Guest OpEd: Jeff Volk on sports media trends to watch in 2024
Volk delivers some thoughts on what's to come from Apple, Amazon, the NBA, Warner and Disney.
Jeff Volk has led key areas of some of the biggest sports media and tech ventures in the industry including MLB Advanced Media, BAMTech Media, Disney/ESPN, EXOS and the USTA/US Open. Here, Volk pinpoints some of the emerging stories of 2024: the evolution of local sports media rights, efforts to create more blockbuster sports events, AI, women’s sports, the gold rush in the production sector, and not least, the flood of capital and investment in the sector.
Those of us who have spent our professional lives at the intersection of the sports/media/entertainment, digital media, and technology marketplaces know that every new year truly begins at the innovation playground that is CES, which kicks off this week in Las Vegas. I’ve attended CES since almost the 1900s – traveling with my cherished Palm Pilot, being awed by early GPS tools, and distributing the first generation of Google Chromecasts during the WWE Network official announcement in 2014.
This convergence of sports, media, and technology has long been my personal passion and remains the thread that has persevered throughout my career across MLB Advanced Media, BAMTech, Disney, USTA, EXOS, Deltatre, and most recently BridgeBuilder Ventures Group.
Back in 2011, when I helped launch sports venture community NYVC Sports, the only significant sports media transactions were eBay’s acquisitions of StubHub and GSI (the first iteration of Fanatics.) Think about how rapidly that has changed over the past decade. Our space moves swiftly on the curve of technological advancements. So, we must continually reassess the meaning of industry evolution, as well as the people who drive them (as this is, first and foremost, a relationship business).
While predictions and trends for a full calendar year are fun to forecast, I have focused below on some key things to keep your keen eyes on over the next six months -- with the intent of revisiting for the second half of the year.
Long Live Premium Live Sports:
As the sheer volume of content continues to surge across more content platforms and distribution services, premium live sports, as an asset class, continue to be the lone true differentiator. No other programming has delivered with more consistency. Live sports delivered 96 of the top 100 most-watched telecasts in the U.S. and 85 of the next 100 in 2023 (powered almost entirely by the NFL). [Source Nielsen’s annual rankings] Monday’s College Football Playoffs National Championship drew more than 25 million viewers and reaching 20 million viewers for key matchups will be the norm in 2024. Even the PDC World Darts Championship Final drew nearly 5 million viewers on Sky Sports -- the biggest ever for a non-sports game on the network. [Source: Sports Business Journal, January 2024]
New Blockbuster Events:
Just like Hollywood movie studios increasingly focus theatrical strategies on blockbusters that can drive multiple revenue streams, premium sports properties are setting their sights on creating more “jewel” events to make products more relevant throughout the year and their games matter across generations of fans, which in turn will make their live rights more valuable to distributors. These innovations include the NBA’s In-Season Tournament, the Leagues Cup tournament featuring MLS and Liga MX, Copa America, and the expansion of the College Football Playoffs to 12 teams this year.
My favorite showcase remains Amazon’s introduction of an exclusive live NFL game on Black Friday. In addition to creative cross-marketing offers, they accomplished their biggest obstacle of all -- keeping NFL fans engaged at home for three-plus hours when they otherwise could be out at big-box retailers.
All Eyes on the NBA:
Similar to Shohei Ohtani’s MLB free agency, the NBA is the locomotive that will drive the next set of media rights deals. The NBA’s negotiations are expected to grow between two to three times their current values ($2.7 billion per year from Disney and Warner Bros. Discovery) among at least six possible buyers (ESPN, Warner Bros. Discovery, NBCU, Amazon, Google/YouTube, and Apple) dividing up the various packages. My industry peers anticipate the multiple to be closer to two times, as they balance the many other valuable assets to round out their content mix. For reference, the NFL’s media agreements, signed in 2020, are worth $10 billion annually for 11 years, which represents increases of at least 35% across its five different partners (Fox, NBC, CBS, ESPN, and Amazon). [Source: Forbes: Jan 5, 2024].
Will the NBA rights acquisition be the landmark deal that cements the new leadership structures within CBS and NBC Sports? We can certainly expect to see these same bidders focused on the College Football Playoffs when their current ESPN agreement expires after the 2025 season.
Apple, Amazon and Google Using Sports To Fuel Core Business.
We have now seen the much-anticipated entry of major streaming services into the live sports arena. Apple trailblazed its 10-year, $2.5 billion global rights deal with MLS and brought Lionel Messi to the U.S. We can expect more mutually beneficial partnerships between leagues and media partners, as all signs point towards initial success. While linear TV relies solely on advertising and carriage fees to maximize revenues, tech enterprises such as Google, Apple, and Amazon are able to leverage premium live sports rights as a gateway to fuel their core businesses/cash cows.
Apple is already leveraging their sports investments, as they have done with other forms of entertainment, music, games, and apps, and we are already seeing this across its retail stores, news, payments, and other verticals. Additionally, Amazon’s Thursday Night Football ratings are way up and are approaching broadcast TV audiences, which ultimately drive Prime subscriptions and its commerce machine. YouTube TV is Google’s fastest growing product, having increased by nearly 50% in 2023, largely as a result of its newly acquired NFL Sunday Ticket package, which drives its core search and advertising businesses. [Source: Insider Intelligence, November 2023]
While Google, Apple and Amazon have the cash reserves to procure any content they want, the giant checkbooks may not be as open or as unlimited as many have predicted. Perhaps shorter media rights deal terms remain the immediate resolution.
Let’s Stop Saying That Netflix Is “On the Fence” with Live Sports:
Netflix has long spoken about, but only recently showed, its customers’ binge-watching viewing patterns. That premise, I believe, will continue to drive their sports content strategy. A weekly live game is unlikely to change the game for its content strategy. Expect Netflix to continue to create and own live events that not only help hone their live streaming technology but also continue to use these rights to create evergreen series that build upon them. Successful series, including “Drive to Survive” with Formula 1 and “Full Swing” with the PGA TOUR (among others) have culminated in the live original production and the exclusive “Netflix Cup” event. Look for Netflix to generate additional programming that leverages these successes, drives acquisition and retention, and maximizes every lever a live sports event presents (including tickets, sponsorships/advertising, and merchandise).
Tumultuous Times Drive Investment Opportunities and Strategic Capital is at the Ready:
Visionaries are attacking major obstacles, and we are taking notice. As top executives deliver on their business plans, we can expect the pool of savvy investors to widen -- including private equity, venture capital, athlete/celebrity influencers, family offices, etc.. Over the past year, more than 31 funds have announced over $4 billion of capital to be deployed in sports and sports-adjacent businesses. [Source: SportsTechX] Expect seasoned investors with operating expertise to be best informed and ready to aggressively infuse early capital to accelerate growth in a meaningful and powerful way.
Investors are ready, and businesses are delivering. I’ve seen some incredible examples that leverage real-time data enhancements (next-gen stats, live predictions, in-game lines for sports betting), digital animations to reach younger audiences (NFL/Nickelodeon’s Slime broadcast, NHL/Disney’s Big City Greens live animations), reimagined uses of audio video capabilities (NFL’s Pylon camera, Amazon’s alternative camera angles, unconventional/alternate telecasts focused on data/fantasy/celebrities), revenue generation (NHL’s use of new local/national ad inventory along its boards), and so many others.
What We Do With Data and AI Is the New “Location, Location, Location”:
While we are already creating customizable experiences for various cohorts and consumers, wide use of data innovation and artificial intelligence tools are still at their inception. AI tools are generating large language models (LLMs) that deliver compelling, entertaining, and powerful solutions that understand our passions, behaviors, and patterns -- and deliver frightfully accurate predictions and results accordingly.
Industries are cyclical. Look for more live sports properties to bring data aggregation and exploitation back in-house (as we have seen with other forms of digital development) to drive core business value, in-game (on-field/court) decision making, injury prevention, and other critical training tools. To be clear, the use of AI didn’t start in 2022 with ChatGPT, rather, it’s opened many ideas to its widespread capabilities, and adoption has created immense opportunities to drive all forward-thinking organizations to explore its inevitable impact on this space.
Everyone Enters the Production Business and Innovation Abounds:
Beyond the largest properties, just about all new media rights deals, in efforts to maximize their top-line values, have brought leagues and teams into the production business. Sports production companies too have been in high demand. For example, Amazon, Apple, and others want a fully produced product and are willing to pay for that luxury. Delivering this fully packaged and compelling product to distributors has empowered them to find creative solutions for media partners that enhance the consumer experience and provide compelling reasons to tune in. For perhaps the best example, watch how MLS and Apple continue to innovate in year-two.
Pressure to Reach Profitability Will Drive Near-Term Consolidation:
We are already seeing the Street apply pressure on media properties to deliver on the promise of profitability across their distribution mixes. As a result, premium sports rights holders are applying significant pressures to distribute across any and every platform, whether it be broadcast, cable, or direct-to-consumer streaming solutions. This hybrid model and sheer flexibility will allow them to drive the most value and reach, despite some distribution channels obviously being larger and more compelling than others.
While we are all focused on the metrics surrounding streaming services (subscriber numbers, viewing session durations, churn), the volume of disparate services cannot survive the consumer demands. The whispers have grown louder, and speculation is circulating about immediate M&A, consolidation, and changes in the way content is distributed, aggregated, and monetized. Examples are brewing: Disney is once again licensing parts of its content library to Netflix. Warner Bros. Discovery could benefit from acquiring a broadcast network or partnering with Paramount/CBS (similar to their current relationship around March Madness), or NBCU (to align North America and Europe’s Olympic rights).
Ultimately, as the sheer volume of content grows and becomes more commoditized, live sports will remain the locomotive. For rapid user scale, meaningful revenue growth, the widest reach, compelling content offerings, and better cross-promotional opportunities, expect more media properties to deprecate or combine existing standalone streaming platforms. Also, expect more sports properties to continue to replace similar standalone streaming solutions with significantly more profitable licensing agreements (as NHL.tv has done with ESPN+).
Live Local Sports Adjusting to New Models and Widest Reach:
What we are currently seeing with local media rights is obviously in the midst of a transition, due to media players exiting the space and bankruptcies. Sports franchises are migrating their local sports from flailing Regional Sports Networks to local broadcast channels, with geo-restricted direct-to-consumer OTT platforms supplementing distribution. MLB has already demonstrated its capabilities to take over production and integrate local rights into traditionally out-of-market streaming packages (D-Backs, Padres, and most recently, the Rockies). NBA and NHL teams have licensed local rights to broadcasters, in efforts to generate the widest possible distribution, while collecting first-party data (Suns, Jazz, Golden Knights). We have even seen the Phoenix Suns artfully distribute TV antennas, in effort to reach every fan in the local market.
I think it’s reasonable to anticipate that while local broadcast deals will continue to expand, the whole gamut will change quickly. Will the NBA allow teams to power local streaming platforms after it completes its media rights negotiations? Might Fanatics acquire local sports rights and merge them with its commerce behemoth when the RSNs become even more distressed assets – thus owning local sports altogether (alongside its sports betting and collectibles businesses)? What about DraftKings and FanDuel, who see streaming as a gateway to transactions? What might MLB do with a package that no longer must delineate local and out-of-market streaming rights? All of these entities have a great understanding of their consumers and have demonstrated the ability to expand horizontally with great track records.
Bundles Broaden in 2024, Buoyed by Generational Stability:
While generational labels stay the same, let’s not forget we all get a year older every 365 days. Having grown up natively on digital media, Gen Z and Gen Alpha have also aged a year, and continue to alter present consumption and future behaviors. At the same time, the data suggest that Millennials, Gen X, and Boomers still watch full live sports broadcasts and account for the majority of pay TV households – thus holding the traditional cable bundle together for longer than many predict.
These sports fans still watch full live broadcasts and account for the majority of pay TV households (thus, holding the traditional cable bundle together for longer than many predict). Few doubt that the pay TV bundle will continue to decline (currently around 65 million households and getting closer and closer to 50 million), however the trajectory of decline will flatten. Viewers, who watch both live TV and subscribe to SVOD services, (termed “Cord Stackers”) are nearly twice as likely to watch sports weekly than streaming-only viewers (65% versus 33%) and are far more likely to be receptive to advertising. [Source: Mediapost, November 2023]. Consumers no longer care whether content is delivered via Wi-Fi, ethernet, or a coaxial cable. Just deliver compelling content at a reasonable price point, and they will subscribe (as we saw in the music industry).
Will We Resolve the Content Discovery Problem?
Ask any sports fan or movie/series lover where to find their favorite programming and you’ll quickly understand their exasperation. Consumer surveys (and personal experiences) have shown that content discovery (how to efficiently find the programming that we want to watch) has consistently been one of subscribers’ biggest frustrations.
Who is best positioned to solve this? Google (built on the tremendous delivery of search results), Amazon (AWS and Channels can provide real-time solutions, if they are willing to promote alternative services), and new entrepreneurial entrants deliver solutions. While my money is on Google, I am rooting for a young venture that focuses on doing one thing savagely well to transform the space.
Women’s Sports are a Real Business. Let’s Stop Saying that They Have Arrived:
As a #GirlDad, I am seeing first-hand the powerful inspiration behind the explosion of women’s sports. If you missed it recently, check out the post-game scene at Rutgers to catch a glimpse of superstar basketball player Caitlin Clark, still a student-athlete at the University of Iowa. The kind of scene that unfolded at a visiting venue – nearly 1,000 miles away from her home – has been reserved for elite superstars. Whether it’s this season or next (she has one year left of eligibility if she wants it), the WNBA waits with great anticipation for this type of mass-market fan engagement and crossover promotional opportunity.
Broadening our scope, let’s look at the numbers: NCAA just tripled its rights deal with its ESPN renewal, which was driven primarily by (what we have long referred to as) Olympic sports and women’s basketball. In fact, of the 40 NCAA championships, 21 are women’s sports. NWSL nabbed $240 million in its most recent media deal. PWHL debuted to sold-out crowds. League One Volleyball has rolled up the entire sport, from youth to professional leagues, and closed its most recent $35 million investment. Watch how these properties perform across their media partners’ various distribution channels, as the investment interests in women’s sports continue to smash records.
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Just like CES, the sports business is a series of independent, yet also potentially intertwining, deals, developments, and companies that bear the responsibility of architecting the ways consumers interact at the intersection of sports, media, and entertainment. My PalmPilot may have turned into an iPhone with its own GPS, yet I still am inspired by everything CES makes us believe our future will bring.
Until we meet again in the second half of the year.
It's remarkable, given the audiences at ad-supported live events and therefore the cost of sponsorship, that so many advertisers continue to run repetitive commercials over the course of a broadcast.