Today’s guest columnist is Tom Rogers, executive chairman of Engine Gaming and Media.
To quote the late Yankee sports legend, Yogi Berra, “The future ain’t what it used to be.” And when it comes to sports television, this is absolutely true. Sports TV is in trouble, and if sports TV is in trouble, the whole sports industry is in trouble.
Television rights are the financial anchor of the entire sports industry, but the revenues that support those TV rights are coming under real distress.
This is being driven by the decline of the cable and satellite bundle (from cord-cutters and cord-nevers), whose fees have been the tentpoles of the sports economic model. According to a Strategy Analytics study from April 2021, overall spending on traditional pay TV services fell 8% in 2020 to $90.7 billion while people were housebound in the middle of a pandemic. While that seems like a lot of money, the study anticipates a further decline to $74.5 billion by 2023.
On top of this, sports ratings have been declining. NBC only averaged 15.5 million prime time viewers across its network, cable and online coverage of the Tokyo Summer Olympics, a 42% decline from the 2016 Rio de Janeiro Summer Olympics, according to Nielsen. This will eventually cause a drop in sports advertising revenues as well, even if that hasn’t yet been the case.
Facing particular headwinds are the regional sports networks that carry local games in their respective markets, which are being dropped by cable and satellite distributors.
While media companies are beginning to put some sports content on streaming services, it is unclear whether direct-to-consumer fees and advertising revenues will get close to offsetting the declines from an economic model premised on subscriptions from 100 million cable and satellite homes.
Into this dismal picture enters sport betting.
Media companies are benefiting from sports betting companies’ hunger to acquire users, and a robust advertising category has developed around this competition.
Every sports media company has tried to align themselves with one of the sports betting operations to get some form of upside economics—anything from free bounties to equity participation—as a way to get a piece of this new category.
But are these new economics attractive enough to right the ship of the sports media model?
While the NFL has shown a unique ability to drive strong ratings and renewed its sports rights contracts at impressive increases, the result is that sports media companies have far more costs now and rapidly declining revenues to meet those costs. There is no indication betting-related revenue will offset the declines. And just aesthetically, how attractive is the solitary experience of betting on a game against the house?
One strategic rationale for paying for sports rights in the past, even if fees created a lack of profitability, was that a network was accessing young men who could be led to entertainment programming, thus buttressing other parts of its schedule. Now, though, these young male viewers have abandoned the cable bundle and watch much less television overall, spending time playing video games and watching esports on Amazon’s Twitch and other platforms.
Is there a way for sports media companies to take advantage of the younger male audience’s desire for gaming and social interaction, such that watching sports on TV can be much more engaging?
One clear answer is social games of skill, synchronized to the live broadcast, which take advantage of what has always been a unique strength of sports TV—its social experience.
Since the beginning of televised sports 70 years ago, these events have created space for parents watching with their kids and buddies watching together—talking back and forth about the next play, or talking smack about who knew the game better.
Creating a game for viewers within the game they’re watching, where friends or family or fans can compete over who has the best sports IQ and how a game will unfold, is a path to generating a socially engaging experience. This is what WinView of Engine Gaming and Media is all about. Our company has developed cash entry games of skill, geared toward allowing younger male viewers to have a social gaming experience—one they can’t get via traditional television.
Games of skill can allow viewers to see who’s best at predicting how the game unfolds, with say, 20 questions over the course of a quarter of a football or basketball game, with cash stakes based on entry fees—an enormous potential revenue source for media companies.
Think HQ Trivia, with the live aspects of the questions developed by producers over the course of the game. Instead of contests with millions of people in a single pool, these can break down into rooms of 20 or fewer, depending on friend, family or fan configuration—Patriots vs. Jets fan bases, or fraternity houses squaring off when Michigan meets Ohio State. The permutations are infinite.
This is the path to a more engaging sports broadcast, a more social way to play for money than betting online, and a customizable experience allowing fans to follow specific players and teams in the ways that most interest them.
This is the path WinView is developing, one we believe leads to a new sports media future.
Prior to co-founding Engine Gaming and Media, Rogers was president of NBC Cable, founder of MSNBC and CNBC, and president and CEO of TiVo Inc.