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Growing sports rights fees are driving cutting-edge user experience, justifying investment levels

Ismail Patel, Analyst, TV

The ongoing growth in rights fees for major national sports is driven by their incredibly popular local demand. The massive investments required to acquire the rights makes sports a very sticky proposition for operators. The favored premium format is the live, linear broadcast. BT Sport's launch of its 4K channel in September 2015 was a by-product of its large investment into soccer rights, as it sought to differentiate itself from its rivals. In addition, it assisted the NBA to become the first sports broadcaster of 4K in North America. BT has broadcast more 4K live events than any other TV provider in Europe. Maintaining its newly found reputation as a pioneer in user experience, BT also trialed virtual reality (VR) technology with a hundred users, who were able to "virtually" place themselves at the heart of the action from various camera angles in the stadium. Such initiatives are expected to form part of the next generation of user experience in the long term, as outlined by BT Sport panelists at TV Connect 2016. Soon, the industry will see premium, second-tier, and tertiary offerings differentiated not only by the portfolio of sports on offer, but also by the user experience promised within the packages. Ovum expects that there will be no shortage of consumer demand and therefore opportunities will be created in all parts of the value chain.

Ovum recommends the following:

  • Sports viewers around the world rarely experience the arena in person, with their access to sports often digital only. The NBA's experience is that 98% of its viewers have never been to a basketball arena to watch a game live, and therefore its focus is on enhancing and investing in the experience of the 98%, through digital, next-generation viewing and social media. Other operators should also invest in this absent majority.

  • There is sizeable value below the top premium sports investments: highlights and second screenings, mobile TV and TV everywhere, over-the-top (OTT) content, and instant shorts (popularized in the UK by the BBC during the recent Twenty20 Cricket World Cup). Operators can realize returns in proportion to the size of their investments, which is where new operators such as Vodafone UK are keen to make entry-level investments.

  • The enhancement of the user experience will be coupled with ongoing adjustments, optimizations, and restructuring of packages. Operators should constantly evaluate and update their premium propositions to identify where the value lies and pivot their businesses around those centers of value.

Related research:

4K UHD Technology: Go-to-Market Strategies and Future Outlook, TE0004-001074 (April 2016)

Death is not yet knocking at the door of linear TV

Adam Steel, Research Analyst, TV

Over the past few years, much has been made of the shifts in people's viewing habits, with the success of OTT services and the emergence of smaller, second-screens pushing consumers away from watching live content on the main TV set. However, what has become clear from conference presentations and exhibitors at TV Connect 2016 is that there is a danger of overstating these shifts, with the often prophesized "death of linear TV" remaining unfulfilled. According to Guy North, managing director of Freeview, 86% of viewing in the UK is still to live TV, and the use of mobile devices is still generally supplementing viewing rather than replacing existing viewing habits. This more positive outlook for linear TV presents a number of opportunities for those looking to work with OTT content, rather than against it.

Ovum recommends the following:

  • Both pay-TV operators and free-to-air providers should look to ensure that they are keeping up with the expectations of their audience by offering broadcast TV integrated with on-demand and catch-up services.

  • Pay-TV operators should not be afraid to work in conjunction with OTT services. One option is for operators to offer services like Netflix through their own platforms – a strategy that has already been adopted by Virgin Media, BT, TalkTalk, and EE in the UK.

  • Conversely, the fact that linear TV remains strong also means that standalone OTT services from pay-TV operators – as Sky has found with Now TV – is at little risk of cannibalizing core pay-TV offerings and can contribute to further growth, albeit by attracting lower-ARPU customers.

Related research:

OTT Video Forecast, 2015–20, ME0003-000637 (January 2016)

Western Europe: Pay-TV and FTA Forecasts to 2021, ME0003-000653 (March 2016)

Greater content personalization to impact TV value chain

Adam Thomas, Lead Analyst, TV

One of the most frequent conversations that I have had over the course of all three days of TV Connect 2016 has been centered on how the visual entertainment proposition will look, and change, over the next few years. There seems to be a general acceptance that the long-established channel-bundling model will continue to come under pressure. In its place – fueled by the gathering and analysis of more granular data on audience consumption patterns – there will increasingly be a new, much more personalized way of dealing with content aggregation. This will create an ability to target individuals with content that is specific to their interests rather than the interests of their household. As this emerging capability is rolled out, there will be some significant impacts across the TV value chain.

Ovum recommends the following:

  • Pay-TV operators need to invest in online/mobile audience-tracking and advertising expertise. This will enable them to effectively aggregate audiences and target content and advertising across all distribution platforms and media types.

  • Broadcasters should position themselves to ensure that they have (either direct or indirect) access to audience consumption metrics and reap the benefits in terms of content commissioning and the targeting of advertising.

  • For technology companies, it is important that their solutions can easily understand the new types of data becoming available and how to utilize this data for content targeting and its related advertising benefits.

Related research:

2016 Trends to Watch: TV and Video, ME0003-000639 (January 2016)

Digital Economy 2025: TV, ME0003-000606 (November 2015)

Low income and broadband availability limit OTT in emerging markets

Jonathan Doran, Principal Analyst, TV

Monetization and bandwidth/infrastructure limitations are among the multiple challenges facing service providers in emerging markets, as outlined in one of the final TV Connect 2016 panel sessions. SVOD provider iROKOtv has abandoned its streaming service in Nigeria, where mobile networks proved too unreliable even for WhatsApp. It has relaunched as a download-only service via an Android app (bypassing the more upmarket iOS consumer) – with most activity now occurring via Wi-Fi rather than cellular networks. In India, 3G has finally started to make an impact over the last two years, leading to an explosion in mobile video consumption. India's Shemaroo highlights the need to “slice and dice” video content for an overwhelmingly mobile and low-income audience. It also points to the importance of innovative content packaging in markets where cost control is a priority. In South Asia, “sachet pricing” works perfectly for those on low wages, presenting a more manageable pay-as-you-go alternative to subscription TV. In Nigeria, iROKOtv is targeting the low-end market with unlimited access to long-form Nollywood content at $1.50 per month (compared to $7.99 for Netflix). It delivers drama series with new episodes coming out two or three times weekly. Both iROKOtv and Shemaroo stress the need to frequently refresh content to keep viewers interested and pirates at bay.



Ismail Patel, Analyst, TV

Adam Steel, Research Analyst, TV

Adam Thomas, Lead Analyst, TV

Jonathan Doran, Principal Analyst, TV

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