The shift in consumer behaviour among younger audiences is the biggest threat to the sports industry, closely followed by a lack of trust in sports governing bodies, according to PwC’s Sports Survey 2017, entitled ‘Sports: the most disrupted of all industries?’, which was published today.
Asked which threat the sports industry should be most concerned about, 57 per cent of respondents cited the former and 47 per cent the latter, well ahead of ‘competitive pressure from alternative entertainment formats (other than sports)’ (29 per cent), ‘speed of technological change’ (27 per cent) and ‘impact of match-fixing’ (22 per cent).
The report commented: “This shift has resulted in an increasing number of sports experimenting with new formats that are more suitable for younger audiences. The recent launch by the Infront Sports & Media AG/Velon partnership of the Hammer [cycling] Series is a great example of a competition that has prioritised fan entertainment and engagement appeal.
“Beyond the increased use of live data through wearable technologies, the Hammer Series’ format results in short but frequent highlights, ideal for digital media consumption. The IOC has also been attentive to fan needs, integrating 3x3 basketball and BMX, for example, as Olympic sports in time for Tokyo 2020.”
Meanwhile, the report claimed that: “It is no longer disputed that live TV is in decline, as evidenced by dropping viewership figures among leading broadcasters such as ESPN in the US (the subscriber base has contracted from 100 million to 88 million in the last six years) and Sky in the UK (average viewing of live Premier League matches declined by 14% over the past season, resulting in the launch of revamped and considerably cheaper channel package offerings).”
The report added: “The alarm bells have also been ringing for the IOC since NBC reported a 17% decline in ratings for primetime coverage of Rio 2016 compared to London 2012, with a steep decline of 25% among the all-important segment of adults aged 18–49.
“Furthermore, TV viewers are ageing across the board, as highlighted by a recent study on sports TV viewership conducted by Magna Global for SportsBusiness Journal.”
The study showed that the median age of TV viewers for golf’s PGA Tour is 2016 was a worryingly high 64, an increase of five years since 2006, followed by tennis’ ATP Tour (61, +5), Major League Baseball (57, +4), tennis’ WTA (55, -8) and the Olympic Games (53, +3).
Even the apparent TV juggernaut that is English soccer’s Premier League, is relying on audiences with an average age of 43, the study found.
The PwC survey of 189 senior sports executives and officials, conducted in May and June this year, also identified the following top three ‘sports rights media market disruptors’:
1. ‘Proliferation of new platforms (OTT, digital media, apps, etc.) to deliver content to fans
2. ‘Expansion of mobile internet and ubiquitous access to sports content through mobile devices
3. ‘Rights holders changing distribution strategy to establish direct relationships with fans (‘proprietary’ TV channel, social media following, etc.)’.
The report commented that, “the global ubiquity of alternative on-demand content means that (live) sports is now competing with various other entertainment formats far more than it used to. OTT solutions such as Netflix or HBO Now are investing more than ever in the content they produce (or acquire the rights for), attracting subscribers with a multitude of engaging series, films, shows and documentaries to choose from. Indeed, respondents identified the proliferation of new platforms to deliver content to fans, such as OTT solutions, as the number one development disrupting the sports rights media market.”
The next edition of Sportcal Insight magazine, published to coincide with next month’s Sportel convention in Monaco, examines the rise of OTT under the headline ‘Disruption’.
In the PwC survey, international federations and broadcasters and media companies were the least optimistic about industry growth, expecting average annual growth of just 4.2 per cent and 5.5 per cent, respectively, in the next three to five years. This compares with the most optimistic groups surveyed, technology companies and investors (9.1 per cent) and leagues and clubs (8.1 per cent).
The report commented: “Of particular note is the relative pessimism among broadcasters, who believe the industry’s growth rate will slow down by over 32% in the coming 3-5 years. This perhaps reflects the ongoing rise of OTT solutions across a variety of private platforms, in particular social media, and media consumption trending towards mobile, bite-sized and on-demand content.”
However, querying whether OTT represents ‘friend or foe’, the PwC report quoted Lewis Wiltshire of digital sports consultancy Seven League as saying that “the biggest misnomer in the industry is that OTT is killing broadcast. OTT is in fact additive to broadcast – at this stage. Almost all of the deals we’ve seen involve digital platforms adding another syndication stream to rights already being shown on traditional TV. Those digital platforms are bringing additional revenue streams and reaching divergent audiences who would otherwise not consume those rights.”
The report added: “Despite this perceived relative decline in the industry’s growth rate, it should be noted that respondents still predict that the industry will grow by a healthy 6.4% on average over the next 3-5 years.”
Meanwhile, under the heading ‘Consolidation of revenues among the top tier’, the report found that: “Unsurprisingly, broadcasting and sponsorship came top of the pile in terms of revenue streams that respondents expect to grow the most over the next 3–5 years, with predicted growth rates of 8 and 7.1% on average respectively.”
It concluded: “When digging deeper to discover the main growth drivers behind the continued dominance of broadcasting and sponsorship as revenue streams, respondents primarily pointed to the global appeal of premium sports properties. This suggests that there is a commercial consolidation around the leading teams, leagues and events, a phenomenon which may well be squeezing the industry’s ‘middle class’, which is generally struggling to generate revenues of a competitive nature.
“Respondents identified the proliferation of OTT/digital streaming solutions, and the new engagement opportunities that these bring, as the second growth driver for broadcasting and sponsorship collectively.”