poll), makes the point that if children attend a major or minor league baseball game prior to age 5, they will go to 58% more games per year, for the rest of their lives,than fans who do not attend their first game until age 14. He says the same logic applies to the other major leagues. Waiting is not an option. The Sports Poll 2020 is replete with examples of how our youngest fans, ages 12 to 17, spend their time not involved with sports. In its IPO S-1, the startup Roblox, essentially a YouTube for Gaming, lists not only more daily active users (31 million) than any sports site but also a uniquely engaged audience (averaging a stunning 2.67 hours daily on their platform).
Revolutionize viewing of live game telecasts. Live events have traditionally commanded unmatched attention and escalating rights fees. They are the life blood of the industry. But, per the Sports Poll, live game viewing is no longer a priority for fans 12 to 34—simply unthinkable a generation ago. In fact, for the first time, sports is struggling to maintain relevance among young fans. Media companies and rightsholders must attack that directly. Using modern platforms like YouTubeTV, fuboTV and Twitch as examples, sports needs to embrace choice (announcers, themed feeds, packaging outside of the pay TV bundles, communal viewing, shorter formats) and make itself available on multiple devices. Sports should lead in innovation for large screen TV viewing (the recent quad screen viewing from the Masters on its own and the ESPN app is a recent example). Betting is a tactic here to lure adult fans,but not the all-in winning strategy to incubate grassroots fandom.
Bring sports to where its new fans are. Essentially, sports must drastically improve availability and ease of discovery. Before, just being on the right TV network was sufficient: Sports event audiences were funneled to the next live event via inertia. Among other things, access today to live games needs to be a click away or, in the case of Snap and others, a swipe up. This fall, Snap is running a trade campaign for advertisers: “Millions of NBA fans are on Snapchat every day.” These NBA fans must be able to access NBA games there, too. Discovery should extend broadly: Fans should be able to find out about live games and be able to watch and participate with them via links from Twitch, the various social media networks, Apple and Amazon, but also game “metaverses” like Fortnite and Roblox. And thinking more broadly, Zoom and Discord, too. Wherever fans are. Today, top players have more social media followers than their leagues do; these athletes too must step up and promote links to live games from their social handles. “Rent” (user acquisition) costs and performance marketing strategies will rise to the fore. A new startup called Buzzer is an early example of a service tackling the issue. Naturally this will require rethinking and readjusting business models, so expect change to be slower than optimal from the new audience’s standpoint.
According to the Sports Poll, as recently as 2007, fans got their sports information from three leading sources—online, TV and newspapers, each with about a 25% share. Today, online has accelerated to 69%; TV has shrunk to 17%, and newspapers have practically disappeared (5%). In 2011, men 18 to 34 occasionally went to Google for sports information (5%); today, it’s their most used sports news utility (23%). Fans move to the best experience available, and quickly. Sports needs similar urgency across the board.
The new presidential administration offers true opportunity. President-elect Biden can push sports to unify a fractured country. Biden has promised an organized national response to COVID-19 and will oversee the rollout of the first vaccines. This will speed the reopening of outdoor and, potentially, indoor venues. The leading sports leagues are national operations and need streamlined practical solutions to operate universally across state lines and welcome back fans. Some U.S. venues have hosted numerous events, under structured conditions, with no indication of virus spread. A nationally coordinated effort to apply lessons learned from successful events would inform reopening discussions at local health departments around the country. Perhaps some of the lessons could improve the safety of all indoor public spaces.
In 1963, President Kennedy established the President’s Council on Physical Fitness. Wouldn’t it be powerful if Biden created a President’s Council on Community Gathering, centered around sports, with the sports industry taking the lead?
Over the past 50 years, changes in the environment have almost completely benefited sports and fueled their growth. No longer. Whether it’s the mere act of gathering together, how we watch the games from home, or the manner in which we get news about our favorite teams and athletes, it’s now changed utterly. The internet-led disruption of myriad other industries has finally hit sports. We must respond now.
Ed Desser is president of Desser Media, Inc. (www.desser.tv), a sports media consultancy. He was the senior media executive at the NBA for 23 years. John Kosner is president of Kosner Media (www.kosnermedia.com), a digital and media consultancy and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 20 years. Together they ran NBA Broadcasting in the ’80s and ’90s.
The COVID-19 Halftime Report
Original Article: Sports Business Journal, by John Kosner and Ed Desser, October 26th, 2020
Sports will contiue to be larger than life as we navigate our way through 2020 and beyond. The Sports Glut hit this summer, but as we await COVID-19’s “Second (Sports) Wave,” we have reached one marjor conclusion: We predict more sports industry change will occur in this decade than in the previous five combined. Keep reading.
Sports’ Cruel Summer
Original Article: By John Kosner and Ed Desser for Sports Business Journal, August 5th, 2020
Back in March, the NBA led a series of “postponements” and the sports industry hunkered down with the hope that play could resume over the summer. Sports has experienced a lost (NHL) season and shortened (NBA, NFL and MLB) ones before, but had never been entirely “on hiatus.” Now, we’re mid-summer, and the re-starts have begun (motorsports, golf, MLB and, last week, the NBA and NHL, so far successfully in their respective bubbles). Amidst the progress, however, the nationwide spike in COVID-19 infections is feeding a new crisis. On July 23 in “Bloomberg” Opinion, Joe Nocera wrote under the headline, “Covid-19 Has the Power to Break the Sports World.” Back on May 1, ESPN published an economics study that found: “The sudden disappearance of sports will erase at least $12B in revenue and hundreds of thousands of jobs, an economic catastrophe that will more than double if the college football & NFL schedules are wiped out this fall by the coronavirus pandemic.”
The $ 11-figure scenario may be upon us this fall. Here’s why:
1. The precariousness of staging sports during COVID-19. In the Wall Street Journal on July 16, Jack Swarbrick, the Athletic Director at Notre Dame, reported, “We’re mid-July and the trends are the wrong way … it’s the environment around us collapsing.” Notre Dame is arguably the most storied school in college football, the only one with its own broadcast TV agreement, and yet it’s already lost games with Stanford, Wisconsin and USC. It may even (gasp) play in the ACC!
2. Sports is in a period of profound uncertainty – and that uncertainty only goes one way. Stanford University, with perhaps the nation’s leading intercollegiate men’s and women’s sports programs (and huge endowment), just unilaterally eliminated 11 sports. And this was two days before the Pac-12 joined the Big Ten in announcing a conference-only college football schedule. Pro and college leagues, schools and organizations are subject to frequently changing Federal guidelines, individual state mandates and issues, and international decisions including managing quarantine orders. On July 18, Canada forbade the Blue Jays playing MLB games in Toronto this season, and in a Bills reversal, they will call Buffalo home.
3. Challenges abound. Among them: long-distance travel (a result of bigger and more consolidated college conference TV agreements), the vagaries and expenses of necessary testing (per the WSJ, the NFL’s 2020 COVID-19 testing plan could run approximately $75M), PPE and cleaning for both practice facilities, stadiums and arenas. Keeping everyone safe is harder and harder; especially with all of the professional and collegiate teams in states where COVID-19 is on the rapid rise – such as Florida, Arizona, Texas and now California. Last week, Pac-12 and SEC student athletes challenged their conference leadership on the efficacy of return to play plans. Of all the sports, golf appears the best situated to “play through” as the sport already lends itself to distancing and revised plans still call for no spectators.
4. The unprecedented nature of COVID-19 on Sports – the first existential crisis for the sports industrial complex. Even during World War II, when sports stars went to war and the U.S. rationed food, Major League Baseball continued to play (thanks to FDR, and women’s teams made famous in the movie “A League of their Own” picked up the slack), the World Series was played and fans attended. Today, sports is a multi-billion dollar enterprise built on long-term contracts and planning cycles. COVID-19 is upending, compressing and extending everything.
5. Perishable events and revenue. Yes, the strongest sports leagues like the NFL could conceivably power through COVID-19’s first and second waves (having the benefit of generating the majority of revenue from media – but facing the challenge of a sport that features heavy-breathing men piled on top of each other for significant, repeated periods of time), extending their season into the spring of 2021, if necessary. But most other sports, including college this fall, are facing cancellations of perishable events – like the 2020 NCAA Basketball Championship. The financial implications are calamitous. Two sports – college football and men’s basketball -- finance almost all the other intercollegiate programs and both are in jeopardy; the Tournament pays the NCAA’s annual operating expenses!
6. The Ramifications of COVID-19 on Sports. Today everything is interconnected. The sports industry is not just owners, players, TV networks, TV distributors and facility owners, but all of the people who work behind the scenes and all of the businesses interconnected are impacted. What does State College, PA look and feel like without Penn State football?
7. A changed and limited sports fan experience. What does the betting industry look like without football season? According to Sponsor United CEO Bob Lynch, there are approximately 450 advertising brands highly active in sports – the Super Bowl is its own phenomenon. Anheuser-Busch can sell you beer at home as well as at the pub, but with bars closed or re-closing, videos have surfaced of proprietors and brewers dumping expired kegs down over-taxed sewers because they can’t serve them to customers;
8. The Psychological impact of COVID-19 on Sports. What happens if the eagerly anticipated fall collision of virtually all major sports doesn’t fully happen? Will MLB fans steeped on the game’s traditions and unique statistical history embrace the 60-game season and its expanded Playoffs*? Will MLB’s already teetering non-Bubble plan last that long? Not only is the sports hiatus unprecedented but also today’s fans have virtually unlimited internet entertainment to fill their time. There is Netflix and an ever-expanding array of subscription VOD services (Peacock is the most recent addition). Perhaps, most important, is the rise of free, user-generated powerhouses like TikTok, Snap and Instagram. COVID-19 is a daunting adversary for sports, but the bigger, longer term threat is the free content algorithms driving social media platforms, especially among young fans.
Still, nothing matches Sports’ unique ability to command attention and galvanize communities. Society misses sports desperately right now, and ratings are thus high.
In the Cruel Summer of 2020, Sports faces both the immediate challenge of returning to play and then the even harder work necessary to restore itself to its historically dominant place in our culture amid upheaval in both the media business and society at large.
Ed Desser is President of Desser Media (www.desser.tv), a sports media consultancy. He was the senior media executive at the NBA for 23 years. John Kosner is President of Kosner Media (www.kosnermedia.com), a digital and media consultancy and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 20 years. Together they ran broadcasting for the NBA in the 80’s and 90’s.
Prepared for Post-COVID Sports?
Original Article: Sports Business Journal, by Ed Desser and John Kosner, June 24th, 2020
“Crisis” derives from the Greek word “krisis,” which means “turning point in a disease.” While all of us hope for medical breakthroughs signaling the end to the COVID-19 scourge, we have no assurances right now. What we do have is time and with summer finally here, our recommendation is that all of us make the best use of that once in a career opportunity to put ourselves and our properties on firmer ground. From a rights/property holder perspective, we think you should focus on the following:
Phase One: Re-Think.
Have you put your most pressing problems into priority order? With revenues prospects down, how best to trim expenses? What do your media and sponsorship agreements state in terms of Force Majeure, and compensation adjustment procedures? How best to maintain these vital relationships? We are just beginning to understand the ramifications of COVID from a media rights perspective. Anticipate some form of renegotiation (see SBJ 5/18/20 “Follow the Money”).
But your people are central to keeping things together. Who are your most critical personnel, what are their key issues in this environment, and how do you keep them close and secure? What are you doing to complement Zoom communication? Who are your most vital customers, including fans and media partners, and what are you doing (communications, engagement) for them during this time-out? Are you using idle production capacity to help your media partners fill their huge un/under-programmed expanse of airtime?
In the midst of your team’s extended “home stand,” we suggest planning and organizational opportunities. Do some long term planning: Think about reorganization/streamlining to focus on high-return future opportunities. Three practical topics:
What is the status of your media agreements? What do you want these to be going forward – including whether or not you’re looking to expand your direct relationship with your fans?
How are you set up across existing and emerging social media platforms? Have you identified and connected with your sports’ key influencers? These will be even more important post-COVID; and
Where are you with your betting strategy? State-by-state betting legalization and mobile betting are likely now to accelerate as states need new revenue sources and fewer people will be going to casinos for the time being.
Phase Two: Re-opening.
Maybe you’re already open, maybe the time is coming soon. In-venue issues are vexing and both league and local governmental requirements are subject to change. Have you done the exercise to determine your capacity with 6-foot separation (e.g., killing every other row, and 1-2 of every 3 seats in occupied rows)? How you can maintain distance in concourses? One-way hallways or lane dividers? Your requirements for fans to wear face masks or bandanas (a new licensing and/or sponsorship opportunity?!). New security personnel or procedures? Arena surface cleaning measures? Are there new “doors” procedures you will need to implement, such as temperature checks at security screening locations, fan entrance and egress schedules, additional social spacing for fans waiting in entrance or concession lines, changes in concession and usher hygiene operations?
If – or once – you’re back, how can fans otherwise access your property (Linear TV, Streaming Video & Audio, Highlights, Social Media)? Expect more changes in fan expectation here. A unique COVID challenge is creating community around your team/sport if people can’t attend live? (we suggest tech to make “studio” sports more entertaining, improving your app, adding “Zoom Watch Parties”). Can social distance be achieved in a TV Truck? Another challenging issue is generating attention, audience, advertising, traffic, and sales when all othersports also come back at once … the scenario we expect to see by late summer.
Phase Three: Re-build.
The “new normal” is hard to imagine at the moment. Still, there are new processes that everyone is using now that you can implement going forward, such as (1) more work from home for employees and customers, (2) video conferencing for League and team events; and (3) use of newer technologies such as AI-tech for video highlights, live remote production, REMI and “Truck in the Cloud,” enhanced live viewing applications to both improve quality and lower costs, voice applications for “Hands-Free” experiences (“A new reality powered by AI,” SBJ, 4/13/2020).
Mostly though, we are encouraging you to think aggressively and creatively. Are there businesses you should consider exiting (e.g., retail, restaurants) or transitioning to online-only (box office, elimination of paper tickets)? Going forward, should your league consider a more unbalanced schedule and/or MLB-style (multi-games with a single opponent) home stands that cut down on travel and better protect player health? Game presentation adjustments to align with the new environment. And, of course, new sponsorship categories? The “Heat Check” seems too obvious to us! Official cleaning materials, gloves, N-95 masks, and disinfectants.
We don’t know how much longer the current fan-less sports hiatus will last or how severe the results will be long-term. Our training is to expect the difficult and prepare accordingly. We do believe our outcomes will be better if we can take advantage of this summer to plan, reorganize and prepare to emerge energetically. Sports fans, and all citizens need a return to a sense of normalcy which sports will provide again. We hope soon.
Ed Desser is President of Desser Media (www.desser.tv), a sports media consultancy. He was the senior media executive at the NBA for 23 years. John Kosner is President of Kosner Media (www.kosnermedia.com), a digital and media consultancy and an investor and advisor in sports tech startups. He was the senior digital executive at ESPN for 20 years. Together they ran broadcasting for the NBA in the 80’s and 90’s.
Follow the Money: Unpacking Sports Media from the Coronavirus Shutdown
Original Article: Sports Business Journal, by John Kosner and Ed Desser, May 18th 2020
Everyone is talking about how and when sports will return. Few are addressing the pain to come: the great adjustment and renegotiation chain. For now, force majeure language in nearly all agreements forestalls this process. These provisions prevent either party from being in breach of the agreement...
The Coming Sports DTC Squeeze Play
Original Article: Sports Business Journal, by John Kosner and Ed Desser, January 13, 2020
Cable networks have provided material, growing rights fees and mass exposure for major sports properties for decades, collectively establishing sports’ supremacy within today’s programming bundle. However, MVPD subscriber counts continue falling, and despite rising per-subscriber fees to counteract the circulation decline, the available revenue won’t remain as robust as originally anticipated when the current slate of deals were consummated. Sports rights holders therefore will need to reconsider how best to deploy their content assets as the “squeeze play” ensues: The most powerful few rights holders take an even larger share of rights revenue in upcoming deals; while the media environment bifurcates and virtually everyone else finds that neither the money they hoped for, nor the full distribution they’re used to, remains.
Cable gained favor over traditional telecasts as it reached majority penetration decades ago, and the “dual revenue stream” enabled it to outbid broadcasters for live sports rights. But as cable’s penetration flags, and broadband coverage grows, rights holders are confronted with a new choice between revenue and reach. They must seriously consider hybrid approaches to reach both traditional viewers and engage younger “cable-never” fans. And not just cable, but also the opportunity of wide broadband reach, apps/sites favored by audiences under 30 (like Twitch and YouTube) and direct-to-consumer (DTC) offerings. Yes, today’s 65%-75% cable network penetration of TV homes is still acceptable to most sports properties when coupled with superior rights fees, but once that drifts closer to half or less over the coming decade, it will become necessary to re-slice the rights “salami.”
This has already begun to occur, as the NFL offers “Thursday Night Football” on broadcast (Fox), pay TV (NFLN) and streaming via Yahoo, Amazon Prime, and Twitch platforms. Baseball has added a package on YouTube (formerly on Facebook). We believe as national packages like the NHL, NFL and NBA come up in the next five years, two things will happen:
1. Recognizing that sports is the linchpin (tenuously) holding pay TV together, the “must-have” major pro leagues will strike especially aggressive rights fee increases from existing media companies.
2. The pro leagues will morph their offerings, continuing to offer “traditional” linear coverage, while adding co-branded or sport-branded apps, packages or platforms, which go beyond the historical one-way delivery mechanism, and create added engagement, social, and business integration to new audiences.
But what will be left for remaining rights holders, after the powerful few make their next set of deals?
The answers might come first locally. Here, we expect high-level team affinity, combined with the changing economics and ownership of RSNs in the Sinclair/Amazon era (Amazon just bought part of YES for a seat at this table), to accelerate adoption of new models. For example, imagine if a team sold its traditional rights to an RSN (or ironically a broadcaster), but then also launched (or partnered with its RSN to create) a new team-devoted premium OTT product which combines game feeds, additional cameras/angles/replays, with a live stats feed, integrated betting, social interaction with other under 30-something fans, a special team event, merchandise, and game tickets only for these new digital “fan club” subscribers across innovative forms of mobile (e.g., a tighter play-by-play shot), and direct home video distribution. Though the RSN might pay less (like MVPDs do for nonexclusive network affiliates that are also available free over-the-air via antenna), it is confronting falling subs and increasing price resistance from MVPDs, and therefore needs to find some economies like nonexclusive rights to remain relevant — though at the risk of loosening its negotiating leverage. At the same time, teams can attract, and better serve, new-age “never” fans who wouldn’t even consider becoming virtual MVPD subs.
The new DTC offering is a differentiated product, which provides the team with a direct business relationship with the majority of fans that aren’t ticket or traditional cable buyers, helps them cement their relationship in a way that is impossible via a three-step intermediated RSN (team/network/distributor/fan). With growing wholesale network pricing, RSNs find attaining high penetration from MVPDs more challenging. As the penetration falls, these new combination opportunities will start to look more attractive to teams, while permitting RSNs to moderate rate growth. Of course, RSNs are loath to allow buy-arounds.
This new world will provide significant business opportunity for streaming companies, app developers and performance marketers. Staring into this coming, grinding, fundamental change, rights holders would be wise to start thinking through their new models now. Just as they have had to confront digital ticketing, the secondary market, and demand for new types of in-venue congregating spaces, teams will now face churn and piracy. Making the new economic media models work will require ongoing marketing, new offers and tailored packaging. In this “new normal” of ADD fans, unlimited quality non-sports competition, and changing fan expectations, that’s the way to still thrive in a world where only the strong survive.
Ed Desser is president of consulting firm Desser Sports Media Inc. (www.desser.tv). John Kosner is president of Kosner Media LLC, a sports and digital consulting company (www.kosnermedia.com). Together they ran the NBA’s media operations in the ’80s and ’90s.
What to Anticipate in Sports Media’s Digital Transition Game
Original Article: Sports Business Journal, by John Kosner and Ed Desser, October 28th, 2019
Ten years ago, cord cutting was not a thing. Subs were still growing, Netflix was mostly DVDs by mail, Amazon was a retailer (there was no “TNF” streaming package), Disney was just Disney, Fox hadn’t launched FS1/FS2 or sold its RSNs, and Instagram didn’t exist. With this kind of industry change, what should we expect a decade from now?
Sports betting is not only legal in many states, but gambling via mobile devices is pervasive. The result: Betting volume and users have exploded. Placing a sports bet is as easy as ordering an Uber, integrated into apps that sports fans already use regularly. As a result, many have at least a $5-$10 wager on the day’s events.
Taking advantage of this new demand, sports media platforms (some now owned by tech companies) are distributing an ever-increasing number of events from all over the globe, in multiple languages and with increasing customization (choose your announcers, pick your statistical overlays from official league advanced data). The model is triple-revenue stream — either pay TV or DTC with advertising — plus a cut of “the action!”
Enabling this boom in coverage for all but the biggest events, sports networks have embraced autonomous live-game production, moved the “TV truck” into the cloud, crowdsourced announcers and rediscovered live international events and once-niche sports that can be scheduled outside of prime time, creating 24/7 availability.
Sports is now available to fans “Live Live,” via 6G and 1-gigabyte pipes in sub-second latency, dramatically improving today’s non-synchronous experience. Social media already enabled the “virtual” sports bar, but now we can watch a synchronized feed with our friends around the globe simultaneously, placing prop bets and participating in chats and polls.
You needn’t turn on your TV to experience all this. Just put on some AR (Augmented Reality) glasses. Transform a wall into the biggest of big screens. At an event, the glasses offer an unlimited selection of information and services— from the venue and worldwide for an immersive experience.
Indeed, all of us — fans, teams and players — are now content-producing platforms, placing bets, choosing our experiences, transacting in multiple ways. Everyone sports a digital avatar, themed by team, league, city or player affinity. Twitch and YouTube have transformed today’s player fan clubs by offering IRL (In Real Life) live feeds from virtually every elite athlete on Earth. Everything is available for a micropayment or a subscription, similar to video games today.
The impact of gaming will be felt everywhere. Fans will expect more frequent software upgrades similar to the meta changes in esports. Today’s offseason “competition committee” rules changes will be moth-balled, as major leagues adopt swifter in-season rules changes to address fan and player feedback. The biggest changes: faster games and an emphasis on real-time information, especially involving highlights.
Nearly all sports (except Olympics, NCAA Tournament) come to market re-thought and re-structured for a new world where rights holders will be anxious to grow revenue while simultaneously serving the now thirtysomething “Nevers” who still don’t buy traditional TV, giving rise to a hybrid (linear and streaming) model. Today’s pay TV bundle becomes even more sports-centric, with fewer households paying significantly higher fees for major league programming. Smaller sports have moved to OTT, combining direct access to small thriving communities, merchandise and events, likely on a platform designed and managed by a tech giant. What technology gives, it also takes away, as everyone struggles to find solutions to rampant digital piracy.
Rights grants for the biggest sports have become global, favoring the planet’s two most popular ones, international football (aka soccer) and basketball. We expect esports to grow, with its biggest events televised, but most of its distribution is not via TV. In the U.S., NFL and college football will remain major factors, in part because of their popularity with bettors.
Ironically, the busy, graphic-heavy scroll of today’s sports TV networks will become pristine, fully immersive viewer experiences. No more crawls, pop-up “toast” or “elevators,” and burn-ins. Tomorrow’s TV experience transforms the viewer to “being there.” If in need of scores or stats, fans can easily add them locally or via a second (or third) screen, without cluttering and distracting from the vivid 16K viewing experience.
Unlimited bandwidth will facilitate virtual channels, replacing traditional linear ones. The experience will be more like a multiplex theater: No longer will an event be truncated or joined in progress. Every event will be shown complete and integrated with its related pregame or postgame show. Overtime won’t abridge the next live event. Fans will be better served, provided personalized curated viewing and funneled to the next event just like an auto-start video clip.
Not quite nirvana, but close: Tomorrow’s sports experience will be vastly improved, integrated, enriched and customized in these ways and many more. The changes are already starting, and we can’t wait!
Ed Desser is president of sports consulting firm Desser Media Inc. (www.desser.tv). John Kosner is president of Kosner Media LLC, a sports and digital consulting company. Together they ran the NBA’s media operations in the 1980s and ’90s.
John Kosner & Ed Desser in SBJ: “Stream a Little Dream: Declining sports rights? We think not.
Original Article: Sports Business Journal, by Ed Desser and John Kosner, January 14, 2019
From the beginning of sports media, new technology has enabled consumption. Early live sports TV consisted primarily of weekend events on the three national broadcast networks and club/school events on local stations and syndication. Then, widespread cable and its dual revenue stream opened the floodgates, introducing multiple 24/7 national sports networks and RSNs, delivering thousands of additional games and ballooning sports revenue (and player salaries).
In the last two decades, digital technology multiplied sports channels and ushered in multi-game subscriptions like Sunday Ticket and League Pass. Meanwhile, the internet made worldwide scores, news and highlights instantly accessible, mobile untethered viewing, and social media-enabled “virtual” sports bars.
Today, streaming technology is changing the sports media paradigm again, like cable did four decades ago. The incumbent networks (e.g., ESPN, Fox) remain well-positioned, but the digital tech titans have entered the field of play, so far focused on shorter-term rights, experimentation and non-exclusive grants (e.g., YouTube has regional rights to some MLS teams and virtual MVPD cousin YouTubeTV has become a major sponsor of the World Series and NBA Finals). Amazon bought EPL and “Thursday Night Football” rights, and Facebook has daytime MLB games. Among legacy players, ESPN+ has daily MLB and NHL games, MLS Direct Kick, and UFC. Turner’s B/R Live includes Champions League, 65 NCAA Championships and, intriguingly, partial NBA League Pass games.
While the techs have the money, recognize the importance and therefore have an interest in live sports, they are not yet willing to spend massive amounts of it for major exclusive rights packages. There are at least five reasons:
1. Most live sports viewing exists on linear TV and none of the tech giants possess that asset yet (though Amazon has shown an interest in buying some Fox RSNs).
2. The traditional incumbents continue to have substantial budgets to continue buying these rights based upon broad distribution, high subscriber fees and large advertising income.
3. They have the motivation to do so: Existing sports networks are dependent on exclusive sports rights because their very identities remain directly tied to sports TV. In addition, as broadcast networks get priced out of the top entertainment programming by Netflix, Amazon, Apple, HBO, etc., sports is even more important as must-have programming to stay in skinny bundles.
4. In an offense/defense strategy, linear players are expanding their own streaming and direct-to-consumer capabilities to better serve fans and attempt to keep the tech goliaths at bay.
5. The techs view sports acquisitions more as R&D expenditures than their primary business. There is not a proven digital business model that generates the kinds of live sports revenue (and viewership) that legacy linear media still can.
Therefore, as NFL, NHL, AAC, NASCAR and NHRA rights are soon negotiated, the traditional networks will continue to provide substantial payments, and wide distribution, the twin media goals of most sports enterprises. The question remains: Will today’s tech dabbling prove to be just an appetizer, or will they stay on the sidelines when the big bidding begins? We expect to see the following:
• Traditional linear players will keep most of the major packages, generally at higher prices (the rollout of legalized sports gambling will provide new rationale), but with some significant modifications, such as leagues carving out streaming rights, or creating a new package of events which are excluded from TV.
• The rich will get richer and those properties in the middle (e.g., NASCAR) will get squeezed.
• New digital packages, like MLB on Facebook and NFL “TNF,” will be created/expanded specifically for streamers. Unlike cable, which largely replaced broadcast as the primary platform for live sports, digital packages will expand and supplement, not replace, TV over the next contract cycle.
• Amazon, YouTube, Facebook and Twitter will expand their sports programming offerings, including through acquisition of events they can distribute worldwide, such as tennis, volleyball and esports.
• New entrants will also take their piece of the programming pie, such as FloSports buying up Olympic sports and DAZN taking more boxing.
• More sports will super-serve their biggest fans through targeted niche streaming offerings like NHRA All-Access and PBA Xtra Frame. NBA League Pass is a truly global, robust offering customized for different territories.
• Most sports fans will continue to demand a wide selection of major sports, so expect them to retain the TV “bundle.” Most would not be satisfied just getting certain sports/matches, as Amazon Prime or Netflix subscribers can be satisfied with a single SVOD package featuring a wide range of entertainment programming, nor would it be cost-effective to buy multiple packages. Pay attention to sports-focused Virtual MVPDs like YouTubeTV and FuboTV and sports-specific bundles.
• Smaller sports properties, which don’t generate meaningful rights revenue, will transition their events to streaming platforms, developing direct customer relationships, reducing TV production costs, and improving programming hours, scheduling, and net revenue, but sacrificing viewership potential.
• Tech players will consider buying traditional linear sports media platforms (e.g., New Fox, Fox RSNs, CBS) to gain entry to the major league sports club.
For almost 50 years, critics have predicted the end of the sports TV rights bubble. We’re still waiting.
Ed Desser is president of sports consulting firm Desser Media Inc. (www.desser.tv). John Kosner is president of Kosner Media LLC, a new sports and digital consulting company. Together they ran the NBA’s media operations in the 1980s and ’90s.
John Kosner, Ed Desser in Sports Business Journal: “Making your Media Rights More Valuable”
Original Article: Sports Business Journal, by Ed Desser and John Kosner, April 23, 2018
NBA Commissioner David Stern (our boss for 23/8 years) often said that no one is going to treat you as well as you treat yourself. The NBA had to be the best property it could possibly be, not rely solely on its media partners to grow audience and value. That attitude helped propel the league’s ascension to its current place in the sports hierarchy.
Naturally, everyone wants a bigger media deal, but with the cross-currents of changing media consumption patterns and pay TV subscriber declines, this isn’t automatic. A sports enterprise must organize itself to continually grow, well in advance of rights negotiations, in order to capture more rights value. Here are some tips to consider designed to build product value in today’s multimedia marketplace:
DATA
• Make yourself smarter. Understand how the market sees you, warts and all. Talk with media, advertising and business contacts outside your “bubble.” “Google” yourself to see what the uninitiated see in search results. Track the sentiment on your property on Twitter. Review the published research on sports properties and audiences.
• Systematically Gather Data (beyond TV ratings) which provide insight into the underlying popularity and growth of your product, such as stream views, unique visitors daily & monthly, “likes.” These digital metrics demonstrate the value of your property, and provide network partners with added evidence of the prudence of investing in you. Also quantify the stats for your sport’s collective players, coaches, personalities, teams on Facebook, Instagram, Twitter and YouTube . The reach can be staggering. Use that data to inform your own decision-making.
• Develop a database of fans by collecting e-mails for a newsletter and social media “likes/followers/subscribers” to indicate the strength of your property, and leverage to increase participation and audience.
STAFFING
• Dedicate staff to your media relationship. David often said, someone that understands the partners’ business needs should be “losing sleep” thinking of ways to service and improve the relationship (we did). Organize to get your people invested in the success of the partnership.
• Annual or quarterly meetings with your media partner(s) can provide a useful forum to surface issues before they become problems, and to work together to increase the value of your property and relationships. Senior and operational staff from each should participate. Immediate post-season meetings are ideal review/preview opportunities.
ADVERTISING/MARKETING
• Promotion is not just the province of networks. Properties can use their own assets to drive viewership, which increases popularity, ratings and media value for networks and distributors. This also better serves your fans; ultimately higher viewership translates into bigger rights fees.
• Harness controlled inventory in local game telecasts, in-venue videoboards, websites, apps, radio and podcasts, to build TV audience and enjoyment. Getting current fans to watch more is the lowest-hanging fruit.
• Advertising your major events, using well-targeted paid media, can increase consumption and lead to greater ultimate media value ROI.
BUSINESS DEVELOPMENT
• Sponsor development enlarges the pool of advertisers to buy into your sport, an implicit signal of value of association to fans, other sponsors and networks’ willingness to invest. The more sponsors you have, with budgets earmarked to support your media relationship, the greater the network will value your rights.
CONTENT
• Strategic Scheduling of event telecasts beyond the usual pattern can grow value. Look for alternate dates and times, consider stunts, and search for attractive lead-in windows.
• Program Development of new concepts and shows help to promote the core event and familiarize the casual audience with your athletes. Roone Aldridge made famous the “up close and personal” approach of sports storytelling (people care about people), which will never go out of style. Also utilize the greats of the game and celebrities to help tell your story.
• A Content Factory operated by your property can efficiently generate an ongoing stream of highlights and feature material for a streaming platform, website, social media posts, and for network partner telecasts with tight production budgets (more open than ever to making use of high quality programming provided by the subject entity), as MLS has provided to ESPN/Fox/Univision.
EVENTS
• Improving the event experience better serves existing fans, and indirectly improves the atmospherics of game telecasts. The bigger and better the event feel, the more exciting on TV.
• Quality Control matters. Don’t wait for your media partner to complain about lighting, PA or game presentation. Objectively look at how your events appear on TV, and proactively improve wherever you can, without being asked. Not only will this improve the product, but also your media reputation. The NBA has done this by tightening the length of its games.
AUDIENCE DEVELOPMENT
• Think differently about Millennials, who have a unique interest, and want new ways to participate. Are there different kinds of highlights you can produce (such as vertical orientation) or new fantasy or video games that would especially appeal to them, as the next generation of fans? The NBA uses a special tighter camera just for live action and highlights viewed on phones.
• Social Media Participation by your teams, athletes, coaches, broadcast talent, and administrators on a sustained basis is essential. No longer are publishing of media guides or post-event press conferences sufficient. New efforts aimed at providing wide access to new areas are necessary.
• Serve new audiences through aggressive outreach and a dedicated strategy. Ratings falling are the new normal, . Fans have more options, so you can’t assume that they will continue showing up in the future without catering/outreach. You must expand the base (e.g., younger fans, women, ethnic audiences, etc.) just to stay even. For example, the NHRA permits kids under 10 to attend events for free with an adult. Never underestimate the appeal of getting your youngest fans onto the playing surface, meeting your athletes, getting them hooked early.
These are just examples of some of the ways you can grow the value of your media rights in anticipation of the next negotiation. Don’t wait until the exclusive negotiation period to engage with your partner(s) and focus on your future business. Making the commitment now will pay dividends.
Ed Desser is President of Desser Media (www.desser.tv), a sports media consultant, with 40 years of industry experience. For the past 20 years, John Kosner was the senior digital media executive at ESPN, and is now President of Kosner Media (@jkosner). The two worked together running the NBA’s media business during the 80’s and 90’s.