By Craig Barberich, Global Head of Media Solutions at Zuora
This article was first published in MediaPost
The last few weeks have been disastrous for the television industry as the NFL continued to witness double-digit decline in TV audiences averaging a decline of 10% in the first five weeks of the NFL and as high as, 24% per Fierce Cable, in week five. Many are calling this the end of television as we know it.
Sports television had long been the missing puzzle piece and Achilles heel for OTT video ascendancy, holding it back from taking over entertainment. Until now.
The last few months have been a turning point as OTT conquered live sports television. We just finished live streaming the Olympics, the biggest sports event in the world, and are now live streaming the NFL, the most popular sports event in the U.S.
2016 seems set to go down as the year that OTT video won over sports television and became mainstream.
Why is this a big deal? It’s pure business math. Sport channels are the biggest drivers of television revenue. And with sports now available a la carte and through online streaming, OTT video has sounded the death knell of the much hated 300 channel cable bundle.
Cable bundles have been held together by sports entertainment. Sports fans have found the lack of OTT sports to be the biggest disincentive to cord-cutting. Which die-hard fan would choose saving a few dollars and miss the minute-to-minute excitement of watching a live game?
Sports channels also subsidize other channels and help keep them afloat. Take a look at your monthly cable bill and you’ll find that a big chunk goes to sports channels. ESPN alone rakes in around $6.55/month.
The success of OTT video largely lies in its ability to tap into a basic need of the modern viewer: immediacy. People want to watch everything live (just look at all the social channels that now support video – Periscope, Snapchat, Twitter and even Facebook) and they want to be able to watch it from anywhere.
And this is precisely where old-school NBC and the cable industry failed with the Olympics. Arguably the greatest global sporting event, NBC decided to skip live telecast and delay it to prime time.
In today’s social-media ruled world, this was an absolutely outdated move. It resulted in the Games having an average of 25.4 million viewers, the lowest since the 2004 Games and an 18% decline from the 2012 Games.
But while TV viewership went down, online streaming numbers hit a record high and OTT video had its best Olympics ever. NBC’s apps recorded 2.7 billion minutes, nearly twice the amount for all previous Olympic Games and had 100 million unique users, a 29% increase over 2012.
What the cable industry doesn’t seem to realize is that it’s sitting on a goldmine. According to Digital TV Research, OTT revenues in Canada and the U.S. will reach $24 billion in 2021, up from $2.6 billion in 2010 and $15 billion in 201
As sports content moves to an OTT world, it’s time for traditional cable companies to embrace change and transform themselves into modern media companies that are more in sync with today’s viewers. In the meanwhile, you can enjoy this year’s NFL season without cable – online, on Sling TV, Playstation Vue and even Twitter!