“There’s an old line of Eric Schmidt’s that is often repeated,” says Steve Nuttall. “‘People over-estimate the impact of technology in the short term and underestimate it in the long term’. I think that’s true.”
Schmidt is the billionaire executive chairman of Alphabet, the parent company of Google, owner of YouTube (albeit the aphorism, known as Amara’s law, was actually coined by US scientist and researcher Roy Charles Amara). Nuttall has cited it in response to a question about what the sports broadcasting landscape will look like in 10 years’ time, and what new trends he sees emerging.
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We’re speaking in Sportcal’s offices in London. Nuttall, who
lives nearby, left YouTube in June for a new venture which, for the moment,
remains under wraps.
“Think back 10 years to the world we were in,” Nuttall says.
“The iPhone had barely launched. YouTube was three, and before that there was
no way to share video online. If we had said we’re going to live-stream the
Olympics we’d have worried: ‘Are we going to break the internet?’ All we had
was a tiny screen on a computer. Now, online, you expect TV to give you an HD
4K picture without interruption: no buffering, no nonsense.
“Technology is not the story any more. The world’s changed
profoundly; it revolves around people’s phones, the screen they spend the most
time with. Make a list and it’s the last device they want to lose. There was a
survey that found that teenagers would rather go without food for 24 hours than
their phone.
“There’s also some Ofcom [the UK media regulator] research
on adults’ media use and attitudes that showed that the fastest-growing
demographic for mobile phone usage is the over-65s.” The research shows that,
while use of smartphones by people aged 65 and over is still lower than for
other age groups, it increased sharply between 2015 and 2016, both for those
aged 65-74 (39 per cent versus 28 per cent) and for over-75s (15 per cent
versus 8 per cent) – the only two age groups for which use has increased. Users
aged 65-74 are also twice as likely in 2016 as in 2015 to nominate their mobile
phone as the device they would miss the most (20 per cent versus 10 per cent).
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By GlobalData“Sometimes people think it’s just something young people
will grow out of, and not for the mainstream,” Nuttall continues. “That’s
completely wrong. The pace of change is only going to increase. We haven’t
begun to see the beginning of the impact of networks and devices on the
entertainment industry.”
After the interview, Nuttall, a voracious consumer of research data, directs me to the blog of Benedict Evans (“I try to work out what’s going on and what will happen next”), of venture capitalist firm Andreessen Horowitz. Evans, who gives an annual presentation called ‘Mobile is eating the world’, writes: “The smartphone is the sun and everything else orbits it. Internet advertising will be bigger than TV advertising this year, and Apple’s revenue is larger than the entire global pay TV industry.”
To Nuttall, this is all positive stuff. “If you look at the
entertainment industry, we’re continuing to live in a golden age,” he says.
“Netflix, Amazon, Hulu, Facebook, YouTube are all commissioning quality
content. Established broadcasters are responding to the new opportunities that
technology brings. It’s great for
consumers. We’re very, very early in the development of new technology and services
and I’m optimistic of greater change in the next 10 years.”
A trend that Nuttall does expect to see continuing is the
one towards “more and more channels.”
“I have a friend who back in the day was controller of
Icelandic TV at a time when it had one channel,” he says. “TV only worked for
three hours a day and one person could control what an entire country watched.
That was in the 1960s, and at the same time the UK was going from two to three
channels.
“Now if you say to anyone under 30 there was once a world of
four or five channels they’d think it bizarre. As a result, more and more
content is shown. In the old days the amount of sport you could get on TV was
severely Iimited. Now, because there are so many ways into a household – so
many screens – everything will be live.”
Actually, even this is not new. In the UK, Nuttall’s ‘home’ market, the amount of top domestic soccer available on screen is deliberately restricted by the leagues, in part to protect live attendances and in part, arguably, to maintain its rarity value on screen and prevent saturation. But Nuttall contrasts this with the situation in Italy, where he worked for the former pay-television operator Telepiu (now Sky Italia), and where every game has been shown live since the early 1990s.
We’ll get to a place where everything is live. I expect to be able to see all 3,500 hours of the summer [Olympic] Games. You can’t put the genie back in the bottle
“We’ll get to a place where everything is live,” he predicts. “I expect to be able to see all 3,500 hours of the summer [Olympic] Games. You can’t put the genie back in the bottle. This raises an interesting production question: the viewing curve is getting steeper, with the difference getting greater and greater between [premium content] and average schedule filler. In some ways, premium sport is benefiting from being in the category of must-watch content. People will tune into big shows. But the production question is how to produce the best games in the very best quality and also retain a very cheap and effective production capability for everything else. How people resolve that will be an interesting challenge.”
There is, however, a theory that I (and doubtless you) have
heard repeated a lot lately that, in an age in which attention spans are apparently
diminishing, and lots of sports ‘content’ (albeit not live coverage of marquee
events) is available for free via social media and in short formats, long-format
coverage’s day is done – meaning that rights values for even the top properties
are bound to fall.
To put it another way, who’s going to pay to watch a Champions
League match live from kick-off to final whistle on TV when they can get the
goal clips, behind-the-scenes footage and gossip, player interviews and other
choice morsels for free on their mobile phones?
Nuttall is not one of the doomsayers, though. Quoting some
more research that shows that aggregate TV viewing in the UK is flat, he argues
that the fall in viewing figures for traditional TV is compensated for by
“digital and other forms of viewing.”
“TV’s share has come down but the absolute amount being watched
is relatively the same,” he says, pointing out that while TV viewing has fallen
among the under-25s, “viewing by the oldest has slightly increased. So, it’s
undoubtedly true that early adopters, for which young people are a proxy, are
still watching an awful lot of video, but not as captured by the big screen. If
people are watching Netflix, they’re watching video. The Champions League is
not watched for any less time on YouTube than on TV.
“I’m not sure I buy the theory that the time [spent watching
individual events or programmes] is falling. You just have to work harder to
keep them. If you put out quality content, people will watch for just as long
on a mobile phone as on another device. It doesn’t really matter if they came
into that screen by satellite or the internet. If you’ve got quality content,
people will stick with you.”
Nuttall cites the NFL’s RedZone, which aims to offer live
coverage of every touchdown from matches being played simultaneously, without
advertising breaks, as evidence of rights-holders and broadcasters responding
to shorter viewing, but also points out that TV viewing data suggests that
“it’s not true that even on TV people watch the whole of a game. One of the
reasons that rolling news channels have a 15-minute wheel is on average people watch
for 15 minutes.
“I’m not sure there was ever a golden age when someone felt
compelled to sit down and watch everything. Maybe on Icelandic TV in the 1960s.
The good thing is now I can see every goal from every Champions League game.
For me as a BT Sport or Sky subscriber that seems like a good service. The fact
I can also watch goals through the Times website next day doesn’t mean I’m
likely to cancel my Sky subscription; in fact, it deepens the relationship, and
makes me more likely to retain my subscription.”
We’ve seen increasing evidence of the big technology companies, such as Apple, Amazon and Yahoo, and social media giants, such as Facebook and Twitter (as well as YouTube) entering the sports media market. Recently, Facebook bid (unsuccessfully, with a $600-million, five-year offer) for rights for cricket’s Indian Premier League, while Amazon and Yahoo were both reported to have acquired the tender documents, albeit they didn’t go so far as to actually submit bids. Meanwhile, Amazon has taken over from Twitter in live-streaming NFL games and has acquired ATP tennis rights in the UK.
It’s been suggested that these companies pose a serious
threat to the way sport has been broadcast since the beginning of television. What
will be their role in sport in future, I ask? “They’re enormously different
companies,” Nuttall points out. “Sports content is very valuable, and is often
tied up for the long term. The question always has to be to rights-holders, ‘how
long do you want to tie your rights up for?’
“The fact is there is more opportunity now to launch a
sports business, whether powered by advertising or subscription than in the past.
Think back to ESPN and Setanta [the former UK pay-TV sports broadcasters] and
they had to have satellite distribution. Now you’ve got the likes of DAZN [the
over-the-top streaming service owned by digital sports content and media group
Perform]. Rights-holders can run their own OTT service or they can sell to
Google or Facebook or Amazon, exclusively or non-exclusively.
“What do you need to succeed in the pay-TV world? The
ability to promote and market content. Apple and Amazon clearly have that. I
think you’ll see significant interest in sports rights over time. It will grow
and grow. One of the challenges for sports and internet businesses is that on
TV the live experience is all; but for some platforms it will work better on the
internet than others. We’ll see who is keenest to experiment.
“For rights-holders the opportunities continue to expand,
including the most simple: do it yourself, if only as a hedging strategy.” Here,
Nuttall once more cites Benedict Evans’ article entitled ‘Content Isn’t King’,
saying: “The point is, everyone thinks that Google or Amazon will buy the entire
TV industry, but Amazon didn’t buy the book business and Apple didn’t buy the music
industry. It doesn’t make sense as a distributor to look for exclusivity or for
a provider to become king-maker. There won’t be a situation where one entity
owns the entire sports business.”
Okay, but are any of this new wave of technology and digital companies ready to put down serious money for a marquee property? For example, in the UK pay-TV rivals BT Sport and Sky are shelling out a combined £5.14 billion ($6.9 billion) for live Premier League rights in the UK in three-year deals expiring in 2019, and Ed Woodward, Manchester United’s executive vice-chairman, recently predicted that the likes of Amazon and Facebook would seek to disrupt this duopoly. Meanwhile, Premier League executive chairman Richard Scudamore has also not ruled out the potential award of live rights to a new digital player.
However, Simon Green, the head of BT Sport, told the
Guardian newspaper last week: “It’s hard to say how the sporting rights market
is going to play out with those brands. The only one which has really dipped
its toe into the water is Amazon, who bought the rights to the ATP tennis.
“What’s Amazon’s business model? Is it to sell tennis
rackets on the back of showing it? Over a five- or 10-year span, I don’t see
those brands competing in the sports rights buying market in the way ourselves
and other established broadcasters are.”
So, in the face of these opposing views, and with a new tender for the rights to English soccer’s Premier League on the horizon, now seems a good time to consider what it will take for these companies to switch their focus from individual, often one-off events to entire leagues, seasons or competitions.
There is a danger for the sports business of shutting itself away
and not having something packaged to be appealing to buyers. Is it
packaged in a way that is interesting?
“One of the things you need to think about is whether your business
is global or local,” Nuttall says. “There is a danger for the sports business
of shutting itself away and not having something packaged to be appealing to
buyers. Is it packaged in a way that is interesting? It seems like this is an
interesting tipping point. The speed [of change] is held back by the length of
existing contracts.”
Unsurprisingly, for someone that has increasingly moved away
from traditional television, Nuttall approves of the Premier League’s plan to
make its tender ‘technology-neutral’. “By not being technology-neutral, you’ve
got to be reducing competition for a set for rights,” he says. “It seems a very
sensible thing to do. No doubt, it will have some knock-on implications to the
way packages are designed. The end result has to be to make it easier for
digital platforms by removing one of the points of friction, which is good for
the Premier League.”
Citing the recent auction for IPL rights, Nuttall continues: “If you take the Facebook view, the global rights to a premium property outside India could be monetised through advertising, so it was a sensible thing to have a run at. Online advertising is now bigger than TV advertising. Apple’s revenue is bigger than the entire TV advertising market. Content now looks more affordable than it used to. The IPL has been live on YouTube for many years, financed by advertising.”
But are we anywhere near that other mythical tipping point
for the sports media rights industry where a set of rights is sold to a single
broadcaster/distributor operating globally, instead of to a range of
broadcasters on a territory-by-territory basis (a tipping point that could have
serious consequences for international sports rights agencies, as well as
broadcasters)?
“The pace of change is accelerating,” Nuttall says. “Simple
maths tells you that if viewership has been up by over 50 per cent, year on
year, for YouTube for several years – and I presume it’s the same for the
others – if it keeps on growing at 50 per cent, in comparison to a TV industry that
is flat, then you just have to wait for the maths to take over.”
However, for the benefit of hyperventilating broadcasters,
at this point Nuttall adds: “I don’t want to give the impression that
everything will switch to online. TV is very resilient and smart and as long as
it continues to innovate, it has an amazing future. [Digital] is not necessarily
out to eat TV. It could partner with TV. There’s a better opportunity than ever
before to delight the customer.
“If you’re a broadcaster now you want a compelling presence
on every screen your audience cares about. It’s part of fighting back, part of
TV focusing on the end user. TV is changing itself, in a way other industries
didn’t do, or only did belatedly. Did the music and books industries respond as
quickly? Has TV seen that they missed opportunities and decided to get on with
it sooner?”
As for the consequences for agencies, Nuttall also has some
words of comfort, albeit he warns: “The viewing curve gets ever steeper, and
the money going to premier properties gets ever greater. For premier properties,
they can increasingly afford to invest in their own production and TV crews and
take and keep everything in-house.
“So if you’re not in the privileged elite, you need to be
smart and savvy. Getting access to skills is not easy. There are economies of
scale for production, so there will always be a role for intermediaries,
agencies and production companies that are necessary to help people come to
market. As the world gets more complex, the need will increase, not decrease.”
Nuttall is regarded in the industry as something of a backroom
operator, with a relatively low public profile, albeit he’s given some
compelling and engaging addresses at industry conferences and events down the
years.
He’s also a sports nut. One ex-colleague tells me that even
when Nuttall was promoted to a more wide-ranging, non-sport-specific role as
senior director, EMEA, at YouTube, he would still turn up to sports department
meetings that his level of seniority did not warrant, simply because he was
interested. Another ex-colleague describes him as “very, very solid, a great
guy to have on the team,” but one who “never went down the entrepreneur,
risk-taking route. He’s not a maverick, he would never start a business, or
raise capital.”
Even his ex-colleagues at YouTube are apparently in the dark
about his next move, so we’ll see about that. But in any case, it’s not
strictly true to say he would never start a business. He was one of the
co-founders of the sports portal Sportal, a casualty of the first dotcom crash.
If he was scarred by the experience, he seems to have got over it. “We briefly
held the record for being the best-funded European start-up,” he says. “It grew
and did very well, and was a sponsor of Euro 2000. Then the stock market shut
down in the recession, and I left and went to Sky because it looked like a safe
haven. I was allowed to reinvent my job every year there, so I stayed for 10
years.
“Sportal to a degree was ahead of its time, but we were also
in due diligence to sell the business to someone else. That would have made us
look like one of the success stories. Two more weeks and it would have been a different
story, and would have been written up differently. We all lost a bit of money,
but I didn’t think it was a disaster. There’s no point in looking backwards. I’m
always optimistic about the future. You learn a lot from those experiences.”
Nuttall was born in Manchester in 1967, and is a Manchester
City supporter, he’s quick to tell me, even though they were going through what
he calls euphemistically “a bit of a fallow period” as he was growing up (those
days are now well and truly behind them). He took a physics degree at
Nottingham University and also an MBA in Milan and at UCLA, where he studied
film as well as business and was inspired by a course on the likely growth of
the internet.
I haven’t used my physics degree in anger since I finished university, but it certainly made me more inclined to look at the data and be logical in my approach
He also worked for consultancies in the regulated
industries, including the media industry, before starting his media career
proper at Telepiu. Of his education, he says: “I haven’t used my physics degree
in anger since I finished university, but it certainly made me more inclined to
look at the data and be logical in my approach. There are two threads in my
career: premium content, sports and movies; and new technologies.”
Asked which companies he admires in the industry, which ones
have got it right, and why, he unsurprisingly cites two of those he has worked
for, Sky and Google/YouTube, together with Perform (“they’re people on the
front foot when it comes to the internet”) and, perhaps surprisingly (albeit it’s
a YouTube client), the International Olympic Committee.
He offers both praise and questions for the IOC’s Olympic Channel,
saying: “They’ve taken the first steps on exactly the right journey. It’s the
right thing to do. The challenge is, can they be as fast-moving and innovative
as they need to be to succeed in the digital environment, given everything
going on around them. The best chance is to give the channel substantial
independence from what is going on around the [Olympic] movement. Will they
give it the opportunity? I don’t know. Can they be fast-moving and competitive
enough? Will they be fleet of foot enough to have a new media start-up within a
venerable institution?”
Finally, I ask him what advice he has for rights-holders,
especially international federations, that are just starting out, or haven’t yet
travelled far, on their digital journeys. “I don’t think it’s an option to get
left behind.” He says. “At a bare minimum, you need an active presence online,
including across all parts of social media that are relevant to you. That ought
to tell you about future fans and how to engage with current fans. If you have
your long- or even medium-term interests in mind, you ought to do it.
“Look around at the lots of people who have had success on
YouTube and Facebook out of garages by being smart and savvy, with minimal
investment. The barriers to entry are lower now than they’ve ever been. It
seems to me you’d be crazy not to do it. If you only give a small investment to
half a dozen people under 30, what have you got to lose? There’s not much risk.”
Nuttall says he recently watched an interview with a German
car blogger, whose audience is “way larger than the audience of any German TV
programme on cars.” The blogger now employs 80 people in a business that is “very
profitable, but it started with him and a camera and not much else. He just
knew how to engage with an audience.
“If you’re a federation, you don’t need to put aside vast
amounts of money to build up a big team, you’ve just got to be innovative. If
you’re a federation president, what’s stopping you?”
