Breaking down the Sports Media Evolution with Industry Experts
The sports media rights market is undergoing a dynamic transformation, driven by the digital age. Traditional broadcasters and streaming platforms are vying to become super-aggregators to combat consumer fatigue, a consequence of increased fragmentation of rights by rights holders. Confronted with stagnating rights fees, many rights holders are equally looking to build sustainable business models, exploring D2C revenue streams and more strategic partnerships characterised by longer-term deals, cross-territories, and shared investments, risks, and revenues. The Apple deal with MLS serves as a notable example of this trend.
In this interview, LaSource's Chief Business Officer and industry expert, Leander Monbaliu, delves into these evolving dynamics with key industry figures, each with a different background and perspective. Sébastien Audoux, Leonard Batet, Tom Evens, and Hans Gabbe share their insights on how these shifts are reshaping the media landscape, providing valuable perspectives on the future of sports media rights.
In the evolving landscape of sports media rights, traditional broadcasters’ business models are increasingly moving towards aggregation to offer comprehensive packages. At the same time, streaming platforms face significant challenges in achieving profitability post-unbundling. How are these dynamics influencing the strategies of both traditional broadcasters and streaming platforms, and what does this suggest about the interdependence of these entities in creating a sustainable sports media ecosystem?
Tom Evens: The early development of streaming was complemented with unbundling: streaming was presented as a cheaper and more flexible alternative to the ‘fat’ pay-tv bundle. However, lately, we see a growing trend toward re-bundling and a race to become the go-to destination for live sports. Smart TV portals are aggregating FAST channels, Amazon is bundling sports with retail, and betting operators are integrating live streams. And what should you think of ESPN, Fox, and Warner Bros. Discovery announcing a joint venture to provide sports streaming?
Sébastein Audoux: One of the important elements in that trend is the shift of the ‘editorial’ part from the media side to the rights owners. We are witnessing more and more rights owners taking up important roles in production. On the other hand, streaming services seem less interested in content and more focused on distribution and commercial elements. This major shift from the traditional relationship between rights owners and broadcasters has shaped the sports media landscape over the last 50 years.
Hans Gabbe: While I agree that aggregating has grown in importance, I don’t believe in distinguishing traditional broadcasters and streaming players because, more or less, any established pay sports business is also offering a streaming solution similar to conventional streamers. The main difference is that the traditional pay operators offer a multi-thematic offer (Sports and Entertainment) versus sports-only offers. On top of that, as rightly stated, these pay operators have their own platform for aggregation. However, the most important acknowledgement is that sports-only offers have a massive strategic downside because they will only attract dedicated sports fans. At the same time, most of these sports fans are also interested in entertainment content, and leaving this aside is limiting the potential headroom massively. Therefore, a multi-thematic platform that aggregates various content would serve sports fans from a single source. On top of this trend, we also see a considerable fragmentation of the sports ecosystem, where the fans are lost. If they want to see live sports, they must have a subscription. To deliver a good fan experience and a sustainable business, content aggregation must happen, and this evolution is already visible in recent activities of the NBA, NFL etc.
The recent groundbreaking partnership between Major League Soccer (MLS) and Apple is a prime example of a league taking a novel approach to broadcasting and distribution. How should sports organisations prepare for and navigate these evolutions in media rights to ensure they effectively leverage partnerships with broadcasters and platforms? What strategies can they employ to understand and align with the new business models of their partners, and what lessons can be drawn from the MLS and Apple collaboration? Lastly, what parallels (if any) can be drawn by the European Sports Industry from the American model per se?
Leonard: The deal between MLS and Apple is an example of how both parties benefit from one another. For MLS, achieving global reach could be challenging due to a lack of interest in some territories. However, securing an international deal with a well-known brand all around the globe has given MLS a powerful exposure, which would be very difficult to achieve if they went the traditional route. On Apple’s side, it's also an excellent opportunity to secure the rights of a well-produced sports event, with probably the best player of all time and content running for about 8-9 months. There aren’t that many leagues or sports events that can cover all these characteristics at an affordable price.
Sébastien: I see this trend evolving even further in the future, with less and less guaranteed money for the rights owners and more and more incentives for the revenues generated by the platform. The days of media/broadcasters taking on all the risks and offering fully guaranteed money to the rights owners are numbered; I don’t see this continuing much longer with the current state of the market. The other important element is that it’s a global deal first, with certain domestic, non-exclusive aspects in place to offer more traditional broadcast deals to continue in the US and Canada, which is very smart. Unfortunately, the complex tender processes in Europe, with all their legal ramifications, don’t offer the same latitude to transition quickly towards that. However, I see this as the future without a doubt. Streaming services are global first, and the sports industry is bound to adapt.
Tom: Over the years, we have gradually shifted from “take-the-money-and-run” broadcast deals to more innovative partnerships, in which sports franchises collaborate with media platforms to enrich the sports experience. In this context, Netflix is an inspiration and reference for the entire industry. Drive To Survive is a textbook example, but its approach to WWE is also interesting to follow.
Hans: Given the length and the kind of cooperation, this type of partnership can only work for premium sports in the US only. So far, the EU law does not allow pan-European deals for premium sports, and these global players are often in need of scale and not isolated country solutions in Europe. As Netflix is in the non-linear area for F1, these players (streaming) can create a massive international audience to engage with fans and, even more importantly, drive new interest in a sport.
A stakeholder (Apple) historically outside the value chain is now a significant player. Now we're seeing evolving deal structures in media rights negotiations, such as Lionel Messi's agreement to join the MLS upon a share of the league's revenue from its Apple TV deal and the PGA Tour’s decision to offer private equity to their players. Do you believe these agreements will remain a niche phenomenon, or will they become increasingly relevant?
Sébastien: Athletes are the product, and even with team sports, younger demographics seem to be more focused on individual athletes than teams; therefore, they hold all the cards, and it’s only fair that they are incentivised on those global deals. You can say that it’s already the case in the NBA, where revenues from TV contracts directly impact the salary cap and, therefore, what the players can earn. That’s the missing link in European football, where players’ salaries rise from the trading market independently from what the clubs are earning from media rights, creating an unsustainable business that is hurting the entire sports ecosystem even more now that we see media rights deals being more challenging to execute and close. Again, it’s all about having a global partnership amongst all the stakeholders, players, teams, owners, leagues, broadcasters, and streaming partners, allowing everyone to share not only the revenues but also the risks.
Leonard: From a rightsholder point of view, the entrance of newcomers is always positive. Finding innovative ways to attract talent or retain existing stars is something that all leagues should aspire to do. So, in this sense, this trend will be very relevant in the upcoming years.
Tom: The recent entry of private equity in many sports ownership structures is driven by a need for financialisation, which is only sometimes used to deal with financial troubles following the COVID-19 pandemic. Apple’s deal with MLS looks more like an innovative strategy, and I think we will see more of this in the future. We are facing a near future with fewer buyers and less interest in spending massively on live sports rights. Therefore, sports organisations must pivot towards a more entrepreneurial mindset. In that context, revenue-sharing deals with media platforms will thrive.
Hans: Like all media players and rights holders, everybody wants to interact with these fans. Therefore, being on social media is vital. Above all, rights holders, clubs, and media companies must adapt radically because the demand from these target groups differs from paying subscribers. Hence, balancing interaction with delivering a passive live experience is vital. Allowing 24/7 storytelling beyond the sport about themes like fashion, cars, social activities, friends, etc, is key for the younger demographic. These target groups have so many choices for their entertainment demand; if the sports industry stays the same, especially in Football, we will lose this generation. However, as F1 and the NFL have shown, new disruptive ways exist. Moreover, it also respects the micropayment demand of this generation. To test, learn and also deliver the live content where they are, even on YouTube or TikTok, is creating the possibility to engage this generation and transform them later into the subscription business.
Engaging young fans seems to be a key focus for leagues, teams, and content providers. What innovative strategies are most effective in attracting and retaining younger, digitally native audiences for sports and media organisations?
Leonard: Fortunately, there are many ways and platforms for leagues to attract young audiences. LALIGA has always been at the forefront of this aspect, both in audiovisual production and the digital ecosystem, as, for us, it is essential to keep providing the best-in-class products and entertainment to our fans. Innovation is part of our DNA, and this mentality has allowed us to bring cutting-edge innovations such as the Fan Cam, Spider Cams, Drones, and digital DBR, which carry the best images to all our fans. We will keep pushing in this direction. The most important strategy is to be where young audiences are rather than bringing young audiences where you are. This doesn’t mean that live matches shouldn’t be broadcast on linear TV. It’s just a matter of choosing the correct formats for each platform, as we did after our agreement with EA Sports.
Sébastien: First, I think it’s imperative to understand that, unlike what many senior sports executives think, younger demographics are not less engaged with sports; they are just engaged very differently than previous generations with a more significant focus on individual athletes, highlights instead of live content, niche storytelling and a very different way to enjoy the on-site sports experience. Is it worth producing high-end tailor-made feeds for younger fans on TV and OTT platforms, as widely experienced today? Or is it better to go with watch-along on Twitch or even live experiences in Roblox or Fortnite? Storytelling needs to be fully aligned with those experiences. Do you need traditional commentary, or do you need a conventional studio? To all of that, I say no. Innovation in tech and editorial is the key to engaging with younger fans.
Hans: The NBA’s new app offers a home to fans with diverse interests and demands, the same as the NFL and the digital approach of F1 globally. It's no longer about delivering sport live; it has to be a one-stop shop solution for engaging experiences like watch parties, additional streams, live interactions with the media company or athletes, gamification offerings, and different types of content clips either related to the live sport and/or to the athletes themselves.
Creating enduring touchpoints with fans and hyper-localising broadcasts are suggested strategies for differentiating content in the shifting landscape. Can you provide examples or insights into how sports media entities are currently implementing or considering these approaches?
Sébastien: Golf has been a great example of what the PGA Tour launched a few years back with the “every shot live” experience during the Players Championship, offering more than 50 different feeds, or one feed per group on the course, which allows you to follow your favourite player all day long. The Masters is also offering in its app (best in the business btw) the “my group” experience, where you have near-live highlights of all players available at the tip of your fingers. To me, this is really the way forward in sports. The one-size-fits-all is not sustainable, particularly in sports where you never see all the action, like Golf, Motorsports, etc. Tech is there and evolving rapidly to allow us to produce it at scale; the future is now!
Leonard: The fact that football, and specifically LALIGA fans, are all over the globe is well known, so localising specific broadcasts or matches in foreign markets is a critical strategy that we have in mind and that we would like to implement in the future seasons, but we have no specific details yet. However, there are always barriers, such as the calendar and player overload, as moving to other continents could be exhausting for the clubs. Thus, local activations are a high-value resource, so sports media entities use them. This concept integrates watch parties, off-season local events, celebrity stars, former football icons’ matches, and grassroots events.
Tom: With limited success, I would say. The main business concern for smaller sports is that they must pop out in the flood of sports apps. Premium sports leagues will find limited difficulties in selling their rights in this red ocean, but niche sports may struggle to navigate this digital abundance. Let’s not forget the power of branding that pulls fans to teams and leagues. Smaller sports thus need to learn how to survive in this wide sea and develop more creative media and sports-related formats to tell their story.
Hans: We can see that rights holders and media companies are creating live and non-live experiences; either on new platforms like Social Media or by creating fresh live viewing behaviours like watch – parties and tailoring dedicated live and non-linear content for different target groups.
The call to constantly experiment and innovate in sports media content is clear. What barriers or challenges do you see hindering the widespread adoption of innovative technologies or approaches, and how can these be overcome to drive further progress in the industry?
Tom: In essence, the sports industry is fairly conservative. Change provokes resistance unless everyone’s situation is improved by that change – which mostly is not the case. The strings of bigger competitions (leagues) are often attached to lucrative media contracts, which they don’t want to put at risk (and probably likely so). Only when deals begin to stall do organisations start to imagine an alternative future (often when a call for a more friendly policy environment is turned down). Leagues must look beyond the next rights cycle and develop a consistent vision of approaching an uncertain future while recognising the power of digital technology.
Sébastien: Innovation carries a risk element; the bigger the sports event, the more risk-averse you become and, therefore, less susceptible to innovation. The single greatest innovation enabler has been… cost cutting. It’s a shame, but media companies tend to innovate more under economic pressure. Innovation should really be a priority. It allows for more growth, better consumer engagement and, in most cases, better economic efficiency.
Leonard: Since the 2015/16 season, LALIGA has been innovating on the audiovisual production of the live matches, incorporating new cameras and graphics. An example of this is the agreement with EA Sports as the title sponsor, where the TV broadcasts incorporate elements of the video game, and while playing the video game, fans feel as if they are part of a real-life match. Of course, other innovations ares still to be tested, such as VR. However, we must be cautious, as with 3D technology that came some years ago and appeared to be the future, and ultimately, it wasn’t.
Hans: Niche sports realised they had to become innovative leaders to compete with premium sports like football, whose revenues always increase, so football has not developed the product as other sports have. It’s still very focused on the live match day, protecting clubs, and a brand vision of rights holders, which hinders innovations. Also, the fact that fans demand entertainment the entire week and not only on match days is still an issue. Fans will choose something different if you don’t deliver an interesting experience.
In the past decade, a lot of focus has been on the D2C capabilities of sports organisations. This hasn’t changed the media rights and content strategies of leagues, federations and clubs. Do you feel these investments in in-house content production capabilities, in-house sales, or D2C OTT platforms for these organisations are sound business models, or will we see a refocus on core activities?
Leonard: D2C is an approach that all sports organisations should be prepared for; in some cases, it is probably the best option. However, returning to the first question, finding the right partner to achieve common goals is more powerful. Would MLS have reached as many subscribers with their own OTT platform had they not partnered with Apple? For sure not.
Tom: The business of direct-to-fan models is still highly uncertain; the economics are not right yet. In other words, I don’t regard these models as the central element in a commercial strategy at this moment in time. However, we can’t imagine a future without companion apps or other owned digital touchpoints either: they have become an indispensable element in the sports marketing mix as they create loyalty, deepen engagement, collect customer data, build a direct relationship with fans, and so on. Currently, I see them as a way to experiment with ancillary rights rather than to use these platforms as an alternative to media partners.
Hans: I would argue that all these ideas have more or less failed because Sports Organisations have not fully understood customer behaviours. Fans are either very limited in growing beyond the status quo or are interested in other sports and entertainment content. leading to various subscriptions and their high prices. However, all Rightsholder D2C products also seek distribution via former media partners because only distributors can heal the pain of not having aggregation and entertainment offerings. Finally, D2C is creating a non-exclusive right, and no one will pay a high licence fee for non-exclusivity.
Sébastien: I think it’s difficult to achieve the kind of access you want with the athletes from the outside. NFL Films is the perfect example. An NFL-owned production company but one that operates with a certain degree of independence. ‘Hard Knocks’ wouldn’t have existed if NFL Films had not produced it and without the NFL-enforced rules regarding the participation of non-playoff teams in the programs. Even though I have a media background, I’m all for leagues building their own production houses and managing larger portions of the content-output pie. Many of my fellow sports journalists might see this trend with certain inhibitions. Still, I see this as a major opportunity to put content at the centre of everything because, in the end, it’s about how you shape the story. The space for traditional media is becoming smaller and smaller, and whether we like it or not, I see this trend accelerating.
Our Take:
The evolving landscape of sports media rights is marked by a significant shift towards aggregation and the increasing importance of innovative partnerships. Traditional broadcasters and streaming platforms are adapting their strategies to navigate these changing dynamics. Traditional broadcasters are moving towards multi-thematic aggregation to retain a broad audience base while streaming platforms like DAZN focus on distribution and commercial elements. This interdependence between entities highlights the necessity for a cohesive and sustainable sports media ecosystem, as noted consistently by our interviewees. Tom, from an academic perspective, emphasises the re-bundling trend and the race to become the go-to destination for live sports, reflecting a broader understanding of media trends. Hans, from his perspective, rightfully underscores the importance of aggregation in offering a comprehensive multi-thematic platform, warning against the limitations of sports-only offers. This convergence towards aggregation, bridging traditional broadcasting and modern streaming services, is crucial for creating a sustainable business model. Rights holders need to understand and anticipate this dynamic, as it risks decreasing direct competition for rights, as we’ve seen in multiple territories. To different degrees, our interviewees seem to agree that rights holders should be equipped to build a stronger D2C relationship, but none see it as a standalone viable solution.
The partnership between Major League Soccer (MLS) and Apple exemplifies a forward-thinking approach to media rights, emphasising collaboration and shared incentives. Leonard, as a league executive, praises this model for its ability to offer global reach and exposure that would be difficult to achieve through traditional routes. Conversely, Hans points out the challenges of replicating such global deals in Europe due to legal constraints. This American model, while not fully replicable in Europe, provides valuable insights. Tom suggests that sports organisations need to adopt an entrepreneurial mindset and embrace data-driven partnerships that share risks and rewards. Indeed, gone are the days whereby rights holders can sit back, take the money and run, something LaLiga and MLS have understood. Additionally, Sébastien, with his editorial experience, highlights the trend of athletes becoming central to media deals, reflecting a shift towards individual-centric fan engagement. Engaging younger, digitally native audiences through innovative technologies and storytelling, as noted by Sébastien and Hans, is also essential in maintaining relevance and driving growth in the sports media landscape. But as all interviewees point out, the industry, and football organisations in particular, should be more open to change and innovation, fighting the conservatism that still seems to be omni-present. This will only be possible with stronger collaborations across different stakeholders. Amen to that!
LaSource and Media Rights: What Do We Do?
LaSource is an agency in the sports industry working with sports and media organisations to create and implement business strategies that accelerate growth and shape the future of the sports industry.
Our Transform Consulting Services provide rights holders and broadcasters strategic and commercial support for their media and broadcast activities.
We design tailored go-to-market strategies and assist rights holders in every step of the process:
Strategies to maximise your media rights value
Optimise your revenues from media rights through innovative sales
Unlock new revenues from non-exploited rights and IP
Create engaging content formats
Build a future-proof tech stack for optimized content distribution
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We assist Broadcasters in their sports rights strategy through:
Identifying rights opportunities
Benchmarking value
End-to-end acquisition support
Negotiation and legal assistance
Operational support
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Contact Leander Monbaliu, David Gonçalves or Loïc Holuigue for more information.