Op-Ed: State of the US Sports OTT Evolution – Paramount+, Peacock, and Disney’s Big NHL Deal

The sports streaming market in North America is predicted to be worth $38.56 Billion. A fast-growing industry, sports streaming in the US has been accelerated by the shelter-in-place restrictions and empty stadiums during the COVID-19 pandemic. As a result, many major sports broadcasters have shifted their focus to delivering more impactful streaming options to capture a larger consumer market share and combat audience decline on cable and linear TV.

Mike Kelley, President of Americas, Grabyo

2021 has seen further strides taken by major broadcasters to enter the streaming market. ViacomCBS have already used its UEFA Champions League rights as one of the key pillars for the launch of its new streaming service, Paramount+.

Paramount+ joins a crowded, increasingly competitive, market for sports streaming in the US. The service will have to compete against the likes of Amazon Prime Video, ESPN+, NBC Peacock, AT&T TV, DAZN, among others.

Who Are the Major Players?

Alongside the launch of Paramount+, Disney has announced a record-breaking seven-year deal with the NHL, worth a reported $2.5Billion. With Disney properties including ABC, ESPN, and Hulu this deal signifies Disney’s recognition of the value of sports streaming and maybe the first indicator that streaming, rather than broadcast, distribution will lead rights negotiations in the future.

The Walt Disney Company is working to position itself as a market leader for streaming sports in the US, and has the capacity to deliver NHL content across multiple streaming services and channels. Disney’s OTT offering is split into two avenues, with ESPN+ being its sport-specific offering gaining 12 Million subscribers so far.

NHL is just the latest big-money deal for ESPN+. It also holds top-tier MLB rights, hosting Sunday, Monday, and Wednesday night games, along with one Wild Card Game.

Subscribers of ESPN+ are also currently able to watch MLS, PGA, and the UFC on the platform. They are not able to watch live NBA or NFL games which are shown on linear ESPN channels.

This is a clear tactic from Disney to keep brands separate with ESPN+ and Disney+ being products that are available separately. Both are also available through Disney-owned aggregator HuluTV.

Consumer loyalty is moving from network brands to specific content, and the affiliation to channels is less important than the availability of must-watch programming. The flexibility of streaming platforms, with the ability to subscribe or cancel month to month, and the ability to “take it with you” on your mobile device, is a significant advantage for consumers when compared with the traditional pay TV and satellite model.

While Paramount+ is unlikely to match Disney’s weight when it comes to rights acquisition, it can add value to its offering with more bespoke programming off the field. Look at the success of Netflix’s ‘The Last Dance’ or Amazon Prime Video’s ‘All or Nothing’ documentaries. Paramount’s content strategy may focus on delivering content value to consumers in different ways to ESPN+ and others.

But Paramount+ has the power of ViacomCBS behind it, with the company already owning rights for some NFL games, College Basketball, and most major golf tournaments. Its range of sports rights should help it to attract subscribers in the short term.

Paramount+ has also approached the market in a different way to Disney. By allowing sports and entertainment content on the same platform, it likely hopes that consumers will see a larger entertainment OTT service as better value for money.

NBC’s Peacock is another major player in the sports streaming market. Announcing that by the end of 2021 NBC Sports Network will be shutting down so its focus can be on Peacock. The sports programming from NBC will be split between USA Network and Peacock Premium. This is a clear sign that NBC is looking at OTT services as the future of its sporting content.

NBC showed backing for Peacock Premium by spending a reported $1Billion for the exclusive rights for the WWE Network for the next five years. Peacock attracted WWE due to its ability to extend its fan base, while NBC liked the idea of adding live-event programming to its streaming site. It also announced that beginning with the 2021 season, all Sunday Night Football games will be streamed on Peacock.

NBC is following the same model as ViacomCBS with Peacock Premier, allowing subscribers to view both entertainment and sports content as part of a larger entertainment OTT offering.

The Other Challengers

Amazon Prime Video is another major player in the sports streaming space. It has the backing of one of the biggest technology companies in the world and is best placed to match Disney for financial muscle. Amazon has just agreed a deal with the NFL over a deal to exclusively show Thursday night football games on its Prime Video platform.

Prime Video has carved a stake in sports streaming through direct licensing and content aggregation, offering both MLB.tv and NBA league pass through its service which allows subscribers of these platforms to watch live broadcasts of games.

Amazon’s content in the US is currently focused on simulcast and on-demand content, but it has been reported the company has ambitions for 24/7 live sports programming and will look to directly compete with Disney.

Amazon Prime Video takes another approach to both ViacomCBS and Disney, offering no network component and being entirely OTT. It does have some similarities to the ViacomCBS model with entertainment and sport both being available on the same platform.

An innovative challenger in this space is DAZN, a streaming-only service that currently owns the media rights to MotoGP and Matchroom Boxing in the US. DAZN  has been challenging the major players by offering live sport at a low monthly price point, alongside producing innovative content for more specific demographics.

DAZN is a pure-play OTT service that focuses heavily on dominating specific markets, most noticeably boxing in the US.

DAZN’s aggressive rights acquisition strategy has allowed it to position its platform as the primary destination for boxing content in the US and worldwide. It holds rights to the likes of Golden Boy Promotions in various markets, leveraging social platforms to promote its services successfully by offering free live content on its channels.

By carving out a niche in a particular sport, DAZN has seen rapid growth and has expanded to multiple markets across the globe. Paramount+ could try a similar route. However, using The Champions League as its driving force makes it a direct rival of  NBC’s Peacock, which allows viewers to watch all English Premier League games. NBC also currently allows fans without a cable subscription to stream live games using FuboTV. On a typical weekend, you can expect to see six EPL games on FuboTV with the other four on Peacock Premium. The competition to be the leading soccer destination in the US is tough.

Can Paramount+ Make It Off the Bench?

The challenge facing any new streaming service is that consumers are only willing to pay a finite amount of money for streaming. Grabyo’s 2020 At Home Video Trends report found that 71% of American’s will pay up to $25 a month for their online streaming services, which equates to 2-3 subscriptions in the main rotation. Paramount+ has a price point of $9.99, which represents almost half of this amount. This means it will be in direct competition with other streaming providers to be the platform they decide to use on a regular basis. Not only is Paramount+ competing against sporting streaming providers but also the likes of Netflix, HBO max, and Apple TV for overall household budgets.

ViacomCBS are hopeful that within 14 months, Paramount+ will have 65-75 Million subscribers. Disney+ has over 100 Million since its launch in late 2019.

Paramount+ will need to differentiate itself to grow long-term. Marketing, pricing, and original content will all play a part in its success, along with the core sports rights that they couple with their TV & film catalog.

Time will only tell for Paramount+, but one thing that is certain is that sports streaming has hit the mainstream, and the distribution is shifting quickly to these apps & OTT services. With that, comes more flexibility for consumers, but also greater data & analytics for the rightsholders.  And at some point, it may become too expensive for fans to subscribe to 10 different apps to watch their sports content. Stay tuned!