While we may have staved off TV Armageddon last week, this won’t be the last in what promises to be a bruising long-term tussle to determine the future of the TV — and live sports — ecosystem that serves as the bedrock of the modern advertising business.
Disney and Charter Communications agreed to a new distribution pact last Monday, mere hours before Charter’s 14.8 million subscribers would have been blacked out of the first Monday Night Football contest of the season on ESPN. While the 11th-hour (or 13th-hour, if you’re a college football or tennis fan) deal prevented Jets and Bills fans from missing Monday’s overtime thriller, the underlying forces that precipitated the conflict aren’t going anywhere.
Consumers and sports leagues are migrating to streaming services and so-called virtual MVPDs (YouTube TV, Fubo, Hulu with Live TV), and networks and pay-TV distributors will continue fighting over bundles and carriage fees as the landscape changes.
For most marketers, all this conflict is enough to cause serious consternation. After all, blackouts and disruptions threaten their ability to reach consumers during the highly engaging live sports programming that commands the industry’s greatest advertising premiums. A changing landscape also makes it harder to plan for the future.
But the good news is that some things in marketing never change.These three keys to Media & Entertainment success are immutable: Talent (or we can call this Content, created by Talent), Fans, and Brands. As I recently discussed on CNBC’s Squawk Box, great talent and the content they create attract highly engaged fans, and the brands that remain focused on this core truth will be well-positioned to weather industry turbulence.
In fact, there’s reason to believe that the live sports ecosystem of tomorrow will be considerably better for fans and advertisers than the one we inhabit today.
The shift to streaming is well underway for major sports programming
Consumers’ migration to streaming platforms for live sports might be messy for our ecosystem, but there’s no denying that it’s happening — and we all need to be ready to adjust.
Indeed, even as the NFL continues to account for an outsized position of viewership on linear TV, more and more fans are streaming live games.
A watershed moment was Amazon Prime Video becoming the exclusive outlet for Thursday Night Football last year, which was successful enough for an encore this year. And Google’s YouTube began selling NFL Sunday Ticket this season, which should bring a whole new crop of fans online. Even the big networks are reporting more fans streaming live games on the likes of Peacock and Paramount+.
The march toward streaming is not limited to the NFL of course. Lionel Messi’s celebrated arrival in Major League Soccer is credited with driving subscriber spikes for Apple TV+, which recently inked a massive global deal with the US league. Warner Bros Discovery has plans to stream some college basketball on its Max service.
Thus, it’s not surprising that the upcoming NBA rights deal is expected to include a streaming partner, and could possibly exclude cable TV entirely.
However, given the stakes, the transition to an eventual digital-centric sports distribution won’t be without hiccups. For instance, Nielsen had to back off perfectly sensible plans to use Amazon’s first-party data for tracking Thursday Night Football after complaints from other broadcasters that they might be disadvantaged. This wasn’t the first and surely won’t be the last measurement dustup during this transition.
That clash is small potatoes compared to some of the existential questions being asked at both cable operators and within Disney over ESPN’s fate. Disney CEO Bob Iger has hinted that ESPN — as it attempts to eventually become a direct to consumer business — may be for sale, or may seek investment from a tech giant.
That was before things came to a head with Charter’s battle with Disney over ESPN distribution — which many saw as tilting the future of the pay TV industry. Before the two parties came to a last-second deal, Charter executives were openly talking about giving up on distributing video altogether, and ESPN officials were urging customers to cut the cord for Hulu Live and other services.
All of this is to say that we’re in a period of transition, and change is never easy.
Streaming provides ease-of-use for consumers and an engaging environment for brands
All this volatility may — in the short term — make things messy and challenging for fans and brands. But overall, the trajectory is clear, and it should be positive for all parties.
We know that live sports are among the strongest assets in the media world, and fans have demonstrated a willingness to follow their favorites — wherever they land. Marketers have long known that investing in great talent and stories usually pays off.
Just look at how engaged viewers have been with the NFL’s top stars over the years. In the past, brands that advertised during games featuring recently retired quarterback Tom Brady were 15% more effective at driving consumer engagement per person than NFL games without him.
Now, Kansas City Chiefs signal-caller Patrick Mahomes is a clear successor to that crown, both on and off the field: State Farm’s Bath Bomb ad featuring the MVP was 59% more effective at driving engagement vs. the average Insurance NFL ad last season.
In the case of streaming, the payoff is already strong. Last year, EDO found that ads on Amazon’s Thursday Night Football games were a whopping 116% more effective at driving valuable engagement behaviors like branded searches and site visits than ads in other NFL games. This is one of numerous data points which demonstrate how ads on streaming services are more engaging for marketers — and that should only improve as companies like Amazon are experimenting with more targeted and dynamic TV ads.
Plus, streaming already provides a better viewing experience for sports fans. Given technology’s history of empowering consumers, this should only improve, as these platforms' various user interfaces become more interactive, while providing fans more options and control of their viewing experiences.
These should all be major positives for brands — as live sports should continue to deliver the biggest audiences in all of media — while driving more engagement than ever before.
Want to weather a period of transition? Stay focused on what never changes.
Yes, some things will never change, even as media titans look to protect their near-term fortunes while trying to compete in a new digital world.
As long as marketers stick to their principles — and lean into the enduring value of content that consumers care about, and partner with the trusted, quality brands where that content is offered — they’ll come out just fine.