Live sports: arguably the most exciting content known to man. Whether it’s about loyalty to the storied national leagues, the smaller niche sports with a fanatic fanbase, or global tournaments that reach hundreds of millions of viewers, sports unite us in a way few other things still can. They stimulate, engage, and sometimes enrage us like nothing else we watch.
Despite their ubiquity, sports leagues, teams, networks, and fans are facing a crucial shift. Sports viewership is moving from its traditional home on cable networks to online platforms. This change comes at the expense of TV ratings and sponsors, creating both new challenges and opportunities. For stakeholders looking to break ground with live sports monetization (through betting and more), this shift is a massive opportunity. This article explores that opportunity, touching on the early examples niche and eSports provide in this space, and how their experiences offer clues for how to best enter the world of live sports monetization for those looking to follow in their footsteps. Let’s dive in.
Live Sports Industry Norms to Date
Big-league sports have been slow to adapt to the digital transformation. Where scripted content (movies and television series) moved over at a breakneck pace in the 2010s, the majority of live sports remain traditionally televised to this day. Why? Right holders, carriage fees, and the complexities of streaming. Let’s break each of these factors down:
Those that hold the rights (and monetization potential) for live sports fear depreciation and commoditization of their content: a path all too familiar thanks to the music and news industries. Advertisers and sponsors still see live sports franchises as the quickest way to reach an immediate (and relatively homogenous) audience in an age of fragmentation and long tail, on-demand content.
Long-term lucrative carriage fees and exclusive subscription deals further solidify the status quo. While ratings for TV sports have been declining year after year, that decline has been less dramatic than other televised events, allowing the sports industry to keep its image as the premier type of content.
Complexities of Streaming
Finally, live streaming used to be complicated. Major sports franchises are incredibly protective of their brands and customer experience. Streaming used to come with a lot of risk for that carefully curated customer experience (examples include the potential for stream failure, its inability to cope with traffic spikes, video lag or buffering time, etc.) – but more on that later.
3 Must-Watch Trends for the Future of Sports Livestreaming and Monetization
Traditional sport broadcasting has ignored a lot of industry potential. From the relatively few number of games available to watch on television networks, to the decentralized customer online experience, there is a lot of room for industry disruption (and a lot of money left on the table). Let’s explore the impact of three trends leading the way.
Trend 1: Niche Sports
Broadcasting over television networks is expensive and competitive. This forces scarcity by design. Only the biggest games of the most popular sports are televised. This excludes dozens of sports, thousands of leagues and teams, and millions of their fans.
These niche sporting events were previously only accessible to those that could attend in person. But breakthroughs in the cost and availability of live streaming have changed this, giving niche sports new opportunities for both viewership and monetization. Today, any sport anywhere is streamable and accessible for any fan, regardless of their device or location. Niche sports have proven to be more adaptive and in tune with new ways to engage fans, and have become a viable, local, and relevant alternative to mainstream sports.
As more niche sports teams lean into streaming, they may outline the potential for larger leagues down the line.
Trend 2: eSports
The second trend to watch is eSports: the competitive video gaming tournament space. While metrics like viewership numbers, sponsor deals, and talent salaries are still small compared to traditional sports, eSports offers an example of a much more future-proof business model.
With eSports, all distribution is online – traditional media is not significantly involved. Instead, (depending on the tournament/title), a combination of games publishers, streaming platforms, and sometimes leagues and teams determine the size and flavor of the pie, and how it is carved.
More importantly, the eSports industry attracts a generation of fans that no longer cares about their family’s blind loyalty to a specific sports franchise. This market segment identifies instead with games, leagues, teams, and players that compete on something more relatable to them. They’re watching people compete in games that they can (and often do) play themselves. These events also create a central place to engage, whether it’s by themselves or with their friends. ESports are available 24/7 on their phone, console, or PC.
ESports also takes personalized engagement to the next level. Platforms like Twitch offer a rich combination of video, data visualization, and interactive tools that may feel confusing at first, but work to make the experience a lot more fun for the end viewer. Instead of shouting at a non-responsive TV set, Twitch viewers can express themselves in a way that’s visible to their peers, offer real-time feedback to shoutcasters (the eSports equivalent to traditional sports commentators), and even interact via custom extensions integrated with the game. Some events even reward players for their participation when they play the game themselves.
Perhaps the most advanced property that makes eSports a role model for the future of traditional sports is how data can drive the viewing experience. Instead of referees and coaches, algorithms make all decisions. Here’s a quick summary on how it works: eSports digitize every move by every player with exact precision. This precise, high-quality data is available in real time, allowing the game host’s software to augment the video in response. As the game unfolds, all kinds of structured and integrated interactivity widgets, overlays, and displays are created automatically, completely personalizing the experience. Although we now see sophisticated ways to track players and more in traditional sports, the data equality gap will continue to exist for some time.
For our article’s purposes, however, the main thing to note is that eSports has proven that engagement works best when it’s integrated with live video. Compare the eSports integrated viewer experience to traditional sports, for example. ESports has the ability to channel and monetize engagement. Traditional sports offer no such controlled outlet. Instead, they push fans onto a generic social platform to express themselves. They have no ownership of the digital fan experience. Not only are they missing an opportunity to monetize and control the online brand experience, but they also offer millions of dollars/euros worth of free promotion to Facebook, Twitter, and other platforms pushed by traditional sports stakeholders looking for that responsive engagement and followers.
Trend 3: Monetization Potential
The third trend to watch in sports streaming is live monetization. Typically, sports revenues are driven by paid access (stadium tickets, TV and online subscriptions, pay-per-view, etc.), sponsorships, and/or advertising. This monetization is asynchronous and predetermined, meaning that whatever happens within the game doesn’t affect the monetization strategy. But if the content is live and open-ended, and if game mechanics apply, then shouldn’t there be a way to create value that’s dictated by the events and results as they unfold?
A version of this reactive monetization has been around as long as sports have (potentially even longer). Insert: betting. Many people love to showcase the depths of their fandom by attempting to predict the outcome of future events – competing with others for the most accurate guesses. As a result, there are many ways for sports fans to put their money where their mouth is: from a round of drinks at the pub, to fantasy sports, to ever more sophisticated prop and live betting platforms.
As more and more countries and states allow live monetization in the sports industry, we’re entering a new era for the business of sports. This era introduces major challenges for the traditional infrastructure that currently powers sports streaming. What we’re learning from niche and eSports, is that live streaming needs to evolve to better support personalization, data visualization, and interactivity.
Live Sports Monetization: How to Make it Happen
To get to the future of live sports monetization, you need incredibly high video quality, reliably low latency (very little delay between action on the field/court and its debut on at-home screens), and video synchronization (so two devices show the same video frame at the same time, regardless of the viewer’s internet strength or location). This combination of requirements has traditionally been hard to come by.
Conventional livestreaming platforms have latencies of up to 30 seconds, which ruins the viewing and betting experience. At the very least, online latency should be less than or equal to TV broadcasting, which is around 6 to 8 seconds.
Another key component is fairness. No matter the device or connection type, every user deserves an equal experience. To ensure fair play, low latency alone is not enough: stream synchronization ensures everyone has access to the same information at the same time. This is not just fair – increasingly regulators require sports streams to be both low latency and synchronized.
Since the first sports match was livestreamed in 1995, the online video industry has been struggling with an inferiority complex of sorts towards traditional TV. Online video platforms and CDNs were so focused on the early criticisms about stuttering video and poor resolution from viewers and TV companies that they built an infrastructure that prioritized picture quality and stability over all else, including latency. It has more than succeeded on this mission – we can now effortlessly watch a game from the other side of the globe in glorious 4K HDR with surround sound from our phones if we feel so inclined. Online video now has TV beat in that department.
The low latency needs for live sports, however, got lost in this process. As a result, operators looking to bring live monetization to sports flocked to alternative solutions, especially WebRTC. The problem is that WebRTC isn’t built for this style of streaming. It was instead designed for small-scale, person-to-person communication scenarios, like video calls. So although WebRTC offers the lowest possible latency, it does so at the expense of audio quality, picture quality, and scalability. Not to mention that WebRTC comes in at up to ten times the cost of its higher latency competitors. WebRTC also allows the capabilities of your device (especially its connection speed) to dictate the exact latency – there is no synchronization control to ensure everybody sees the same thing at the same time.
Let’s summarize what all this means. If you’re serious about offering the best possible user experience for live sports streaming (and sports betting in particular), keep the following in mind:
- Latency needs to be low. 95% of all interactive stream use cases function perfectly when the latency is about 3 seconds, especially when the stream is synchronized (point 2). Lower latency is always better, but eventually, you run into diminishing returns. 2-4 seconds provides the best possible balance between quality, cost, and interactive capabilities.
- Synchronization is key. Synchronization between users is, in most cases, even more important than the latency itself. If every viewer, regardless of connection or device, sees the exact same thing at the same time, you ensure both fairness and compliance. Synchronization is the best way to prevent spoilers, cheating, and complaints from viewers. It can also allow you to sync online with typical TV latencies when needed.
- Your system needs to prioritize scalability and maintained quality. Pick an infrastructure solution (in particular, an encoder, CDN, and player) that guarantees scalability and image quality. With new standards like ULL-CMAF, it is now possible to reap the benefits of 25 years of building global CDNs while introducing low latency for the first time. As a bonus, you’ll benefit from the lowest possible cost for video distribution only available to established CDN users.
- Real-time data drives engagement and opportunities for monetization. Keeping the user engagement experience in mind, design layered user experiences that seamlessly integrate the video with personalization, data visualization, and interactive components. With a well-designed interactive layer, betting and other, more casual interactive features (like chat, polls, trivia, and eCommerce) become effortless.
At Livery, we’ve developed an end-to-end solution that makes it easier than ever to get into low latency, synchronous live streaming. Our business model aims to make interactive livestreaming accessible, which is why you only pay for what you use with no upfront costs. Let us show you what Livery can do through a custom live demo.