Audiences and Revenue, Chickens and Eggs

We aren’t fortune-tellers, so we can’t predict exactly when the tidal wave of Fluid Fandom will hit the shore. When it comes to Immersive Media, it’s a question of what will change the tide more—changing consumer behavior or diminishing revenues.

Every month, as a part of our Leadership Board program, we hold board meetings that keep all our members up to date on our research, and that also include breakout groups for in-depth discussions and networking. In our most recent meeting, a breakout group—with executives from Cisco, LiveLike, Rover, Yahoo Sports, and Octagon—dove into a robust conversation about the future of interactive video, and the market drivers that will push for sports media experiences that are about more than just “watching.” (To read more about this concept, check out our latest report “The Future of Watching Sports”)

The premise behind the discussion is that TV, whether on Cable/Satellite or OTA, remains the dominant mode of sports media consumption in the world, by a wide margin. Even as OTT takes on more market share, until smartphone penetration grows enough, TV will remain the dominant mode for sports media consumption. For example, according to global study conducted by Ipsos in advance of the FIFA World Cup in 2018, a whopping 62% of the audience for the FIFA World Cup planned to watch on TV, with only 13% planning to watch on a smartphone. 25% said they would watch on a computer. (To be fair, that may be an underestimation, as respondents to the study came from only 27 countries that, in our estimation, did not present adequate global representation—only one African country, South Africa, was included in the survey, for example.)

So the question posed to the group was, “what will drive the growth of interactive OTT more, changing consumer behaviors that continue to erode the TV audience size, or market pressures from advertising buyers who no longer believe in the 30-second ad spot offered by TV?”

There were compelling arguments on both sides. For some, it’s all about consumer behavior and the rise of the Fluid Fan. As fans expect more from their media, sports will need to address those demands to acquire and retain audiences (which can then, in turn, be used for advertising sales). We’ve made this very argument ourselves, of course, defining the Fluid Fan, and heralding their arrival.

The other side is a more complicated argument based on market pressures and, perhaps, the decline of mass media altogether. If advertisers lose faith in their ability to market via linear TV (or even mid-roll and pre-roll video on OTT) to a large scale audience, they will spend elsewhere on more focused engagements that address their target market. If the ad dollars erode, then the media rights will soon follow suit. Ad buyers will want to create authentic engagements that provide value to an audience, while also improving brand affinity. This may be the financial pressure that pushes interactivity into the mainstream.

If we’re being fair, the reality is probably somewhere in the middle. The absolute fact is the traditional media business model built on scale is eroding. Sports is one of the last bastions of a media business built on the back of massive audiences routinely in the multi-millions. Consider how the Super Bowl still commands major advertising dollars for an ad break because so many people watch. But the rise of OTT may not be just about where audiences go to watch, and what devices they use. It may be more about the rise of the niche audience that wants content more focused on their specific expectations and desires. What is appealing to marketers about Ninja, or Dr. Disrespect is not the sheer size of their audiences, which still are small when compared to sports, it’s that the audience feels like part of a community. The fans are committed and active.

The future may not be one major Super Bowl broadcast with bloated ads, it may be 10, 20, or 100 different broadcasts, each with focused targeted audiences that are more of a community than just an audience rating. It may be community-driven sportscasters providing custom streams to their audience.

It’s impossible, and unscientific, to predict when, exactly, the wave will hit. But it’s essential for media businesses in sports today to consider what pressures they believe will impact their industry the most going forward. So what do you think?