In September 2023, YouTube began streaming the NFL’s Sunday Ticket. Having announced the acquisition of the rights to Sunday-night out-of-market games in the US, formerly carried by DirecTV, speculation in the sports industry was understandably rife. Would YouTube be joining their Silicon valley counterparts Amazon and Apple in bidding for sports rights on a more wholesale basis? Could this replenish what is perceived to be thinning competition in the sports rights market (cf. Ligue 1’s struggles to secure a domestic broadcast deal), as traditional broadcasters face an existential battle to balance the books?
YouTube as a competitor to TV is not a new movie, but with this deal it felt as though there was a new sequel for the franchise, and sports - one of the last remaining bastions of linear TV - was the lead actor.
Ever since YouTube launched and MTV sued it for copyright breaches, there has been an uneasy relationship between TV & YouTube. YouTube has a fairly naked ambition to obtain a greater share of TV’s advertising revenue, but it relies on the traditional players of that TV industry (producers, broadcasters, distributors and rights-owners at large) as the source of some of its most premium content. Meanwhile the TV industry knows (or has resigned itself to the fact) that YouTube offers reach and engagement it can scarcely now achieve through other means, even as the battle to get a greater share of that reach requires them to give up more and more rights.
For sports rights-owners - marginally more agnostic in the ecosystem given their diversified revenue streams - the last few years has been a question of trying to choose a horse to back in the media industry: traditional broadcasters, who may pay upfront for rights (but declining amounts and with declining audiences) or the great digital unknown.
The second of these strategic approaches has been a PhD topic in itself. Since COVID, we have seen an explosion in rightsholder-owned OTT services, FAST channels, digital membership schemes, and web & app experiences: sometimes paid, sometimes in exchange for data; sometimes as a complement to a broadcast partner, sometimes in lieu of one; sometimes as a proactive strategy, sometimes enforced. While many of these have opened some interesting paths for exploration, very few can be held up as the indicators of new, widespread business models for the sports media industry. Indeed, there seemed to be something telling about one of the more bleeding-edge sports-entertainment properties, WWE, transitioning back from an owned OTT service to Peacock and other traditional broadcast brands, before signing a 10 year rights agreement with the modern incarnation of a TV broadcaster, Netflix. Increasingly, the prevailing wisdom is that the direct-to-consumer world has
shown itself to be hard and expensive - from the point of view of personnel, tech, and marketing.
Why not just leave that to businesses who have made it their specialism?
Meanwhile, YouTube’s own development has continued steadily in parallel to this. Its pitch to be the ‘home of highlights’ has led to almost every rightsholder fighting to carve out a reserved right to upload not just short highlights, but often 10 minute plus, long-form highlights onto the platform within minutes of the event ending.
Now, as it makes a similar blanket push for Live sports rights - still, by the way, a long way away from the NFL Sunday Ticket in upfront investment terms - it is slowly becoming apparent that YouTube could be a viable 3rd way for rights-owners’ distribution dilemma. It’s not traditional broadcast distribution, whose downside is weakening returns and audiences, but neither is it fully direct-to-consumer, where tech and marketing outlay can be prohibitive. It’s almost as if YouTube has been waiting patiently in the wings for the industry to come to this realisation. More accurately, though, it’s audiences who have been showing the way. Our own data is showing that our Sports partners’ YouTube watchtime on Connected TVs has grown from 10% of the total to nearly 30% in 4 years. YouTube themselves have communicated that: “For more than a year, YouTube has been the #1 most watched streaming platform on TV, according to Nielsen”. In the same period, RPMs (revenue per thousand views) for the longer-form (30 mins+) content that is likely driving this viewership has grown to nearly 4 times the amount of a
5 minute video. The upshot of this is that YouTube is looking more and more like a platform where you might distribute Live and long-form content.
Certainly, the building blocks are all there. YouTube is investing in its live product, notably dynamic ad insertion, which allows live content to be monetised better by increasing the number of ad placements - and in a manner you might expect from TV. There is also strong momentum to improve the revenue that is returned from those ad placements, via initiatives from Google’s sales teams to market their premium content better (YouTube Select) or by allowing specific partners with established sales teams like us at Little Dot Studios to go and sell these ad slots directly to commercial partners and advertisers under their Partner Seller Program. YouTube even has PPV and paid subscription options (Primetime channels or Channel Memberships), both traditionally associated with the likes of boxing or sports channel bolt-ons. And let’s not forget that YouTube offers something that no OTT provider can: no tech costs (just a share of the advertising revenue) and a ready-made, large-scale, existing addressable audience. Indeed, according to ComScore, YouTube has the biggest and most evenly spread reach among all UK demographics of any digital platform.
Despite this, there is a long way to go before YouTube is an entirely viable alternative for sports rights. The Ligue 1 domestic rights are currently rumoured to be worth around €700m per year. It is rare for a YouTube channel to make more than $1m. YouTube’s acquisition of the NFL rights is a very different beast to where the rest of the platform and company is at on sports rights. (That acquisition was really to support YouTube TV - a specific product targeting US cord-cutters that does crossover with and may coalesce with YouTube as the rest of the world knows it, but is not likely to do so any time soon).
Robbie Spargo is Managing Director of Little Dot Sport
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