The Rise of OTT Content Streaming

In recent years, we have witnessed major developments in the media and entertainment industry regarding the way content is produced, delivered, and consumed. On a global scale, new specialized OTT streamers such as Eleven Sport, DAZN, Twitch, Roku, and Hulu are emerging alongside traditional TV broadcasters. They help clubs, federations, and even broadcasters to manage and improve their OTT or live media streaming offerings.

Over-the-top (OTT) services are services offered via the open internet. They are the counterpart to the managed services of traditional TV broadcasters, which are provided over their own network (and not over the open internet).

In line with other industries, technology has disrupted the value chain within the media industry. The new ecosystem is becoming more complex and more “connected.” Previously, rights holders (such as (con)federations, clubs, leagues, etc.) sold their media rights collectively by auction to a handful of TV broadcasters, who then aired the sports programs to the fans, the TV viewers. The rise of social media and mobile devices has significantly lowered the barriers to entry for newcomers in the media industry. As the multi-year TV contracts expire, new disruptive players are now emerging to strike media deals. This has given OTT providers like Eleven Sports and DAZN, among others, the opportunity to enter the market with a direct-to-customer (D2C) service, offering content and advertising tailored to specific (groups of) fans. They often first bid for rights in a smaller market, before expanding into larger markets. The new contracts often combine rights relating to both footage (the traditional media rights) and analysis and data. Due to the multitude of new providers, this market is becoming increasingly fragmented.

USA: Since 2013, the media rights landscape in the NBA in America has been completely shaken up by new OTT providers.

England: A good test case could be seen during the last contract renewal for the TV rights of the Premier League in England. Most rights (35 matches) went to BT (TV channel), but Amazon (OTT provider) obtained the rights to 20 matches. Rights holders are now selling rights to both the established order and to OTT providers (these can be specialized OTT platforms or social media that also offer OTT services).

Belgium: In 2020, the OTT provider Eleven Sport (ESN) was the highest bidder for the media rights of the Belgian Pro League, leaving Telenet behind. They have only existed for 5 years but are already bringing a global sports network that offers sports and lifestyle entertainment at both national and international levels. In addition to live coverage, they provide analysis, news, digital content, and local programs. Recently, they decided to significantly expand their offering of women’s sports and esports.

Football clubs are increasingly setting up their own in-house OTT platforms, allowing them to directly target their own fan base. Of course, they cannot offer the often match-related content, as they have sold those rights to traditional media, but there is so much more! Data, statistics, players, players’ wives, the chairman, interviews, club affairs, club history and icons, gossip, local sponsors, reality TV, locker room stories, etc. The fans love it and are willing to pay for it. See some examples below:

FC Barcelona: Barça recently launched its own OTT service: Barça TV+. The aim is to get to know their global fans better and to have more control over the content offered to their digital fan base. Typical content includes club videos, match highlights, live streams of press conferences, the B team, youth teams, exclusive “backstage” stories. Barcelona predicts that its digital revenue will triple to around €300M between now and 2025.

PAOK FC: For the 2019/2020 season, PAOK FC in Greece caused an earthquake when they refused to sign the football rights deal from the federation, opting instead for their own OTT platform. As national champions, they simply felt they were receiving too little TV money. They decided to stream all home matches to their approximately 200,000 fans worldwide. Setting up the in-house OTT service cost the club €3,000. Now, other Greek clubs are asking PAOK for advice. The established order of TV broadcasters is suddenly willing to offer a much better deal to the Greek top league.

Ajax: Ajax TV has been broadcast since August 2016 via Ziggo Sport and on premium channels Ziggo Sport Select and Ziggo Sport Voetbal. Given the above, it is inevitable that this solution is under pressure.

In terms of value, OTT currently represents less than 10% of the market. However, we are only at the beginning of a steep learning curve in sports.

OTT offers advantages in terms of flexibility and the enrichment of the viewing experience. And all that at significantly lower costs than traditional providers (OTT providers have no CAPEX). In particular, upcoming 5G innovations will stir things up even more in the areas of immersive video experiences, multi-stream, augmented and virtual reality, and “true” high-density image quality. Market research shows estimates that 75% of media revenue growth in the next 5 years will come from the OTT sector. While traditional TV shows about 3% annual growth in the Netherlands, OTT is growing by more than 20% per year.* The arrival of Disney+ and, to a lesser extent, Apple TV are making a positive contribution to this.

*Source: telecompaper.com