“Inside Voices” offers expert perspectives from our team on key trends and challenges in media and advertising. Through this series, you’ll gain actionable insights and forward-thinking predictions on topics ranging from AdTech advancements to the impact of emerging technologies on audience engagement and revenue models.
Live Sports: CTV’s Game Changer
Streaming is breaking all sorts of records in 2024, starting with live sports. This year’s Super Bowl was the most streamed ever, boosting Paramount+ by 24%. And in two days of Paris Olympics coverage, Warner Bros. Discovery’s Max and Discovery+ streaming services drew more unique viewers than for the entire summer Olympic Games in Tokyo in 2021.
Live sports around the world, from March Madness to the World Cup are the main focus for streaming providers, who are bidding billions to get the rights to these major events. Not only do they draw audiences and subscriptions, they bring in advertisers. Because of their unique “live” appeal, unlike a drama series or a movie, advertisers can reach a massive audience at a specific time, much like the linear broadcast heyday.
As media companies form their future CTV strategy, the role of live sports looms large, and will influence how the market evolves in a few key ways, from shaping the way media companies sell ads to the M&A that could reshape the market.
Old Ad Models Die Hard
Despite media companies’ efforts to sell premium direct packages to advertisers, digital advertising has always been about targeted buying. Even as cookies slowly erode (despite Google’s abandonment of their Privacy Sandbox) advertisers found many other ways to target on digital from walled-garden options on Amazon and Facebook to ad-tech providers like Dstillery and Cognitiv and publisher solutions such as Hearst’s Aura, which uses AI to provide contextually derived audiences.
Many advertisers were eager to do the same thing on CTV. Given that it’s a digital channel, advertisers have tried to target specific audiences, but it’s not exactly the same. First, the scale is much more limited, especially on high quality inventory. Second, targeting is not at an individual user level on TVs like on a cell phone or laptop. And third, and possibly most importantly, media companies are strenuously resisting it.
Enter live streamed sports. The nature of live sports makes it so that it’s easier for media companies to preset ad blocks, rather than dynamically target.
It’s also more profitable. Media companies see their premium streaming content as an opportunity to charge a premium and have little interest in allowing advertisers to cherry pick audiences at reduced prices. Media companies are borrowing from older linear models where they view these ad opportunities as mass brand awareness, one of the few remaining screen-based places that brands get huge scale and shared experiences.
The Potential of Consolidation
These trends in streaming could set a wave of M&A in motion. The reason is money moving in a number of different directions.
First, to afford a streaming contract for live sports, companies need big bucks. A consolidated media conglomerate generates more cash than a smaller independent company. Big media companies will simply outbid the smaller companies for the sports contracts, which will leave those smaller companies with lower scale and lower appeal to advertisers. Bigger media companies will then have the opportunity to buy them up for the content and revenue they do generate to afford even more sports contracts.
Second, live sports appeal to advertisers, who want to reach audiences at scale. They’ll pay a premium for the big events, but will also pay for extended product offerings across a network of content. The more advertisers can do with one company, the less they need to have a complicated, distributed media plan. It is easier for advertisers to work with just a few media companies that offer everything than piece together relationships with a number of independent smaller ones.
And finally, viewers are already showing “subscription fatigue,” and aren’t happy to pay for a list of different streaming apps that only offer a couple of shows. They’d prefer to get a few robust services that deliver sports, shows and movies all in one.
Placing Bets on the Winners
It’s still difficult to know which companies will emerge the winners, or which companies will merge or evolve beyond recognition. Will the digital giants like Amazon, Netflix and Apple prevail? Or will we see the rise of Disney, NBC and others? Or even more interesting, will these companies pair up in a new creative ways?
Keeping an eye on the shifting market is critical for both advertisers and media companies to compete. And having an agile, flexible business that can react to advertiser and consumers demand is the only way to thrive in a market that is just getting started.
