Crystal-gazing into OTT ecosystem in 2023 Part 1: From sports streaming to Metaverse

One of the effects of the pandemic was that ‘streaming’ entered the modish lexicon of the entertainment industry; streaming services became an inescapable reality and a mainstream avenue for content consumption. In 2022, we saw streaming giants, especially the likes of Netflix, shifting their attention toward having a sustainable revenue model.

And what does 2023 hold for the steaming industry? In this two-part Crystal-gazing series, let’s hear from industry experts who give us a peek into the future with their predictions for 2023 and beyond.

Sports streaming

In 2023, live sports streaming took off substantially, with the entry of Big Tech changing the game. Apple and Amazon Prime Video went for strategic rights buys in some markets, while Netflix has evinced interest in live sports.

Amazon’s Prime Video will remain the exclusive destination for NFL Thursday Night Football. The biggest moment in the live sports arena came when Alphabet’s Google grabbed the NFL’s Sunday Ticket package to YouTube TV for the 2023 season. The deal enables fans to pick up Sunday Ticket à la carte from YouTube Primetime Channels without having to subscribe to YouTube TV.

Will we see these streaming giants going big in 2023? What are the other trends, opportunities, and challenges that lay ahead for streaming platforms in 2023?

“Sports streaming at scale is not for the faint-hearted, and achieving profitability is no mean feat given the cost of sports rights,” says Julien Signes, Senior Vice President of video networks at Synamedia.

The year 2022 was an amazing year for sports streaming records, says Greg Armshaw, Senior Director, Strategy at Brightcove. “The Olympics, the ICC Men’s T20 World Cup and the FIFA World Cup have seen record breaking engagements with digital channels. This applies to official streaming sources as well as “watch-along” events on social media platforms like YouTube and Twitch, as well as highlights and shoulder content,” says Armshaw.

He points out that the difference with sports is that it is a high-passion experience, and many fans want to have a shared and prolonged experience – especially if their favourite competitor is winning.

“To maximise this level of engagement, platforms that typically deliver an on-demand experience may find it difficult to deliver the experience the fan truly wants. Fans would likely be engaged by statistics and trivia as well as the ability to participate interactively while an event is going on. Additionally, if sports events are streamed to big screens like televisions, it will be important to ensure that the quality of the streaming experience is optimised for those devices. Finally, especially for marquee sports events, combating piracy is critical to comply with the demands of the content owner. It is also important to note that the avid sports fan is more likely to part with money for the privilege of watching the big event live,” he explains.

According to Armshaw, the benefit of attracting new subscribers and capturing first-party data is a key driver that ensures that bigger platforms will continue to consider live sports content.

He points out that streamers are investing in robust video streaming solutions to live up to fans’ expectations.

“Options to consume sports content are multiplying rapidly, and audience attention remains at a premium. Consumers continue to demand easy access to high-quality experiences, which makes understanding the users’ quality of experience a pivotal element to growing and maintaining the audience. Thus, sports and broadcasting companies are investing in robust video streaming solutions and services to prioritise the fan experience and cut through the noise in this highly competitive landscape,” he explains.

Armshaw says that in places like India e-sports as a category will gain traction.

According to him, an often-overlooked benefit of the rise of OTT streaming is that more niche content is finding a home and an audience. “This applies not only to sports, but also other categories such as movies and drama. Another category, particularly for India, is e-sports, where the market is expected to cross 85 million viewers by 2025 – up from 17 million in 2021 – a testimony to the increasing maturity of the sports streaming market in the region.”

On the other hand, Lloyd Mathias, Business Strategist and Angel Investor, does not not think the global OTT platforms (Netflix, Amazon Prime, Disney-Star or Apple TV) will buy the rights for live sports events in India. “The biggest sporting property, the IPL, has just been sold and while Disney Star got the broadcast rights clearly streaming was excluded. Content fragmentation will increase as the best way to generate better revenue for your business is to align your services better for your target audience. Content fragmentation will become a popular way to do this,” he says.

ESPN spin-off

Analysts predict that this year Disney will spin off ESPN, allowing it to stream directly to sports fans.

Wells Fargo analysts say that a key reason for ESPN/ABC to spin from Disney is to give it the operational flexibility to move into [direct-to-consumer]. “ESPN stand-alone can focus on ESPN’s future of how to monetize sports, unencumbered by the bigger pictures facing Disney like how to position streaming content, bundle services like Hulu and Disney+, managing Linear Networks OIBDA [operating income before depreciation and amortization] to keep the balance sheet stronger into the Hulu put, etc. We think some of [Disney’s] resistance to take ESPN fully a la carte up to now is these other issues.”

Single aggregator

A recent Reinvent for Growth report from Accenture says that large majority of consumers (86%) want a single app that can provide all the entertainment services they need on one platform, and 41% would be interested in paying for it.

And the majority of consumers would also value being able to access other services directly from their usual streaming home page: 70% for music, 63% for web browsing, 62% for e-commerce and 60% to connect with family and friends, says the survey.

Consumers want things simpler, says the report. They don’t wish to spend excessive amounts of time searching for content or trawling through multiple screens and apps to find what they want. Almost three in four (72%) consumers now report frustration at finding something to watch – that’s 6 percentage points higher than last year.

Concurring with the Accenture report, ThinkAnalytics CTO Peter Docherty says that as super-aggregation becomes a must-have for users, the next goal to keep viewers engaged will be for operators and brands to become a single destination for entertainment including gaming and music, services including hospitality, and shopping.

“To reach this goal, over the next couple of years we expect to see video service providers start to incorporate search and recommendations across news, music, gaming, and even non-media assets such as books,” he says.

Manik Bambha, Co-Founder & President at ViewLift, feels that young people will move more to streaming because now they can get sports, news, and entertainment in one or two apps and can watch on demand on their phones and smartphones. “The older audience will move when they want to watch something which is not on TV. The transition will happen over the next decade; so in 2023, we will see all the OTT players invest more and more into live streaming.”

Metaverse and more

In 2023, can we expect Metaverse, AI, etc. and such other tech advancements playing a decisive role in giving augmented fan viewing experience, especially in sports streaming?

Metaverse offers a new level of interactivity and immersion that traditional sports leagues cannot provide, says Rajat Ojha, CEO of Gamitronics and PartyNite. He cites the recent example of the FIFA World Cup, which embraced the Metaverse where people could just pull out their phones and AI could recognise the players and provide statistics.

“Similar things will happen in future sports leagues too. All information will be at your finger tips, you just need to point out on your phone. Things will evolve gradually with glasses and other devices; even your TV screens will change into more than just a viewing experience. Metaverse is all about having a phygital connection through which a simulated experience can happen. Already people are creating groups in Metaverses which we call watch parties. Next, there will be avatars that will imitate and emulate pretty much the same scores and you can be a part of the game,” he says.

Internet penetration, the rise in demand for devices, and technological advancements are bringing substantial improvements in digital viewing experiences and transforming the online streaming landscape, says Greg Armshaw. 

He points out that advancements in AI and ML models provide quality analysis on video and viewer insights to predict future audience behaviour and drive higher viewer engagements.

Armshaw feels that such immersive experiences will revolutionise the sports streaming industry. According to him, access to such content and subscriber insights enables companies to make data-driven decisions to improve subscriber acquisition, conversions, engagement, and retention.

AR and VR experiences, he adds, are slowly becoming popular, providing a synergistic effect to the growth of media streaming.

“The developments happening to support the Metaverse, for instance, are creating virtual worlds, driving innovative ways of delivering various forms of entertainment, and further improving the viewing experience by making it more enjoyable and highly interactive. Such immersive digital experiences are set to revolutionise the sports streaming industry, enhancing fan engagement across different levels. Technological evolution can thus enable businesses in the sports streaming industry to imagine new forms of collaborative, compelling, and personalised content,” he explains.

With the Metaverse experience getting real in 2023, says Lloyd Mathias, it won’t be long before sports streaming will have customised product and ad placements that will make the whole sport experience far more immersive. This, according to him, will also have an impact on how sports properties are sold.

Churn prevention 

Peter Docherty feels that churn prevention will be a focus area in the times to come. “The combination of the cost of living crisis and fragmentation due to the proliferation of streaming services means that preventing churn will be a key focus for pay-TV, SVOD and AVOD/ FAST service providers over the next couple of years. While technologies can already predict the likelihood of a subscriber churning, this insight is meaningless without effective actions to persuade viewers to stay. We expect to see operators use this behavioural insight creatively to turn potential churners back into loyal subscribers,” he concludes.

(Tomorrow: Part 2 of the report will cover key OTT trends, and the challenges such as piracy, password-sharing, etc.)