Why OTT is hotter than ever, and what it means for you

Following IMG parent-company Endeavor’s agreement to acquire NeuLion for $250m yesterday, today Perform – the sports media company with widespread OTT capabilities including DAZN – revealed it will sell a share of the company to Japanese advertising giant Dentsu.

Why the sudden flurry of deals? At Two Circles, we are increasingly working with our clients to navigate rapidly-changing media habits and capitalise on the opportunities that come with being able to reach fans directly, and more easily, than ever before.

In my mind, there are four driving factors – and even more implications for sports rights-holders.

1) A fall-back option

‘Traditional’ rights deals with broadcasters are under pressure, driven by falling TV viewership. The biggest, most valuable rights (such as the Premier League and the NFL) can still command a premium from broadcasters, but at the middle-tier it’s much tougher. By having a fall-back, ready-made D2C option, rights-holders (and rights-sellers, like Endeavor) have a strong fall-back option for media rights that struggle to hit their reserve price.

2) Better margins

Never underestimate the power of earnings accretion. As the UFC’s streaming partner, Endeavor will have been acutely aware of the margin NeuLion was making as its service provider; having streaming capabilities ‘in-house’ is a strategic investment as more rights-holders look to go OTT.

3) A new data-driven route to customers

The value of sports rights increasingly lies in how they’re monetised digitally. Going to an audience OTT enables a rights-holder to know who its customers are and how they consume the product – data that is hugely valuable to advertisers, and in being able to market additional products.

4) Better control of the customer experience

In the world of OTT sports broadcasting, marketing and product are totally intertwined. By controlling the development roadmap for NeuLion’s product, Endeavor will have greater control over the experience it can offer fans. The streaming issues UFC experienced over the Mayweather/McGregor fight were a big deal; rights-holders want better control.

The challenge to the traditional broadcast model won’t go away and for rights-holders this presents an opportunity, not a risk.

But there’s plenty for leading rights-holders to ponder – which we do with them on a daily basis. What is their strategy for D2C sales, for example? Are they structuring broadcast deals to retain D2C rights, which will hold huge value in the future?

And what about data strategy? Do they know, in detail, who their most valuable fans are? Rights-holders who own their fan relationships directly, and therefore have the insight from data to find understand that, are those that will succeed in the long-term in the new media landscape.