Digital Media Rights and Sports League Financing

Technology all over the world has been advancing at a breakneck speed. Just a few decades earlier, radio was the dominant medium of transmission when it came to sports leagues. Then slowly, the transition from radio to television began.

In the past few years, television has turned out to be the predominant medium of transmission with regard to sports leagues. This is because television is highly interactive and is able to capture the audience’s attention.

However, it is also because television has a very wide reach and it is available in almost all households across the world regardless of whether they are in developed or developing countries.

However, with the proliferation of technology, digital modes of communication such as smart televisions, mobile phones, and tablets have reached a critical mass. This is truer in the field of sports broadcasting since the young male demographic is the key target audience for such leagues. It is a known fact that this demographic is not averse to technological change. In fact, this demographic enthusiastically adopts technological changes.

In this article, we will have a closer look at how the economic value of digital media rights is growing rapidly.

What are Digital Media Rights?

Digital media rights can be viewed as an extension of the broadcasting rights owned by media companies.

Broadcasting rights allow companies to broadcast sports league content via television channels. However digital media rights allow the same company or a different company to broadcast the sports league content via internet-based media such as OTT platforms.

Earlier, digital media rights were sold as an add-on in the broadcasting contract itself. This is because the social media niche was relatively smaller and hence there was not much economic value. However, now this is not the case. Digital media rights are now sold separately by sporting leagues since they have also grown in terms of economic value.

Why Do People Prefer to Watch Sports Leagues On Digital Media?

Digital media has been witnessing a steady and upward-rising trend vis-a-vis television broadcasts. In fact, most of the market share which has been gained by digital media has been at the expense of television broadcasts. It is important to note that the tables seem to have turned in certain sports leagues around the world.

For instance, in the Indian Premier League, the digital media rights for the sports league were sold at a higher price as compared to the broadcasting rights! There are many experts who do not think of this situation as being an anomaly at all.

In fact, there is a common belief amongst experts that the size of digital media rights is likely to become 4x of television rights in the next five to ten years! This is because an increasingly large number of audiences have started watching sports leagues on digital applications. The reason behind this shift has been explained below:

1. Mobile: When it comes to television viewing, the viewer has to ensure that they are stationary in front of a television screen in order to be able to view a sporting event. However, this is not the case when it comes to mobile applications.

   As far as mobile applications are concerned, viewers can be at work or even on the move and they can still have access to the sports league content. Most of the young males who form a big chunk of the viewing demographic highly value this mobility. As a result, the economic value of digital marketing rights is increasing exponentially.

2. Extended Digital Library: Mobile applications have realized that a lot of the time viewers are also interested in shorter-form snippets of the important moments in the game. This could be the highlights of the game or it could just be an interesting moment of the game. It is possible to create these shorter snippets and place them in a digital library on the mobile application which the viewers can access on demand. It is common for viewers to share these snippets on social media. Advertising on these snippets has also emerged as an alternate source of revenue.

3. No Additional Subscription: In most cases, the viewers are already subscribed to the OTT platform for their other content needs. Hence, they do not have to pay an additional fee to view the sports league. However, the OTT team is able to build better customer retention by broadcasting content from famous sports leagues.

4. Higher Engagement: Last but not least, digital media allows the viewers to have a higher level of engagement while watching the match. This is because the viewers are easily able to access polls, games, and other such tools which are used to make the viewing experience more interactive.

   Gen Z and millennial viewers value this immersive experience more and as a result the economic value of digital media rights is also increasing rapidly.

The fact of the matter is that the market for broadcasting sports leagues is changing rapidly. Newer technologies are evolving and allowing faster, better quality, and more seamless transmission of content to a wide variety of users on an even wider variety of devices.

This market is likely to grow at a very high rate in the future. Hence, broadcasting companies are bound to face tough competition from digital applications if they are not able to adapt to the changing realities of the marketplace.