Disruption in the media industry is rife. Innovations and evolving consumer viewing habits are transforming expectations of how live events, and in particular live sports, are watched. Esports viewership worldwide has been on a steep upward trajectory and will soon begin to challenge traditional sports broadcast audience figures.
While sport remains the biggest draw for TV viewers worldwide, finding ways to deliver this video content at scale and on an increasing number of devices and formats comes with its own challenges for broadcasters, service providers, content owners, and rights holders. Furthermore, niche and non-traditional sports are continuing to redefine the way live events are enjoyed, particularly for younger audiences.
As the mobile-savvy audiences demand their favorite live sports content in increasingly immersive formats, broadcasters are responding in kind. Content providers, broadcasters, and service providers have been securely and reliably acquiring, backhauling, and distributing the highest-quality content from anywhere to everywhere.
However, the global economic effects of the COVID-19 pandemic are already taking shape, as markets tumble and countries take emergency actions to respond. As global habits change to adapt to the new realities of the outbreak, consumer spending also appears likely to fall, and the impact could have far-reaching effects on the media, sports, and entertainment industries.
Predictions before the pandemic
Demand for live sports will drive remote production. The number of live sporting events is growing at an incredible rate, with a study by Rethink Research projecting 75 percent growth in global rights revenue over the next 5 years. With more events needing to reach an exploding global audience, there is fierce competition between broadcasters, rights holders, and service providers to deliver seamless coverage of sporting events of all types. A trend that is gaining major traction is remote production. With production budgets hitting their limit and demand for live content continuing to escalate, use of this cost-effective approach is only going to increase in 2020. Earlier in 2019, a ground-breaking remote production was witnessed for the FIS Alpine World Ski Championships, with 80 camera signals from the course via 100Gbps fiber circuits to regional control rooms in Stockholm. More recently, The Switch has been supporting NFL Network with remote production of the broadcast of Conference USA college football games, which has enabled the NFL to produce more games far more cost-efficiently than traditional outside broadcasting (OB) production services.
Esports to break beyond its core audience and into the mainstream. Having watched it explode over the past decade as the fastest-growing entertainment niche the media industry has ever seen, one can only expect the world of esports to continue its trajectory toward becoming a broadcast TV mainstay. As major media companies embrace esports, the gaming audience is growing beyond specialist online platforms and into the mainstream broadcast space where it will be viewed on par with F1 motor racing and PGA golf. Esports is already driving technological innovation in live broadcast and will continue to do so. Direct fan interaction, player cameras that put the viewer right in the game, and pioneering use of augments and virtual reality are all advances in the broadcast and streaming of esports that will get a wider viewing in 2020. At the same time, gaming tournament production will increasingly reflect the approach and reliability of big-time live sports broadcasting; consistent standards across different events, true global reach, expertise in delivering seamless feeds, and redundancy that ensures events do not suddenly go dark.
One of the most exciting developments in 2019 was to see how far the industry has come in harnessing low latency for ABR-delivered content. Although today’s initial deployments currently adopt unicast low-latency methods, the industry will see an increasing rise in multicast viewing, and it will become ever more crucial for live event broadcasting. Leveraging direct path technology between encoder and packager can massively reduce the time to move content from one media processing function to the next. Innovators within the broadcast industry with an all-digital, IP-driven workflow are perfectly placed to deliver on this vision, while the arrival of new consoles and gaming engines with built-in broadcast support will only make this easier.
New business models will unlock local and niche sports broadcasting. The combination of growing remote-production capabilities, all-IP workflows, and live direct-to-consumer (D2C) streaming services will offer a boon to smaller sporting leagues that were previously not deemed profitable enough for traditional TV broadcasters. Put simply, these more cost-effective approaches now mean that even the smallest of local teams and most unheard-of individual sports can find a platform that brings all their fans the latest action when they cannot be there. Lower-division soccer leagues in Europe, lower-tier college sports, and even high school football in the US provide great examples of this trend, which will be further accelerated by the deployment of smarter technologies such as drone control and automated highlight packages.
The potential of 360-degree video. The highly immersive and unique quality of 360-degree video will continue to revolutionize the viewing experience in 2020. Through this technology, broadcasters can provide perspectives that were previously beyond the realms of TV viewing. For instance, football fans could be taken to the touchline to see the manager’s view of the football pitch and crowd. Another compelling application could be in motor racing; fans could take the opportunity to pick and choose a viewing angle around the race track, whether it is in the pit-lane or from their favorite driver’s seat. This could then open up enormous revenue potential for broadcasters, including in-game advertising or sponsorship opportunities.
The Tokyo Olympics to bring 4K and 8K to the fore. Of course, the live sports pinnacle of 2020 will be the Tokyo Olympics, offering a major test ground for advanced OB technologies as the demand for live events continues to surge, particularly if the Japanese broadcaster NHK fulfils its pioneering ambitions to shoot the entire fortnight in 8K. Olympic Broadcasting Services are planning on using Tokyo 2020 to run the first 8K live content for the games, with more use of drones and innovations like tracking cameras that focus on a single competitor for OTT streaming. While this sounds like an appealing enticement for end-consumers wanting the best viewing experience for the games, realizing the full potential of 4K, let alone 8K, is still in its early days. The technology is in place to produce and transmit 4K signals, but there are still huge technical hurdles for broadcasters to providing true 4K content on the consumer’s TV, providing they even have a big enough TV to notice the difference from HD. For this to be achieved, a high-density encoding application will be key to reducing the expense associated with acquiring and distributing the high-resolution live content. Nonetheless, the consumer reality of achieving 8K could provide an unwelcome distraction to the ongoing rollout of 4K, which still has a way to go before reaching its true potential. What will be seen, however, is an Olympian-sized step toward achieving zero latency, so that viewers of live-via-satellite broadcasts and OTT finally enjoy comparable signals rather than a 20-second delay between the two.
The industry is poised to thrive. There is no single technology or business path that will guarantee success for every rights holder. The big takeaway for the leagues and broadcasters is that sports fans – whether they are in New York, Mumbai, London, or Beijing – are willing to follow their passion on the device, timetable, and cost model that suits their circumstances. Whoever brings them their favorite sports needs to adapt to meet changing and expanding demands.
As audiences become more global, the ability to deliver live sports and esports content, in increasingly immersive formats from anywhere to everywhere, is going to be a critical driver of media-delivery innovation. The importance of high-bandwidth, low-latency connectivity will underpin the necessary developments the broadcast industry needs to take, to maximize what is set to be another game-changing year for live sports.
Content owners are trying to optimize the monetization of their content, using OTT delivery. There are now new pure-play sport OTT players in the field, like DAZN and Eleven Sports that have aggressive ambitions and are following the footsteps of Netflix. These players have made progress thanks to their strong drive, their differentiation, and their consumer focus. But will they be profitable? That question remains unanswered.
Partnerships are going to be essential for success. OTT services will not be profitable without the support of operators marketing their offering. That scenario is a win-win situation for all parties. Netflix is distributed across more than 150 pay-TV operators, which brings significant revenue to Netflix, without the cost of acquiring those customers. Similar schemes are expected to be developed with pay-TV operators for sports content.
Is the broadcast model doomed? Not really, and broadcasters can add more interactivity to the fan experience on hybrid devices powered by Android TV. On the infrastructure side, the cloud is still the best technology because it allows deploying fast, coping with the event-based nature of sports, and creating innovative services that can be consumed on any device. It is also the only viable economic model for Tier-II and Tier-III sports, where capital investments have to be minimal to test new markets.
When China sneezes, the world catches a cold
Some of the biggest events in the sporting calendar have fallen victim to COVID-19, with organizers, clubs, and broadcasters among those counting the multibillion-dollar cost of disruption after fixtures across the world were cancelled. The English Premier League, France’s Ligue 1, and Uefa, European football’s governing body which organizes the Champions League, became the latest organizations in the sport to postpone matches after players and coaches contracted the virus and forced teammates into self-isolation. The start of the Formula One motor racing series was delayed, with the season-opening Australian Grand Prix cancelled. Many of North America’s biggest sports leagues, including the National Basketball Association, the National Hockey League, Major League Soccer, and college tournaments, have also been postponed. Leading professional tournaments in tennis, rugby, golf, and upcoming World Cup football qualifiers in Asia have also either been halted or axed.
In a recent development, Japan’s Prime Minister Shinzo Abe and International Olympic Committee (IOC) president Thomas Bach agreed to postpone the Olympics until 2021. The ripple effects for NBC and owner Comcast will be significant, though probably not disastrous. More than USD 1.25 billion in advertising commitments is on the line for the network and Comcast. The network had already spent millions more on infrastructure and deals related to its broadcast plans. The swath of cancellations has left holes in the broadcast industry. The impact goes further, with heavy losses expected for many businesses associated with the competitions. Everyone thinks immediately of lost revenues from matches that are cancelled. But this is just the start of it – clubs have commercial contracts, which are contingent on brand exposure, matches being broadcasted, and/or dependent on spectators in the stadium. Cancellations ultimately mean sports rights-owners losing revenue.
Cord cutting will accelerate with a vengeance. It is happening around the world: The more people stay in self-quarantine, the more they find themselves glued to their screens. In South Korea, as cases spiked, television viewership shot up 17 percent, according to Nielsen. In Italy, the size of the TV audience increased 6.5 percent, with a 12-percent rise in hard-hit Lombardy. The same trend has arrived in the United States and the rest of the affected countries. But for media companies, the benefit of having a bigger-than-usual audience may be short-lived as the outbreak threatens to undercut the very structure of their business. With businesses scaling back workers, and analysts warning of a recession as global economies slow, a significant number of viewers may decide in the coming months to break away from cable or cut back on streaming subscriptions.
The gain in audience size will be replaced pretty quickly by the necessity of reducing monthly bills, when consumers will have to deal with the financial impacts of a recession. Live sports coverage generates billions of advertising dollars and fuels television subscriptions – a combination that delivers fat profits. The sports coverage has become critical at a time when the audience appetite for dramas and sitcoms has shrunk. Advertisers spend more than USD 2 billion on live games and tournaments during this part of the year, according to Kantar Media.
It is difficult to say what the long-term impact of coronavirus will be on the broadcast and media industry because nobody knows exactly when things will return to normal. The extent of the disruption will likely depend on the type of content that media companies produce and distribute. The film, TV, and video industries can only maintain output if their physical operations are maintained.
Would consumers still subscribe to OTT platforms if they could not add new shows to their libraries? If sports stadiums are forced to close their doors for the long term, they could lose their allure to broadcasters. Would these competitions be as good, or as popular, without the live atmosphere that fans create? With luck, these disruptions will just be temporary. Beyond this, the industry is in uncharted waters.