Today’s guest columnist is Rob Shaw, Facebook’s director of sports league and media partnerships.
We’re speeding towards a pivotal moment in the future of sports business. COVID-19 has devastated core revenue streams such as ticket, concession and sponsorship sales, making organizations more reliant on media rights fees than ever. Meanwhile, the pandemic is accelerating cord cutting, as fans—especially young ones—shed their pay TV subscriptions.
The industry is at a crossroads. Can leagues continue to cash the largest checks from broadcast networks knowing the nation’s youth isn’t tuning in? Can networks continue to write these checks knowing the number of households they reach is declining?
These are complicated questions, and while there aren’t easy answers, it’s clear that the historically lucrative broadcast business model needs to evolve, or risk losing an entire generation of fans.
This topic is especially timely with the NFL closing in on its next round of media rights deals. Full disclosure—we weren’t involved in those discussions. We also didn’t bid to extend our UEFA Champions League and La Liga agreements in Latin America and India, respectively. We still have excellent partnerships with these leagues, but the reality is that traditional media rights deals like these aren’t compatible with our current video business model. We also don’t think they’ll create the most sustainable value for the industry moving forward.
Instead, we believe the future of free-to-air distribution will fuel a promising new business model for leagues and networks. This model will rely—at least from Facebook—more on the benefits that come from establishing a direct relationship with consumers than from rights payments. Admittedly, it isn’t mature enough yet to replace what the NFL, UEFA and La Liga will earn from their next television deals. But it can complement the current media-rights model. And it’s especially relevant for the countless rights holders that don’t generate significant TV rights fees. Indeed, no matter what type of organization you are, be it a league or a network, mainstream or emerging, this model should have your attention for four primary reasons.
1) This future of free-to-air distribution is rapidly approaching. Many of us grew up humming John Tesh’s Roundball Rock, as NBA on NBC live coverage introduced us to heroes such as Michael Jordan and Shaquille O’Neal. Today, younger fans are introduced to Zion Williamson and LaMelo Ball via short-form highlights on free-to-air digital platforms such as Facebook, Instagram, YouTube, Snapchat and Twitter. These clips will remain incredibly important in increasing engagement and revenue. But there’s no denying the power of live events—and right now young fans aren’t being served these events where they spend most of their time. If leagues want to reverse this trend, they need to program free-to-air digital platforms like they did the major free-to-air networks 25 years ago.
This doesn’t mean these platforms should replace TV or compete with networks for rights. Rather, we’ve found Facebook simulcasts can be the ultimate complement. TNT’s Facebook broadcast of the 2020 UEFA Champions League Final in Latin America was the most-watched soccer match in our platform’s history. Simultaneously, the network’s television broadcast was reportedly the most-watched pay TV program ever in Brazil. This demonstrates that Facebook doesn’t take a slice of the pie. By reaching new audiences, it grows it.
2) The home for your next generation of fans is also the home for your lead generation. On television, your ability to connect with an audience ends when the broadcast concludes. On Facebook, you have a much better understanding of your audience and you can continually engage with it. While Facebook doesn’t share individual data, we do provide aggregate, anonymous reports to help you convert targeted viewers into paying customers. If you’re an NBA team, you can retarget people in your market who watched your Facebook broadcast with a discount to come back to the arena. Or if you’re a network such as ESPN, you can offer people a taste of your live programming on Facebook and then drive them to ESPN+.
In this new free-to-air business model, the content is the start of the consumer journey, not the end. MLB sold more than half a million dollars in tickets to people who watched its Facebook broadcasts. IRONMAN drove viewers of its live events on Facebook to sign up for its races, generating a 14.6X return on ad spend.
3) Social media monetization is maturing. We’re admittedly in the early innings of building out our content monetization tools, but we’re excited to see a wide range of organizations lean into them. UFC is generating millions of dollars annually via ads that run during its Facebook videos. World Surf League is growing its sponsorship business by integrating brands into its global Facebook simulcasts. The Major Arena Soccer League broadcast its 2020 All-Star game live on Facebook and used our paid online events (pay-per-view) feature to generate a 25% equivalent increase in ticket revenue for the event in a typical, non-COVID year. We believe these results are just the tip of the social media monetization iceberg, as innovation will continue to spark new revenue streams.
4) Technology will enhance viewing experiences and revenue opportunities. Sports Innovation Lab’s “The Future of Watching Sports” report argues that “Media teams need to stop asking ‘what do our fans want to watch?’ and instead address ‘what do our fans want to do?’” For young sports fans, the answer is “a lot.” They’re growing up with multiple devices in their hands, and new technologies will be critical to capturing and capitalizing on their attention.
That’s why we’re building for a future where interactive Facebook productions will keep viewers watching longer, creating new opportunities for brand integration. Where Messenger’s Watch Together feature will bring friends together to cheer on their amazin’ Mets and virtual reality in Oculus will enable people around the world to buy a courtside seat at Staples Center. Where fans can purchase a Tom Brady jersey after watching him throw a touchdown via a single click without leaving the broadcast. As innovation accelerates, so too does this new model’s potential.
So can leagues still afford to put their content on television if younger fans aren’t watching? And can networks still afford to pay for rights with declining reach? The answer is yes, but only if they also program on free-to-air digital platforms to take advantage of the opportunities emerging technologies afford. In this new world, the most forward-thinking leagues and networks will establish a relationship with their viewers to reach new frontiers of financial success and preserve their sports properties for generations to come.
Shaw came to Facebook after four years at Bloomberg Sports as the VP of content/media, where he led partnerships with media companies including Turner Sports, Fox Sports, ESPN and NBC Sports.