Tuesday, 6 November 2018

Sports rights valuations on OTT video platforms. The internet may be a much less profitable platform than TV for sports rights owners and holders.

An established and well supported article of faith in the sports tv industry is the ability of exclusive live rights to major sports events to drive paying subscribers to major distribution platforms. Conditional access systems in general did a solid job of protecting live rights from major leakage on satellite and cable platforms. Various models existed to create initial rights valuation ranging from detailed discounted cash flow analysis to the less structured pay more than the other guy and sort it out later approach.  Companies like BskyB have been very successful driving value from sports rights on TV.

As a working assumption it has been accepted that exclusive live content that drives subscription and PPV on satellite and cable will work equally well on internet delivered platforms and common sense would seems to support that view - why should a consumer care about the technology of delivery ? Therefore the types of sports rights valuation applicable in the "TV" industry apply equally well online.

New data collected by Klipcorp suggests that this assumption may be wrong and if so this has some potential implications which are worth looking at. A hint of this was also provided in the last FA Premier League rights auction where the social media companies did not really "step up".

1. Our stand out piece of data from a 3 year rolling project suggests that the purchase decisions for consumers buying sports content online are very different in the online to the TV environment and very influenced by the perception that the material is available online free in good quality via unlicensed sites. This mainly applies to OTT services delivered to PC's, Tablets, Phones but not to OTT walled garden services where discovery of unlicensed content is harder. In the case of highlights the consistent availability of good quality delayed highlights on YouTube (see below) and elsewhere re-inforces this perception further. "Claiming" the content published on YouTube without license generates some income but erodes the perception of exclusivity.

2. It also seems to be the case that price points online for sports are lower by significant orders of magnitude than TV. Customers are also not automatically taking up "free trials" - when they realise a payment method also needs to be provided. A free pirate feed trumps a free trial on a legitimate site for a significant number of consumers.

3. Overall levels of interest and engagement remain very solid and in parts of the developing world interaction levels for video delivered via mobile devices are "off the charts". Monetisation of that interest is a challenge.

The music business, as it frequently does, offers a pretty good potential analogy. Vinyl records were a better tool for making money from the consumer that digital downloads - at least so far. But the music industry has adapted and new types of winners and losers have emerged.

Tentative conclusions are that sports rights drive a fraction of the value from consumers online than they drive on TV platforms - but the consumers are heading online fast in the search for value.

Netflix market penetration was initially built on range of choice, convenience and price rather than exclusivity, which was patently not in place, and works well for movies and drama - who could not watch Under Seige for the fifth time ? Whether the Netflix model works well in sport is yet to be seen and NetFlix has mainly created value through its share price gains as opposed to bottom line profits.

YouTube is the sleeping giant in this area and has the ability to create successful Sports pay-per-view events online from a couple of Vloggers and out audience "major" sports rights - see CSI v Logan Paul. Yet despite seeing all the data YouTube do not seem to want to aggressively acquire rights.

Predictions regarding the fall in the value of sports rights have almost always been wrong in the past. As more and more OTT platforms emerge the "pay more than the other guy" approach may well continue to keep values up.

As a helicopter view of the issue when exclusive sports rights were bought pre 2008 they were exclusive in reality. Now rights are exclusively licensed but are in fact non exclusive which has inevitable consequences.

Some conclusions;

1. YouTube has the ability to dominate the market either through content creation, unlicensed material or rights licensing if it decides to. It is already multiplatform, multi device worldwide and the worlds second biggest search engine.

2. Only very well funded OTT sports operators will survive what looks to be a very long battle to secure paying subscribers online.

3. Advertising and Sponsorship driven models which fully engage with all social media platforms are likely to be the online success stories and quite possibly non "official" events.

4. Rights holders will need to balance short term cash from ageing TV platforms against ensuring long term viability with the younger demographic.

Monday, 8 October 2018

Regional piracy data for UFC 229 - US with 45% of pirate viewing.

With PPV buys expected to hit over 3 million UFC 229 was bound to attract high levels of unauthorised streaming and viewing hand in hand with high levels of legitimate viewing.

Klipcorp systems analysed the regionality of the pirate viewing and we thought it would be useful to share the results.

Our systems saw pirate viewing in 65 countries worldwide but with 4 markets accounting for 67% of the activity.

The US market was by far the largest with 45% of the pirate viewing, followed by the UK with 9%, Canada with 7% and Australia with 6% of the pirate viewing.

A couple of examples of pirate activity are below.

The high concentration of pirate viewing in the US market for UFC 229 (as other content will deliver different results) is probably due to a combination of high levels of US promotion and the price point. 

Sunday, 26 August 2018

KSI v Logan Paul marks fundamental shift

Last nights wildly popular amateur boxing event live on YouTube PPV proves a number of things;

1. The immense power of video enabled social media platforms. With respect to the competitors they are not at the pinnacle boxing - and yet the audience size dwarfed many (if not all ) genuine title fights online. The platform outscores the content - and the power of satellite and cable is now dwindling with the younger demographic. It has been on the cards for a while but now proven.

2. Live PPV can work on the internet at scale. The streams on my TV via the Amazon Fire TV stick were solid and while the production was a little kooky it maybe added to the charm - the presenters and commentary team were perfect IMO.

3. To those of us elbow deep in the digital space the graphic below showing YouTube being ripped off by the pirates on the Twitch platform (our monitoring showed it was everywhere else too) may bring a wry smile. Content protection and discovery is a big challenge. Individual streams at 400k and above.

Tuesday, 17 April 2018

Relieve the stress on GDPR

For those in the SME community hearing the bloodcurdling warnings re the new Data Protection regulations (4% turnover etc etc) help is at hand from Klipcorp IP.

Take our free online assessment (@30 questions) CLICK HERE and we will provide a free consultation on the phone to assess your risk levels and recommend simple and cost effective steps to reduce risk levels if they exist. For most companies compliance is not a major hurdle.

There are quite a few simple steps you can take to reduce the risk profile such as collecting and storing as little personal data as possible so don't be a soft target for the ICO.