The value of in-play clips (+76% to $1.7 billion) and short-form highlights (+101% to $3.2 billion) is expected to rise at a faster rate than the value of live rights (+18.7% to $49.1 billion) over the next five years as media consumption habits continue to change. The rebalancing is expected to come as rights holders take a closer look at fan consumption numbers and begin to place a greater emphasis on licensing short-form rights packages. As it currently stands, live rights make up 86% of rights holders’ revenues – but the average sports fan is only watching 55% of the sports content they consume in real time; Two Circles (which uses proprietary media modeling techniques) is forecasting that figure falls to 53% by 2024. SVP consulting, Sam Yardley suggested that the “biggest increases will be for highlights, clip rights and shoulder content.”
Howie Long-Short: On a global basis, most of the anticipated growth in live rights is expected to come from the digital side. However, here in the U.S. Yardley says there is still room for the value of live linear rights to climb. “As eyeballs drop off all other types of media, a halo effect remains around sports.” To support that point, he noted that since the season began TV’s top-30 rated broadcasts have all been NFL games.
While one could argue that it’s the NFL – not all sports leagues in the U.S. – that are immune to a drop-off, Yardley says that “nothing drives rights fees upwards like competition. Historically [the companies buying media rights have been the likes of] CBS and Turner Sports. Now, you have a whole new set of agents in the market; DAZN, Amazon, Facebook and Netflix have all been rumored to have interest in bidding on rights as they become available.” It certainly remains TBD how serious FAANG are about spending billions on exclusive premium live rights – to date, their interest has been limited to non-exclusive packages (think: Amazon + TNF) and niche sports (at least in the U.S.), but Yardley believes the “threat of competition should be enough to drive the value of the rights upwards regardless of who ends up getting them.”
Non-live rights now “contribute more to the overall value of a broadcast rights package than they have historically.” That’s because logic used to say that rights holders should distribute non-live content as far and wide as possible – as long as they’re receiving a large enough check from the primary broadcaster; the thought was if you gave people snacks (see: highlights) they might tune in for the larger meal (see: the game). But with digital players like Facebook paying significant dollars for clip rights (see: $100 million to ICC), it’s forcing sports properties to re-evaluate their strategy.
Yardley doesn’t expect the total value of non-live rights to challenge live rights in this lifetime. “The business model for live rights is still predominantly advertising driven and outside of live sports there are simply very few properties that can deliver audiences of scale [to advertisers].”
Fan Marino: The Two Circles executive referred to the NFL’s RedZone channel as the “closest thing there is to the future of sports consumption.” He is convinced that as more and more fans decide “they don’t want to sit through a 3-hour broadcast with one hour of commercial breaks, the value in media rights will gravitate towards properties like RedZone.” Widespread legalization of sports betting should only serve to increase the fans’ desire for that kind of product.