An increasing number of broadcasters are making plays for sports rights, according to a new report from Ampere Analysis, levelling the playing field for both incumbents and streaming companies. But that fragmentation risks alienating consumers who have to pay for more streaming services, creating opportunities for free, ad-supported streaming TV (FAST) companies.
“In the US and major European markets, popular competitions are being split across a growing volume of services, making the market less convenient for sports fans,” found Dan Harraghy, Senior Analyst at Ampere. In the US for instance, broadcast rights for the top 10 sporting competitions were spread across 12 broadcasters in 2022.
The report, ‘Fragmentation in the sports media market’, notes the benefits for both sports leagues and media companies. For rights holders, the rise of new contenders creates a more competitive bidding process. For example, the latest Champions League auction upped the tournament’s value from £1.2 billion to £1.5 billion. And YouTube now pays the NFL $2 billion per year for the Sunday Ticket rights.
That fragmentation spells opportunity not just for deep-pocketed tech giants, but also “pure-play” streaming services. In Italy for example, DAZN pays over €2.5 billion for the majority of Serie A matches. The incumbent broadcaster, Sky Italia, now accounts for just 28 percent of market share.
But the incumbents are largely holding their ground, accounting for over 50 percent of rights spend in Spain (Telefonica), France (Canal+) and the UK (Sky). At the same time, spend is falling across the board. Ampere forecasts that total spend on sports rights by “traditional TV players” will decline by almost 10 percent between 2024 and 2028, at an average of almost $800 million per year.
And the streaming companies are pulling back too, as they start to prioritise profitability. After a decade of double-digit growth, total content spend by the OTT services is expected to fall to just 2 percent YoY in 2028. The high costs of sports rights make them particularly vulnerable, and Viaplay’s recent struggles have shown the difficulty in monetising localised sports leagues compared with global content.
As a result, rights packages are increasingly being split among multiple broadcast outfits. This trend not only drives revenue growth for rights holders, but enables broadcasters to hold onto rights while cutting their own spending. Ampere notes that Sky Italia has maintained the rights to five of the leading sports competitions in Italy, despite reducing its media rights spend to a third of its level five years ago.
Moving the goalposts
However, this proliferation of players risks passing the costs on to consumers. Subscription services such as Amazon and DAZN effectively put sports behind a paywall, and the more destinations showing games, the higher the price of following a competition. In Germany for instance, the addition of new market entrants has increased the cost of watching all televised Bundesliga and Champions League matches by 54 percent.
Ampere found that sports fans pay for more SVOD services (an average of 2.84) than the average consumer (2.67). And while that figure is still growing, rising subscription fees will likely impose a limit on the number of services fans can afford.
“Not only does this hurt the future engagement with the sport, but also has an impact on revenue streams such as sponsorship and advertising where partners will look to pay less due to the lower addressable audience,” noted Ampere’s Dan Harraghy. It also risks driving piracy, with 54 percent of sports fans in the EU Big 5 markets already claiming to pirate live sport on a weekly basis.
But Ampere suggested that free, ad-supported streaming TV (FAST) services can also fill that void. As consumers look to reduce their SVOD spending, FAST services can provide and monetise that content, attracting sports fans while boosting ad revenues. DAZN for example runs FAST channels for women’s football and combat sports, and even showed the UEFA Women’s Champions League for free on YouTube.
“FAST channels can be used to promote wider coverage of more niche sports that are often behind a paywall,” said Harraghy. “These platforms can therefore monetise sports rights as fans look to cut costs on sports subscriptions.”
