KEY POINTS

  • Live sports — the last pillar of linear programming — is declining on traditional TV. For a long time, sports networks seemed immune to the digital disruption driving the shift away from traditional TV, but that's starting to change. The 2016-17 TV season saw a dramatic drop in live viewership for many broadcast sports, including two of the most popular leagues on TV: the NFL and English Premier League.
  • As cord-cutting continues to accelerate, it's growing more difficult for live sports to resist the shift away from linear TV. Better user experiences offered by internet media platforms — in the form of free video, ad-free experiences, and on-demand video — are pulling customers from traditional TV. This is finally trickling down to the live sports sphere.
  • Meanwhile, the increasing cost of sports broadcast rights and, accordingly, the higher advertising rates for brands, is making the current live sports business model unsustainable. The cost of the rights to televise live sports has climbed steeply in the last decade, according to research by Ampere Analysis, forcing broadcasters to raise their ad rates. This strategy may suffice in the near term, but eventually brands will balk at having to pay higher prices to reach fewer people. When this happens, broadcasters may struggle to stay afloat. 
  • With the legacy live sports model in decline, social and digital video platforms are making large strides to acquire sports programming. Twitter's acquisition of 10 NFL games for the 2015-16 season serves as an early example. And more recently, Facebook and YouTube have secured sports content to promote their nascent live video platforms. Amazon is also eyeing the live sports arena, holding talks with the NBA, MLB, NFL, and MLS, in anticipation of securing rights in the next round of negotiations.
  • Broadcasters will likely be forced to relinquish a slice of the lucrative revenue pie generated by live sports content. But their winning position won't be lost overnight — it will take several more years for the declining influence of live sports on TV to be truly felt. As this happens, new business models will emerge, transforming the entire live sports industry. 

Introduction

Live sports — traditional TV's flagship bulwark against digital disruption — appears to be in trouble. Viewership across major sports programming like the NFL and English Premier League has underwhelmed in the 2016-17 TV season. Meanwhile, subscriptions for pay-TV and, in turn, for sports [...]