Media Rights Fragmentation: The Shifting Landscape of Sports Broadcasting
In the digital age of sports, characterised by globalisation and the increasing popularity of different competitions and leagues, a noticeable split concerning the broadcasting of these sports has emerged. The sports broadcasting realm has undergone a rapid transformation in recent years, fueled by the rise of advanced commercialisation and the emergence of new technologies. Gone are the days when fans could tune into the same one or two channels to catch every night's big match or follow their favourite team or league throughout the season. In response to the changing media landscape, sports organisations and leagues sell individual events, match series and bundles to different broadcasters, streaming platforms, or digital providers, effectively fragmenting and packaging their media rights. The rise of fragmentation has undoubtedly contributed to the growth of media rights value for teams, leagues and platforms alike.
However, the phenomenon has existed for over a decade, so why discuss this now, or why has it become an increasingly debated topic in the landscape? Because we’ve potentially reached a tipping point where the commercial advantages of the far-reached fragmentation no-longer outweigh the disadvantages. Or at least, it’s worth debating whether it still serves fans' changing needs and interests and, consequently, if it still helps drive and capture media rights value. In this article, we’ll introduce you to the concept of rights fragmentation, the advantages and risks, and our take on the evolution forward.
Sourced via EVAN SHAPIRO
Media Rights Fragmentation: The Evolution and Concept
As teams and leagues have been experiencing exponential growth in popularity for the past decade, so did their prospective value for their rights deals. This, coupled with the rise of new technologies for distribution, changing consumer behaviours and increasing regulatory scrutiny, created the perfect environment for media rights fragmentation. The intensifying competition among broadcasters, streaming platforms, and digital providers has led sports organisations and leagues to explore diversifying to increase competition and revenue in this space.
This competition has been fueled by the rise of over-the-top (OTT), direct-to-consumer (D2C), and streaming platforms, challenging traditional broadcasting models. Notable platforms such as DAZN, Amazon Prime, Apple TV+, and ESPN+ have emerged as competitors, attracting a growing base of sports enthusiasts who seek convenience and personalised content experiences.
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In parallel with the changing needs of consumers, the distribution and allocation of media rights are no longer limited to the live feed of the match or event. Highlights have been sold separately for years, like with the BBC's renewal of the Premier League highlights deal. More recently, near-live broadcasting rights and highlights have become notable examples of media rights fragmentation in search of catering to younger audiences and consequential value growth. Because younger fans tend to watch fewer full games but more short clips. For instance, Free.fr and Uber Eats' partnership allows near-live broadcasting of Ligue 1 matches, and in the Pro League, Belgian Bank's mobile app offers near-live clips, providing fans with on-the-go access to highlights. Short-form content is leveraged in both cases to drive consumers to other services. While we see an increase in the value of near-live packages, we see a decrease in highlights in many territories. With the emergence of social media, fewer fans wait for programs like Match of the Day to see highlights and scores of their favourite games. In other words, rights holders have been trying to capture additional value by creating new content packages of rights that cater to specific audiences and, therefore, help create competition amongst broadcasters. In this process, they have been trying to strike a difficult balance to not excessively cannibalise existing packages, whether that be live or delayed.
The conversation of media rights fragmentation and packaging isn’t limited to linear matches broadcasted on traditional TV; rights holders also tend to leverage the emergence of new technologies to differentiate packages based on the means of distribution, like streaming and OTT. However, generally speaking, many broadcasters will want to get so-called platform-neutral rights, maximising their ability to leverage different technologies to cater to their own subscribers. Rights holders nevertheless tend to provide those options in their quest to increase competition, a prerequisite for value creation.
To note: At the time of writing the article, news came out about LFP launching an innovative tender with only two packages, thus moving away from this tendency. With this bold move, the French league will give more exploitation flexibility to the live rights holders, putting its bets on this exceeding the additional value that could have been created by having multiple packages.
Beyond content and technologies, rights holders also create fragments by carving out specific use cases, like betting streaming rights or usage in commercial premises and, obviously, territories, creating a complex set of packages offered to the market in a tender document.
Advantages of Media Rights Fragmentation
For Sports Organisations: Maximising Revenue
In the ever-evolving landscape of sports media, maximising profits through strategic media rights deals has become imperative for sports organisations. With a substantial portion of their revenue from selling media rights, securing lucrative agreements with broadcasting, streaming, and digital platforms has become critical in sustaining financial stability and growth. As the global value of sports media rights surges, reaching an impressive $55 billion and projected to surpass $60 billion by 2024, these deals become even more apparent.
The fragmentation certainly played a role in this evolution, as it has created extensive competition amongst different players in the market. Tier 2 leagues now often receive 40% or more from their international media rights revenues by separating betting streaming rights from traditional rights, and near-live clips’ value proportion has increased significantly for many leagues, to name only a few examples.
Sourced via Deloitte
For Sports Organizations: Diversification of Audience
Fragmented media rights packages allow content to reach untapped audiences, expanding its accessibility to new viewers. It has opened up additional avenues for content distribution and different audiences. Viewers with access to a specific broadcaster or OTT platform are likelier to explore and engage with additional sporting events on the same subscription, especially as it is typically included in the price.
Platforms and broadcasters with extensive catalogues of sports content, such as DAZN adding over 75 rights to the platform in 2022, appeal significantly to the average sports consumer. These platforms cater to viewers seeking a broad and comprehensive understanding of the sports world or different leagues. This presents an advantageous opportunity for sports organisations, as fragmenting media rights allows these companies to become a part of the available and easily accessible options for these consumers.
OTT platforms that deliver on-the-go content present a unique opportunity for sports organisations, as they can cater to fans' evolving consumption patterns and preferences. These platforms resonate particularly well with the younger and digitally connected audience, as a catalogue of content is ready at the click of a button. As sports organisations divide their rights to these platforms, this can foster a solid and lasting connection from a league or organisation to a coveted fan base. Through these avenues, sports organisations and leagues can directly connect with fans, catering to changing consumption patterns and preferences.
Regarding changing consumption patterns of the younger generation, matches and sporting events can and are optimised to attract not only Gen Z but the next generation of viewers. Many league and sports organisations sell the rights to a youth-centered broadcast, targeting Gen Alpha through eye-catching graphics like the NFL and Nickelodeon or cartoons replacing players like with the NHL and Disney.
For Platforms: Being a Leader in the Industry
For platforms and broadcasters, the advantage of fragmentation is the opportunity to acquire different types of media to give to viewers. Due to the acquisition of different media rights packages by each platform, they can offer a diverse range of sports programming, allowing fans to access live events, highlights, and exclusive content directly. Broadcasters’ and OTT platforms’ attractiveness to existing consumers and potential new subscribers significantly increases as they secure rights to a broader range of content.
By continuously expanding their content catalogue, rights holders effectively position themselves as the go-to destination for sports enthusiasts. This desire to be a powerhouse in the sports broadcasting industry has allowed leagues and sports organisations to capitalise on these platforms.
What are the drawbacks?
For Sports Organisations and Broadcasters: Overall Viewership Decline
Excessive fragmentation may lead to decreased findability of the content, impacting the user experience and ultimately risking a decline in overall viewership, as fans must subscribe to multiple platforms to access all desired content. This fragmentation can result in confusion and frustration among fans who must navigate various services to watch their favourite sports team or league. Most fans (59%) would pay extra for a streaming video service with all the sports they want to watch in one place, with 80% of Millennials stating they would pay extra.
Sourced via Chemneera
Another key struggle for viewers is the rising cost of retaining multiple subscriptions for comprehensive sports coverage. These exclusive rights come at a high cost for not only the platform or broadcaster but also trickle down to the viewer. For example, in France, to watch Ligue 1se through Amazon Prime and Canal+ Sport, the price is around 575 euros a year. In the UK, it costs £700 (around 800 euros) a year in 2022 to access all of the Premier League. Exclusive rights deals can limit the availability of certain events or matches to fans who cannot afford or access the required platforms.
This presents financial obstacles for fans desiring all-encompassing coverage, leading to dissatisfaction. As a result, some fans might opt for alternative methods to access matches or events, resorting to piracy to obtain so they can stay up to date on their favourite league or team or catch a marquee event. The rampant rise in pirating and intellectual property violations can significantly diminish the product's overall value, affecting both the creators and legitimate consumers alike.
For Sports Organisations: Data Management
While media rights fragmentation opens doors to various opportunities for sports organisations and leagues, it also brings forth challenges and potential drawbacks that are critical to discuss in this conversation. One of the significant challenges lies in data management when dealing with multiple broadcasters.
Indeed, data management has or should become a key topic in the discussions between rights holders and broadcasters. The lack of exchange on this front leads to sub-optimal exploitation of rights. Lacking viewership numbers, leagues are not in the capacity to measure commercial exposure towards sponsors nor learn more about the fan's interests, reach and behaviour for the longer-term sales strategy. Equally, broadcasters could benefit from data sharing with the league, for example, to cross-sell subscriptions. These discussions have always been challenging, but, the more parties are added to the discussion, the more difficult it will be to be successful.
Our Take on the Future
It is critical to weigh both the benefits and risks of fragmentation as it becomes further cemented into media rights negotiations. However, it is also necessary to consider the market inefficiency resulting from media rights fragmentation.
Recently, as an answer to the continued fragmentation, the pendulum has begun to swing toward aggregation or the clustering of 3rd party content into one centralised area. For example, notable players like DAZN and Canal + are trying to capitalise on this inefficiency and possible fan fatigue by combining their offerings under one price and product. French Subscribers to DAZN will be able to access the top two matches per week throughout the season on Canal+ Ligue 1. It further demonstrates that both sports streaming services and more traditional players are facing the same challenges. Besides big tech players, like Google with its YouTube PrimeTime channels (link to Streamtime podcast), local traditional pay-tv players equally look to play an aggregator role, especially in the domestic market. This move could affect their interest in directly competing for rights and investing in production rather than focusing on striking strategic carriage partnerships. While navigating this evolution, rights holders must remain diligent and best evaluate the appropriate avenue for their organisation.
These companies effectively package content coverage in a given region, but aggregation can also occur globally through a singular entity. Take the Apple TV and the MLS; fans from over 100 countries can access the Leagues Cup on MLS Season Pass on the Apple TV app. In this model, fans know exactly where to find the tournament, and both organisations value the global shared brand recognition. While such a global rights agreement might not lead to short-term profit maximisation - going market by market or region by region might have been more profitable - it does fit better in the longer-term strategy and value for the MLS, as the partnership will strengthen their brand globally and a deeper commercial relationship, for example in relation to gaining market knowledge and data-sharing. Similarly, in Europe, we see premature signs that rights holders are conscious of these evolutions and might be considering changing tactics. The recent news about the LFP tender can be read in that context.
At LaSource, we believe broadcasters and rights holders will move towards a more mature and advanced partnership relationship. These types of partnerships are only possible if they are entered into for the longer term and cover a broad enough scope and product. This will require long-term vision, a thorough understanding of the market, and, more importantly, what really entails value for the league and clubs. Because we can’t be naive either, short-term value will remain key for all stakeholders involved. It will come down to outweighing and balancing all interests.
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
Legal assistance
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
Content strategy
Contact Leander Monbaliu, David Gonçalves or Loïc Holuigue for more information.
Learn More about what we do for Sports Organisations