Exposure vs. Reach: Are Sports Retreating From The Paywall In The Digital Era?

The world of sport has been transformed by the advent of subscription television, allowing revenues to rise to previously unimaginable sums. But in the scramble to maximise profitability, the amount of free-to-air coverage has eroded over the past two decades, with more content put behind paywalls.

However, falling participation rates, declining TV audiences, and the rise of digital have caused many organisations to re-evaluate their strategies to ensure they have sufficient reach.

Last month, the FA concluded a new four-year television deal with ITV, giving it the rights to show more than 20 live FA Cup matches a season from the 2021-22 season.

The UK’s largest commercial broadcaster will share the rights with BBC, marking the first time since 1988 that the competition will be available exclusively on free-to-air (FTA) TV by design rather than accident.

The FA’s decision to prioritise the reach rather than to extract the maximum possible revenue from pay-TV represents a significant change in strategy.

But it is a debate that all rightsholders must consider as they compete with other sports and other forms of entertainment. And in the digital era, finding the right balance is increasingly complex.

A fully free-to-air competition

Along with England internationals, the FA Cup is the FA’s most high-profile vehicle for driving fan engagement and boosting participation at all levels. It could be that the FA, emboldened by its £800 million overseas broadcast deal, decided reach was more valuable than the increased revenues promised by pay-TV – especially as it looks for a new competition sponsor once the deal with Emirates expires in 2021.

Not only does the new TV deal guarantee exposure on the UK’s two most-watched TV channels, it also includes provisions for expanded coverage of early rounds of the competition and for online and social media highlights. The level of exposure isn’t possible behind a paywall – as audience figures for last season prove.

Sky achieved an average audience of more than 2 million for 16 live Premier League matches in the 2018-19 season, while BT Sport enjoyed a record 1.7 million viewers for its coverage of Liverpool v Arsenal[1]. Meanwhile, BT’s coverage of the Champions League semi-finals involving Liverpool and Tottenham attracted average audiences of 1.7 million and 1.5 million, with peaks of 2.7 million and 2.4 million.

The BBC, by contrast, attracted a peak of 7.6 million for the fourth round FA Cup tie between Arsenal and Manchester United, and 8.1 million for the fifth-round clash between United and Chelsea – the largest audiences of the season except for the Champions League final (more on that below).

The growing influence of digital

Of course, other football organisations don’t ignore reach. The Premier League has always made highlights available on BBC or ITV, while Sky Sports offers highlights and clips online, in its app, and on social media. It is thought that 70% of the UK population watched the Premier League last season.

But the Premier League commands a profile that few other competitions can match. Other organisations need to be more creative in finding a balance, especially as TV viewers decline and get older, limiting the audience for FTA highlights packages [1].

Over the past few years, FTA coverage of the UEFA Champions League in major European markets has fallen dramatically. In France, Germany, Spain and the UK, there is no FTA broadcaster, leading to concerns among some sponsors about limited reach.

In 2009, 9.7 million people watched the final between Man Utd and Barcelona on ITV in the UK, whereas BT Sport secured just 4.2 million for the 2018 final between Liverpool and Real Madrid[2].

However, ITV’s share of the available audience in 2009 was just 24%, whereas BT Sport’s was 44%. Furthermore, BT had 8.5 million total viewers when online, app and YouTube viewers are considered.

It’s clear that viewing habits and demographic trends are having an impact and is why UEFA is placing such importance on digital. When BT Sport first won the rights in 2014, it promised to show at least one game per matchday on FTA TV, while ITV retained a highlights package. Furthermore, BT Sport has made the final available for free on YouTube every year since 2016.

For the 2019 final between Liverpool and Tottenham, BT Sport had record viewers of 11.3 million — 6.5 million on TV (the final was FTA on some platforms) and 4.8 million on digital platforms. BT Sport’s linear channel had more viewers than ITV and BBC One combined during the match.

While there’s no doubting that more FTA coverage would enhance exposure throughout the season, it does show that digital is more than capable of finding reach.

A mixed approach

It’s naïve to think that FTA coverage is the answer to all of sport’s problems. Increased TV revenues have transformed the world of professional sport, and in any case, there is only so much programming that FTA broadcasters can show.

“Our distribution strategy is like everyone else’s – to drive revenue. If the BBC drove revenue, then we’d all be on it,” says Keith Pelley, CEO of golf’s European Tour.

“Look at the [difference between the] ratings for The Open on BBC and on Sky. There’s no question you can put a potted plant on the BBC and get good ratings. People will watch golf on the BBC just because it’s there.”

There is perhaps one exception. Every decision made by the All-England Club (AELTC) takes into account the prestige of the tournament. Although it works with Pay-TV broadcasters in some countries, it believes the blanket coverage afforded by the BBC in the UK is integral to maintaining its position as the most high-profile of tennis’s four grand slams.

But it too has embraced digital, with a heavy social media presence and official mobile applications and websites that push a range of content.

Wimbledon is not alone in pursuing a more balanced diet of Pay TV, FTA and digital. Organisations securing more “reserved rights” for themselves in broadcast contracts so they have more freedom to create digital content, while some are even planning their own Over The Top (OTT) platforms.

Major rugby union competitions are ensuring matches are available on FTA TV in key markets, while also increasing the volume of YouTube content, and Formula 1 – which has an aging audience – is devoting significant resources to its digital capabilities after going behind a paywall in many major countries.

Is it enough?

Cricket also finds itself at a crossroads – at least in England. Until 2006, England home test matches were shown exclusively on FTA, transforming players into household names and attracting a peak audience of 8.4 million for the 2005 Ashes series between England and Australia.

However, immediately after that series, a lucrative new TV contract came into effect and placed cricket behind a paywall. FTA TV highlights were seen as a way of offsetting the loss in exposure but there was inevitably a huge impact on awareness and participation levels suffered.

A decade on, and the England and Wales Cricket Board (ECB) has decided to ensure a selection of England games are on FTA TV, while it has created an entirely new competition called ‘The Hundred’, which will be broadcast on the BBC and Sky from 2020. The deal also allows for significant social media and online content, helping to tap into young audiences.

While some have lamented the absence of FTA coverage of the 2019 Cricket World Cup, organisers have been working for years on their digital strategy and a wonder-catch from Ben Stokes went viral on social media.

The risk of fragmentation

But for all the optimism surrounding digital, one organisation is warning against the pursuit of youth at the expense of all demographics, warning it can alienate core audiences and impact revenues. Golf has sought to expand its appeal with social content, new broadcast technologies, and new formats such as GolfSixes.

However, European Tour CEO Keith Pelly feels that platform fragmentation could be detrimental.

“If you put a bit [of content] on BBC, a bit on Sky, and some on OTT then you have a problem with consumer confusion and people won’t be bothered,” he says.

“We own the 45-60 C-Suite demographic and we don’t celebrate that. This is the key demographic in sports as it represents more than 200 million people in Europe with the most disposable income. I’m not saying we’re not going to target younger audiences, but we can’t forget our core – just remember where the revenue comes from.”

Adapt or die

In an era when viewing habits are changing so dramatically, choice is expanding, and viewer expectations are shifting, it’s no surprise that sports organisations find it hard to strike the right balance of coverage.

FTA TV is still a useful route to market for organisations that can attract interest, but it is no longer enough in the digital era, and it is not an avenue open to all. That’s why social and online platforms are such an opportunity.

More free content will be made available but subscription-based services will remain a key revenue driver. It is likely, however, we will see greater experimentation in delivery models with an emphasis on personalisation and flexibility – as evidenced by the rise of streaming services like DAZN.

With so many different platforms and variables, the one thing that is clear is that there is no one-size-fits-all.

[1] https://www.premierleague.com/news/1214277

[2] Ofcom: https://www.ofcom.org.uk/__data/assets/pdf_file/0014/116006/media-nations-2018-uk.pdf

[3] https://nielsensports.com/uefa-champions-league-final-viewership-figures/