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The Decline of Cable in Sports Broadcasting and the Arrival of the “Wild West” of Streaming

3 Nov 2023   ·   

The NFL has always prioritized the reach of its broadcast spectacle over other technical considerations. American football was considered the king of open television, but in May 2023, Roger Goodell, the league’s chief commissioner, announced a deal with YouTube TV for the broadcasting of its most important package, the Sunday Ticket, the Sunday afternoon game not broadcast by local televisions. A step he described as “just the beginning” of what is to come. The service had been with DirecTV, a satellite television provider, for 30 years since 1994. 

HBO (Time Warner) had been offering boxing on its cable broadcasts even longer: 45 years. It was their star product, but in 2018, it was announced that it would no longer be broadcast. The network had made household names of George Foreman, Joe Frazier, Mike Tyson, Julio César Chávez, Oscar De La Hoya, or Manny Pacquiao, to the extent that the HBO brand was more identified with boxing than with other content. The decision was a surprise because boxing continues to thrive and HBO had reached 40 million subscribers, but a simultaneous phenomenon was occurring. The boxing audience within the platform had dropped from 30% to 2%. Fans were migrating to streaming platforms, where the offer is broader and more varied. 

Its major competitor, Showtime (CBS), has announced the dissolution of its sports network that had been broadcasting boxing for 38 years. Both HBO and Showtime had made significant investments in their streaming services, but changing habits or fan preferences made it unsustainable to maintain the rights. The behavior of this audience is worthy of study because extrapolating their case to other sports is relevant. 

In the early part of the last decade, there was an aging of the viewers. Most of them had been hooked on the sport by great historic fights in more accessible broadcasts than the packages that over the years had ended up being offered on these two major networks. Unlike that generation, the new one, with a cable package system unreachable for their budget, had ended up being interested in new fighting modalities, like MMA (Mixed Martial Arts), while boxing subscribers on HBO and Showtime were averaging over 55 years of age and had ceased to be an attractive segment for advertisers. 

The dynamics of boxing broadcasts had led to a stagnation of viewers, and at the same time, MMA organizations, UFC (founded in 1993), and Bellator (2008) were taking advantage of all the technological innovations on the market, streaming, and social networks, to grow. Their product was much more accessible by first screen (without a subscription, young people did not want to pay a monthly fee for cable) and dominated the key factor for the growth of any offer: interactivity. To the point that Bob Arum, the most important boxing promoter in the United States, expressed to the Washington Post that they had tried everything to rejuvenate their audience, from promotional strategies to social media campaigns, but had not been successful. At least until they realized the problem was the premium cable subscription. 

Another key to the big change has less to do with the content than with the layout of homes. The 20th century shaped a house around a piece of furniture: the television. This device had a focal function, with all family members gathering around it. With variations and the appearance of a second or third television set, this model has lasted for decades. However, mobile devices allowed viewing anywhere, during commutes or trips. The possibility of this individual and flexible enjoyment of entertainment, without depending on location, added to the phenomenon of the second screen, the use of mobile devices as complementary while following a live show, is what ultimately launched the OTT offer. 

To mobility, we must add the possibility of easily watching two or more simultaneous broadcasts or switching between them. It is no longer about following a sport, but being able to be aware of all regardless of the time and place: Personalizing the experience. A two-way phenomenon because for the industry, streaming also means being able to personalize advertising, a way to monetize it much more without additional investment. Moreover, it facilitates the inclusion of e-commerce options. There are already applications, like Magnolia, that have integrated sales within the app itself. The possibilities this allows in the sports sector with different brands and official merchandise multiply the potential profitability. On the other hand, improved accessibility also affects people with disabilities, as they can have automatic subtitles and adapted and descriptive audio for the blind. Similarly, all the expected development of Virtual Reality and Augmented Reality options will come this way. 

One of the most-watched sports, Formula 1, has taken advantage of countries where it did not have a cable broadcast partner to launch its OTT app, F1 TV Pro. Installing it is as complicated as entering Google Play Store or Apple’s App Store. It allows watching all races live, including Formula 2 and Formula 3, and on-demand, but the most differentiating feature is that the user can choose camera angles and access replays. The risk, on the other hand, is that it is an attractive product for the “purist” fan, but it neglects the casual viewers. As has been seen with boxing and HBO, the exclusivity of the content and a captive audience can lead to emerging sports or simply those from competitors displacing it in terms of popularity. Nonetheless, after five years of the app’s operation, it has penetrated 87 countries with a corresponding increase in revenue. Although, currently, its promoters prefer not to enter into conflict with other operators in markets where they have sold the rights, claiming it would “cannibalize” them, the momentum looking forward is clear about the direction it is going to take

But it’s not all about advancements that leave cable behind; there are also setbacks. Recently, there have been instances like that of the Phoenix Suns, who have provided their fans in Arizona with free antennas so they can watch their team’s games on conventional television without needing a cable or satellite subscription. The idea emerged following the bankruptcy of Diamond Sports Group, the cable provider, and the Suns were joined by the WNBA’s Mercury and MLB’s Arizona Diamondbacks. Now, local Arizona television broadcasters, as well as Kiswe, a streaming operator, will air the games. In this case, the losses due to the abandonment of cable are compensated for by the reach, which is estimated to be almost three million households. 

This surge in itself did not pose a threat to traditional sports, which have eventually migrated, as the NFL recently announced, to streaming platforms. However, it has increased competition, as happened with boxing. OTT technologies do not discriminate against minority sports; their accessibility is exactly the same as that of major sports, unlike what happened with premium cable. There is an empowerment of niche sports with an unprecedented reach because not even a media infrastructure is necessary. Autonomous cameras and computer vision can make amateur or formative category broadcasts viable and even profitable with minimal technological investment, which in turn can offer statistics and data like those that until a few days ago illustrated the most important broadcasts. Initially, the growth of this new sector was fragmented and progressed irregularly with initiatives from high schools or some sports clubs, but now projects are emerging that seek to centralize this entire market, such as NBC Sports Next’s SportsEngine Play, and they may be the major change makers. 

According to a report by Digital TV Research, it is estimated that pay-TV revenue accounts in Western Europe will lose approximately five billion dollars (an 18% decrease) by 2028 with a 7% decline in the number of subscribers. Meanwhile, Statista estimates that OTT television will gather more than four billion users worldwide by 2027. However, if there is resistance to change, it is because of the great Achilles’ heel of OTTs: technical excellence. During the NBA playoffs, a Heat vs. Celtics game, the broadcast was interrupted, and then, it was not accessible on demand either. YouTube TV apologized to fans. Peacock TV had the same problem with the Premier League, leading to a corresponding wave of complaints on social media. Latency, which can still be around 20 seconds, is another handicap, as immediacy is the most important sensation that a live event must convey. In 2019, when the aforementioned F1 TV Pro was launched, the failures were so frequent that Liberty Media was forced to refund subscription money.

Nor should we dismiss a concerning scenario, where the solution becomes the new problem. The paradoxical case begins with that fragmentation of audiences. Traditional television suffered this phenomenon, first with the arrival of cable, then with OTTs and streaming, and the sports industry runs the same risks. Beyond iconic spectacles, such as the NBA Finals, the Super Bowl, or the Champions League, as Forbes says, in terms of business forecasting, the scenario that comes with the new technological options is “the Wild West”.

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