Recently, several sports leagues and federations have introduced new direct-to-consumer (DTC) streaming solutions or new markets for their streaming product. For example, FIFA rolled out FIFA+, the NFL debuted NFL+, LaLiga launched LaLiga Plus in China and just last week, Sportico reported UFC Fight Pass will become the exclusive home for all UFC events aired in Brazil come Jan. 1.
Rights-owner-controlled over-the-top (OTT) services, as we recently wrote, can provide useful leverage in future media-rights negotiations. DTC streaming platforms can also expand the league’s audience, reach people in different parts of the world and drive engagement among existing fans.
But at least for Endeavor, the parent company of the UFC, it is the desire to own the one-to-one fan relationship that is pushing it away from pay TV and towards digital in the market. “The better you know your fan, the better you can serve your fan,” Mark Shapiro (president, Endeavor) said in an interview with Sportico.
That’s not limited to premium content or advertising, either; the fan data gathered from DTC streaming should lead to additional economic opportunities, according to Sam Yardley, EVP, North America, Two Circles. (Two Circles is working with the NFL and FIFA on their respective OTT platforms.)
“You can start to weave in sports betting and fantasy, merchandise, ticketing. There are all these different directions you can go in, which starts to build up a [even] richer audience profile,” Yardley said in an interview with Sportico.
JWS’ Take: Establishing a proprietary DTC streaming platform can benefit a sports league or federation in several ways. “One is as a strategic hedge,” Yardley said. “If you have your own distribution outlet, then you’re in a better negotiating position with broadcast partners. And you’re building a media channel that can, one day, deliver an audience that rivals those delivered traditionally by cable networks.”
Also, the service can satiate the need for league-centric content amongst its most ardent supporters. UFC Fight Pass Brazil will give MMA fans access to over 200 live events, including all the numbered PPVs, and a library filled with more than 20,000 fights from around 35 different promotions.
But Two Circles data shows that league- or federation-owned DTC services appeal to a new, broader audience than just the hardcore fan, including younger fans and fans in international markets. Streaming platforms are becoming the preferred viewing method for Gen-Z, according to Shapiro, and 96% of UFC fans in Brazil watch television via an OTT service. “We want to be where the fish are biting,” Shapiro said.
The globalization of sport and the increased adoption of mobile technology has also made it possible to attract new fans in underserved markets. FIFA+ recently launched a service in Arabic, ahead of November’s FIFA World Cup in the Middle East, bringing its number of local language editions of the platform to 10. “The numbers they’ve gotten from Egypt are through the roof,” Yardley said.
Even without a global fan base, a sports property can benefit from establishing one-to-one fan relationships. “There’s a degree to which data is information, information is power and [the information generated from DTC streaming] enables them to make much more strategic decisions about all sorts of things that they can do as a league and as teams,” Yardley said.
The challenge for many rights owners is giving up lucrative media rights licensing revenue available to put content behind a paywall. “There’s always a bigger check available for selling the rights than there is money to be had for selling direct-to-consumer subscriptions,” Yardley said.
But the Two Circles executive believes that comparing projected subscription revenues to the media rights dollars on the table means missing the strategic rationale for building a streaming platform. “[OTT services will be] the central hub of the direct-to-consumer flywheel for all of the other entities and businesses that it has,” Yardley said.
Shapiro understands that the more touch points a league or federation has with its fans, the more those individuals will spend. But he said that because the guaranteed money for live sports rights is so enormous, and because rising rights fees are not slowing, “rights owners have to keep inhaling that drug.”
However, Shapiro said if a rights owner can simultaneously launch an ancillary streaming service, testing the water with those fan relationships and monetization opportunities, it should. The thinking is, should the appetite for streaming ever justify it, the league or federation would be prepared to make the migration from pay TV at that time.
DTC is not a solution for every rights owner. WWE, which was an early adopter of DTC streaming, sold the exclusive rights to WWE Network to Peacock in 2021. But Shapiro said that when WWE did that, WWE Network’s subscriber growth had plateaued, and the company was already in control of all the fan data. There was little to be gained by remaining direct-to-consumer.
Two Circles and Endeavor’s experiences with DTC streaming have spawned several lessons that could be useful to a rights owner that is considering investing in an OTT platform. For starters, having premium live content on the service matters, even if it is not exclusive. “It’s the live events that ultimately draw and keep audiences,” Shapiro said.
The cost to acquire customers is not as high as one might think. “The degree to which you can go out and get users is much more effective than [a vMVPD] can be because [the rights owner] knows exactly the audiences to target,” Yardley said.
Because the number of subscription streaming services continues to grow, packaging and pricing the service right is critical to adoption. “Fewer choices is generally better,” Yardley said.
As is a low barrier for entry. Having a monthly subscription option, preferably at or under $5/month to start, has proven helpful. FIFA+ is free. NFL+ is just $4.99/month. UFC Fight Pass Brazil will be about $5/month. Of course, the more premium rights that go behind the paywall, the more challenging it becomes for the league or federation to make the economics work in mature markets.