Report: Sports to drive online TV boom
EmptyLONDON -- Premium sport content will drive online TV growth over the next five years, just as it did with the adoption of pay TV, according to Media analyst Screen Digest.
In its latest report, "Online Sports Video: Rights, Revenues and Forecasts," Screen Digest predicts that the number of sports video streams/downloads served in the U.S. and U.K. markets will more than double -- from 5.2 billion last year to 10.8 billion by 2012 in the U.S. and from 398 million to 1.2 billion in the U.K.
Online sports video, or OSV, accounted for 35% of all online TV streams/downloads in the U.S. in 2007 and 46% in the U.K., the report said. And revenue from the sector is predicted to increase from $762 million in 2007 to $2.3 billion in U.S. in 2012 and from 23.5 million euros ($45.6 million) to 82.9 million euros ($160.8 million) in the U.K.
But, it will be advertising, not subscriptions, that generate the lion's share of the revenue from OSV, Screen Digest said.
In the U.K., advertising will account for 61% of revenue by 2012, up from for 46.5% five years earlier. That will be twice the value of subscriptions. By comparison, in the U.S., advertising and subscriptions will contribute almost equal revenue by 2012, at 41% and 39%, respectively.
"Unlike pay TV sports, consumers have not been willing to separately subscribe to online platforms offering a 'TV bouquet-style' range of aggregated OSV content across multiple sports," the report said.
"Platforms such as ESPN and Sky Sports have moved toward offering online propositions as a mix of free 'value-add' to their existing pay TV sports customers, or free ad-supported content to the entire domestic Internet market. As a standalone proposition, the OSV subscription model has only found a degree of consumer favor when it has been presented as a single sports, single event or single club proposition."
The report also sounded a note of caution to existing media owners, suggesting that sports-rights owners now have the means to take their content directly to the end viewer, anywhere in the world, completely bypassing third-party aggregators and broadcasters such as ESPN and Sky Sports, and even potentially such online platforms as Yahoo!, YouTube and Joost.
In the U.S., the report noted, major branded sports including Major League Baseball have restructured their "single interest" content and online access into very effective subscription propositions, successfully signing up fans directly through their own Web properties.
Sports rights holders, Screen Digest continued, are increasingly in a privileged position to assess the value of selling their rights to third parties against the revenue potential of offering services directly to fans wherever they may be in the world.
"The Internet has revolutionized how and where people access content, and whilst attention has tended to focus on the impact that has had on the business of music and film, sport content has also been dramatically affected," report author Arash Amel said.
The report goes on to note that the "democratization of distribution" created by the Internet means that the sports rights holders can, for the first time, provide their own sports video services and directly compete with the very broadcasters and sports networks that traditionally pay huge sums for sports rights.