Why OTT Avoids Sports

In my travels through the television world it's interesting to note the plapable sense of panic that pervades the industry.

Everyone recognises that we live in a 'golden age' for television, where even big Hollywood stars yearn for the next small screen gig, but underlying this is a real sense of unease.

In an era where massive amounts of venture money is proping up a slew of new ventures, an industry that has resisted the coming of the internet is finally facing seismic changes.

Linear television and schedules are finally fading away and apps are the new channels.

There is nothing to stop content generators from becoming media empires, as the like of Vice have shown (before they were gobbled up by a bigger media empire).

But the great danger of this new model is disintermediation.

Time and again I have been involved in projects that involved right holders going directly to audiences, and with a few notable examples, in most cases they have failed. The reality is that those who are good at telling stories and producing great content are pretty bad at marketing them and building audiences. They depend on existing platforms, from the BBC to Netflix, to do this for them.

And with surging valuations and ever increasing budgets from these middle men, who can blame them for avoiding trying to build their own distribution platforms ?

Of course there are a some new player such as fubo TV and Premier TV who are seeking to carve a place in this ultra competitive niche - one by aggregating and the other by acquiring more minor rights.

Meanwhile the platforms themselves - broadcasters in old parlance - are in a dog fight to the death. In the UK a cross party group of MPs are seeking to protect the BBC from Netflix and its ilk. There is consolidation and merger at every turn. Even Rupert Murdoch had to admit that his Fox and Sky television empire was too small to survive.

At the core of this is rights price inflation. This, of course, first manifested itself with soccer where cable company Sky bet the company on over paying for rights in order to build a customer base. Their punt paid off handsomely. But it's interesting to note how few sports rights have been bought out by the new platforms. Netflix has some sports documentaries, Google has toyed with a few minor cricket rights and Amazon is focusing on tennis, where rights are far more affordable.

These are data driven companies. Their growth and success is down as much to algorithms as to the gut feel of commissioning editors and marketing departments, and the cost of sports rights makes no sense at all to them in their current form.

This, then leaves the market open for the likes of Disney and Comcast (who now own Sky) and even terrestrial players. For the time being anyway.

OTT is based on apps and AI and drives engagement via alerts and emails. Traditional TV is left with dancing and baking shows, which are still working well. Where the two worlds meet is the blockbuster mini series (usually crime based). Ironically nearly all of the big hits on Netflix and Prime were produced by the likes of ABC Studios, A&M and the BBC.

And this is where the sports and entertainment rights markets really diverge. There is heavy integration between both the OTT and TV distributors and production companies - often via ownership, but, with the exception of certain properties such as Formula 1, there remains a clear gap between sports rights holders and distributors.

I predict that this is where we are going to see some major changes in the near future as the market for sporting rights corrects itself.