In addition to the strategic trends noted in the prior section, Parks Associates sees four key tactical moves that studios are engaging with in the short term to drive revenue. One big one is the rise of sports programming.
Returning to a strategy used to counter ad-skipping as DVRs like TiVo became popular, streaming networks have turned to sports to keep fans riveted and returning. Deals have ranged from exclusive access to an up-and-coming league free of broadcast rights and local blackouts legacy (Apple and Major League Soccer), enabling a premium add-on, to the fractured streaming of NFL games.
With the decline of linear TV, the TV-viewing audience now watches what they want, when they want, and those eyeballs are further fragmented across SVOD applications, ad-supported destinations, and dozens of viewing platforms, making audience reach a critical problem for advertisers. Sports’ ability to aggregate massive amounts of viewers into same date-and-time viewing is incredibly valuable and drives the massive spending on sports rights. Gaining access to a game or two brings differentiation, destination recognition, and new viewers, as Netflix has calculated in purchasing rights to NFL games at $75 million/game.
A Netflix executive has compared the price to roughly the budget for a medium-sized original film. The first NFL playoff game on Peacock attracted a streaming audience of more than 20 million users, according to Nielsen. Sports offers advertising revenue potential even for viewers using an ad-free tier or service, e.g., Major League Baseball games on ad holdout Apple TV+.
Currently, Parks Associates research shows 19% of US internet households subscribe to ESPN+, and 10% subscribe to National Football League (NFL)+.
Streaming has increased the accessibility of sports, enabling fans to watch events on their preferred devices—whether mobile, smart TVs, or laptops—on their own time or even while on the go. Key findings from the study include:
- 33% of US internet households subscribe to a D2C (direct-to-consumer) sports service.
- 43% of US internet households personally watch live sports from any source.
- 70% of sports viewers ages 18-24 watch at least one live game or match per week, compared to more than 87% of those ages 55 and older.
"As more games move to streaming platforms, the traditional sports viewer, or 'Sports Traditionalist,' who watches only via broadcast or pay TV, is becoming a smaller segment of the overall audience," said Jennifer Kent, VP of Research at Parks Associates. "By Q3 2024, only 8% of consumers in internet households were Sports Traditionalists, with an additional 13% using both traditional outlets and streaming services to watch sports."
While sports have emerged as a content ingredient of increasing importance for services more focused on movies and TV shows, it has also been the foundation of vMVPD Fubo and ESPN+ (the third leg of the all-Disney streaming bundle).The perceived sports opportunity drew together competitors Disney, WBD, and Fox to launch vMPD Venu Sports. But when that venture was challenged by rival Fubo as anti-competitive, the partners shut down the joint venture before it launched. Disney instead acquired 70 percent of Fubo, which will likely take on much of the EPSN live sports that would have gone to Venu. And as Fubo’s service includes non-sports channels as well, Disney will also shift Hulu’s Live Channels offering toward Fubo (albeit as separate services for now).
Amazon (left) has used its home page to promote football games on Prime Video while Netflix (right) has dedicated its launch screen to mobile games.
This is an excerpt from Parks Associates report Streaming Video Market: Rise of Hybrid Models
In this report, Parks Associates assesses the state of the streaming market with a focus on shifting video consumption habits and the hybrid revenue strategies that services are employing to make the economics of streaming work. The report assesses leading company strategies and includes a 5-year forecast of OTT subscriptions and ad-based streaming service viewers in the US.
