OTT Sports Streaming Industry: Overcoming Market Setbacks

Live sports have always been a reliable revenue generator for television networks, as broadcasting rights practically guaranteed large audiences and significant advertising dollars. In return, TV rights funded the growth of sports leagues, and sports programming was used to encourage viewers to subscribe to costly cable and satellite TV. We’re seeing this relationship evolve as sports organizations adapt to the evolution of OTT sports streaming.

For example, the NHL and F1 racing have launched their own direct-to-consumer (DTC) platforms to create completely new revenue streams. Sports clubs have also launched their own platforms, like Manchester United’s MUTV and FC Barcelona’s Barça One, which feature exclusive content along with live matches. And of course, new agreements are forming with existing OTT streaming platforms, such as NBC’s Peacock hosting the 2024 Summer Olympics.

However, the changes in the sports streaming industry are proving to be much more complex than simply transitioning from traditional broadcasting to digital platforms. Sports organizations are finding that the straightforward DTC connections that so many of today’s content creators and music artists enjoy aren’t as clear or easy for them.

Changes in both the sports streaming market size and audience behaviors have brought forth new, unforeseen obstacles. But at the same time, these challenges are also presenting even greater opportunities.

Challenges for OTT Sports Streaming

During a 2024 Sports Video Group (SVG) event in London, Caretta Research presented their findings on the current state of live sports. The presentation (“The Trouble with Live Sports” by Ed Barton) noted several challenges.

Flat Market Spending

Market spending in sports rights has flattened overall. As more viewers shift to streaming, the biggest buyers of sports rights—broadcasters, regional sports networks (RSNs), and pay TV providers—are losing revenue.

While many broadcasters are mitigating their revenue declines by expanding their streaming offerings, they’re facing significant costs as they do so. The investment required to build a streaming infrastructure, coupled with the declining revenue from their traditional models, has led to less capital for purchasing sports rights.

To compound these challenges, major streaming platforms are approaching sports rights more selectively than traditional broadcasters did. Rather than investing in entire seasons and tournaments, they’re often choosing specific high-profile events that they can monetize through multiple revenue streams.

Taken together, these trends demonstrate that the financial component simply hasn’t followed at the same pace that content has from broadcast to digital. Instead, traditional broadcasters are facing their own budgetary constraints, and the largest streamers aren’t replacing this shortfall with equivalent investments.

Different Consumption Habits

Another significant challenge the sports industry faces is the matter of changing consumption patterns. While cord cutting isn’t new, the total number of cord cutters in the U.S. has grown to nearly 40 million. And even though cable is growing in other regions like Asia, Africa, and Latin America, the U.S. alone accounts for 45% of global pay TV revenues.

Younger audiences in particular aren’t even cord cutting; they’re not subscribing to traditional pay TV models in the first place. Instead, they’re consuming more and more sports content in short-form vertical video format on social media platforms like TikTok, Instagram, and YouTube. The bite-sized nature of this content stands in direct contrast to the extended, immersive viewing experiences that live sports typically offer. Furthermore, it doesn’t align with the advertising and subscription revenue models that have historically supported sports broadcasting.

Thus, broadcasters have to appeal to the preferences of younger audiences, who represent the future of viewership. But they also have to cater to the preferences of older fans who still value traditional, longer-form sports content. Balancing these opposite consumption patterns will require new approaches to content creation, distribution, and monetization—all of which add more layers of complexity to the transition.

Opportunities for OTT Sports Streaming

The challenges in the sports streaming industry also bring unique opportunities to the sports federations, leagues, and clubs affected by the shrinking sports rights pie. Embracing a hybrid approach that blends traditional broadcast with DTC streaming will be key to achieving growth in a stagnant market. Furthermore, it creates new monetization opportunities via sponsors, advertisers, memberships, and e-commerce.

More Event Highlights

Sports highlights have been growing in popularity among younger audiences. In fact, a third of 18-to-24-year-olds prefer sports clips or highlights over live streamed sports games. The viral combination of sports and social media makes platforms like Instagram and YouTube ideal for short, engaging clips. Videos that see more interaction and shares will also inform content and editorial decisions and create opportunities to reach broader audiences and attract new viewers.

Video streaming platforms like Brightcove have simple workflows to create clips and distribute them on other channels. You can also clip live events during the stream. For example, if your live stream sees a drop in concurrent viewers, you can quickly clip a highlight and promote it to your fans on social media. It’s much more effective to show sports fans what they’re missing rather than simply reminding them.

Better Fan Engagement

Interactive video boosts viewer engagement, and stats have shown a boost across all video metrics once a viewer interacts with a video. This ripple effect results in longer viewing times and more views and engagement across more content. Features like displaying player and team stats in real time, instant replays, and highlight reels during live streams create a more immersive and participatory viewing experience. In addition to keeping fans engaged, the increased interactivity will also provide valuable data on viewer preferences and behaviors that can be used to improve performance and create a more personalized experience.

Be aware that live interactivity is technically complex, and the volume of metadata created from live sports is enormous. For example, the German Football League has 11 petabytes of data within its media hub. Before jumping into interactive video, be sure your streaming provider has proven experience at this kind of scale.

Smarter Content Discoverability

By now most sports organizations realize that not leveraging data-driven insights to improve content discoverability is a competitive disadvantage. Using data to generate personalized recommendations helps keep fans on the platform longer and increases the likelihood of them watching more content.

Of course, analyzing the viewing history, engagement, and preferences of thousands of individual fans can be a tedious process. That’s why Brightcove aggregates all of your audience, content, and service data for you into actionable insights. Even if you don’t use Brightcove for your media, you can use our Subscriber Insights to collect data from different sources, harmonize it, and visualize it.

Especially in the world of sports, where audiences are engaging in real time, you can’t be buried in dozens of data pulls and spreadsheets. Our insights can help you take action before your fans miss those record-breaking moments.

Simpler Pathways to Loyalty

Leveraging DTC as part of a hybrid approach to OTT sports streaming can also create a more seamless customer journey that boosts overall fan loyalty. Fans could easily transition from watching a live game to viewing highlights, purchasing tickets for future games, buying merchandise, and accessing exclusive behind-the-scenes content. This creates a comprehensive ecosystem that improves the fan experience while allowing sports organizations to own the revenue from memberships and advertising.

Taking Sports Streaming Beyond the TV

Certainly, franchise loyalty among sports fans is already the envy of brands and other industries around the world. But given the challenges in the sports industry, even that has its limits.

Sports organizations must realize that the future of sports streaming is not just about adopting new technologies, new tactics, and a hybrid approach to live sports. Rather, it represents a paradigm shift in how viewers consume content and how fans engage with their favorite sports, clubs, leagues, teams, and players.

The organizations that recognize consumers’ desire for sports entertainment to be integrated into their lives, not just confined to their TVs, will see the highest revenue potential. Fans want to be immersed in the culture and experience of the live sports events they love. We can do that by offering them behind-the-scenes content, exclusive content, and the plethora of other video content types that can keep fans connected. Done correctly, these organizations will also see more engagement and ultimately turn casual viewers into “superfans.”

Though the challenges in the sports streaming industry are formidable, it’s moments like these that lay the foundation for success in the years that lie ahead. The sports viewing experience is continuing to evolve, and now is the time to seize the opportunities it presents.