Disney’s announcement of a new bundle package for its OTT channels in the US market may not have sent shockwaves through the UK sports industry - but it should have.
Or at the very least, it should be on our radar. The distant rumble of a tech announcement in the US almost always builds to a deafening clamour by the time it reaches our shores and the industry has properly taken in its long-term implications.
So what is this one and why does it matter?
Let’s deal with the first of those questions first: Disney just announced that Disney+ (its yet-to-launch streaming service) will be bundled along with ESPN+ and Hulu for $12.99 per month, starting November 12th.
Who cares? We knew Disney+ was coming later in 2019, and it isn’t sports. Hulu has some sports but it’s only available in the US. ESPN+ is vaguely interesting but again, US-only and anyway, ESPN hardly pulled up trees when it last tried to be a UK sports broadcaster, right?
All true. But that hot take would miss the bigger picture. Which is: bundling is back, sports is a major part of it, and the biggest internet giants are going to dominate. Your sports broadcasters of the future: Disney and Amazon.
Even if the bundle announced last night doesn’t reach the UK (and the smart money says it does, in some form) there is a very clear picture beginning to form through the clouds of smoke that have thus far engulfed the OTT landscape.
First, consumers are going to get subscription fatigue. We are in a golden age of subscription in the US and UK sports, media and entertainment industries and sooner or later the audience is going to say enough’s enough.
By the time you’ve paid for Sky Sports, BT Sport, Amazon Prime, Netflix, Spotify, and goodness knows how many other monthly subscriptions (including, as of this week, The Athletic) you’re going to feel the pinch. Heck, even football clubs are offering season tickets via a ‘Netflix-style subscription model’ now.
We’ve piled one-off, individual subscriptions on top of other one-off individual subscriptions and in doing so we have created the market conditions in which bundling comes back into play.
Secondly, who can offer an attractive bundling option? The biggest players, that’s who. We all love Netflix and Spotify - two iconic brands which will define the media landscape of whatever we end up calling this decade - but in their current guise they’re able to offer us Netflix and, er, Spotify (although both are sometimes available as an add-on to bundles from telcos or broadcasters).
In contrast Disney will now offer consumers a little bit of everything it has to offer for an affordable price. And in Disney’s case, what it has to offer is a lot: Disney, Star Wars, Marvel, Pixar, 21st Century Fox, ESPN’s sports rights, Hulu’s programming, National Geographic, ABC, and more. Underpinned by BAMTech, the OTT technology which grew out of the sports industry to become (somewhat unexpectedly) renowned as the industry leader.
Likewise Amazon, which will offer two rounds of Premier League fixtures on top of its video streaming offer, all of which is essentially free for any of us who already paid for a package which included Amazon next-day delivery, Amazon Music to play through Alexa (which personally meant I didn’t need Spotify any longer), and Amazon’s (under-rated in my opinion) cloud-based photo storage.
Everyone will want to be the gatekeeper: Amazon Channels vs Apple TV Channels is going to be an interesting battleground (with Roku also in that mix) as more and more of the current OTT services fold back into one dashboard for the consumer. Kind of like … a satellite TV subscription. It’s no coincidence that companies as big as Amazon and Apple are going to fight that one out as they can afford to pick up the most rights or commission their own blockbuster shows.
In 2018, online streaming overtook cable usage for the first time. But cable and satellite is still ahead of streaming on revenue. That tells us there is a market for streaming, but people are likely using one or at the most two streaming services, eg Netflix and Amazon. In the US, maybe Hulu.
You can probably see this effect in your own usage. I’m guessing most readers of SportsPro have Sky Sports and BT Sport subscriptions. Sky is currently advertising all of its sports channels for £23 per month and you can add BT Sport for £7.50. So, 30 quid while a Netflix premium package is £9.99. You may have a couple of those and your household might watch more of them (certainly true in my house) but those sports subscriptions are still costing you more.
Thus, if streaming has overtaken cable for usage but not cost, people definitely ain’t subscribing to all of the OTT platforms on offer, and the streaming market will have to consolidate.
We’re already seeing this: HBO Now is an OTT service from HBO which is owned by WarnerMedia which will soon launch HBO Max (coming in 2020). WarnerMedia is owned by AT&T which previously launched DirecTV Now as an OTT offer. Even with the biggest media groups, consolidation is happening.
That’s what led us back to bundling and if sports thinks it’s ducked this one, think again.
Sports - or more specifically European football which, like it or not, determines market conditions for the rest of the sports industry - was the last corner of the global entertainment landscape to resist OTT.
Football has plucked sweet, sweet fruit from satellite broadcasting’s orchard for so long that, understandably, OTT hasn’t felt like a particularly urgent need. While football has been bathing in broadcasting’s billions, carving out an OTT service with all its gnarly issues around platform reliability and direct-to-consumer payments was always a problem to solve tomorrow.
That’s changing. UEFA launched its own OTT platform this summer, and as we’ve discussed, Premier League football will this season stream on Amazon and will drive Amazon Prime subscriptions.
Standalone OTT platforms will still do well: these things never happen quickly and as Netflix and Spotify have proved, if you have great content and present it well at an attractive price, it’s possible to compete with the giants. In sport, DAZN is a success story and we’re also seeing broadcasters launch their own OTT services, such as Foxtel’s Kayo in Australia.
However for every one of those, there’s a Hotstar in India which is now owned by Disney or Twitch which is, of course, part of Amazon’s empire. Market consolidation is never far away.
For the sports industry in the UK, this season’s Premier League broadcasts on Amazon represents a very significant watershed moment. And if that drumbeat isn’t ringing loudly in your ears, the distant sound of Disney’s bundle announcement last night, including ESPN+, should be. OTT is coming, and the biggest players will dominate it. Exactly where sports fits into that remains to be seen, but it’s no longer standing on the sidelines watching. Bring it on.