Events that are streamed live on the net are growing in popularity among internet households, especially live sports, according to a study released by Parks Associates.
The report, “Livestreaming: The Next Hot Video Market,” indicates that more than 40% of U.S. internet households have streamed content over the past three months. More than three out of five households (61%) were watching a streaming sports event.
The study also found that consumers who livestream spend about half their online video time watching live events.
“Traditionally, live sports programming has performed well,” observed Parks Contributing Analyst Eric Sorensen, Sr.
However, “pre- and post-event programming does not perform nearly as well in terms of ratings as the actual event itself,” he told TechNewsWorld. “These facts apply to both linear television and live streaming platforms.”
“Sports are popular because they matter when live and matter far less when watched later,” added Michael Pachter, managing director for equity research at Wedbush Securities in Los Angeles.
“You don’t care about a baseball game that ended up 12 – 2 or about a football game that ended up 49 – 14, and there is no point in watching a replay,” he told TechNewsWorld. “Some lopsided wins might have value if records were broken — Brady’s 500th touchdown or a no-hitter in baseball — but they are largely worth a lot less if watched after the fact.”
Sorensen explained that live sports programming is migrating to online platforms as more rights become available.
“Numerous streaming providers continue to outbid one another for coveted sports media rights,” he said. “Sports consumers do not want to miss ‘water cooler’ moments with their favorite sports teams.”
Professional sports leagues don’t want the fans to miss those moments, either. “The leagues want to be where their viewers are and these days, that’s online,” observed Michael Goodman, director for digital media strategies at Strategy Analytics, a global research, advisory and analytics firm.
A D V E R T I S E M E N T
“Streaming is giving them additional revenue streams,” he told TechNewsWorld. “Amazon is paying a huge amount of money for Thursday Night Football. Streaming is also driving up the rights fees because there are new competitors for them.”
Michael Inouye, a principal analyst at ABI Research, noted that sports has always been the largest driver for livestreaming due to the nature of the programming, size of audience, and market potential.
“One issue with live streaming was latency,” he told TechNewsWorld. “OTT [over-the-top] services in the past lagged behind the live broadcasts by quite a bit. A typical live broadcast is six to eight seconds behind a live event, while livestreaming was 30 to 45 seconds or more behind.”
“Now we’re seeing more live streaming hitting the same broadcast levels — sub 10 seconds — so this, too, is making this type of programming more equitable with traditional broadcast channels,” he said.
Edge Over Netflix
Inouye observed that live sports streaming is growing as more viewers cut the pay TV cord. “Securing distribution rights is the largest hurdle but more and more streaming is often part of new deals and negotiations and as direct to consumer continues to grow, we’ll see more content going through streaming channels,” he continued.
“The strong growth in video advertising in streaming markets is also a significant driver to bringing sports and other live streaming content to a broader audience,” he added. “It’s still not at traditional broadcast levels, but it’s at least now viewed as a key complementary channel.”
Some online platforms see livestreaming as a way get an edge in the market, noted Neil Macker, an equity analyst with Morningstar. “Live streaming is something that companies competing with Netflix have been adding to packages, not only here in the states, but internationally, as well, to differentiate themselves,” he told TechNewsWorld.
Those moves by its competitors may not be ignored for long by Netflix, which is reportedly mulling over a livestreaming strategy.
“Streaming is getting more attention from Netflix because it’s having a hard time competing against companies with vast troves of intellectual property like Disney and Warner Bros. It could be a way to diversify a bit,” observed Ross Rubin, the principal analyst with Reticle Research, a consumer technology advisory firm in New York City.
“It’s also interesting, given the recent discussion of Netflix opening up an advertising tier, that live events — particularly news and sports — typically have advertising associated with them,” he told TechNewsWorld.
“It’s questionable, though, how much investment livestreaming will receive when Netflix is looking to cut back budgets and be more fiscally conservative,” he added.
An Important Opportunity
Sorensen noted that Hulu with Live TV, Amazon Prime Video, and Disney+ are key providers that now offer live streaming services that are challenging Netflix’s leadership position in the OTT ecosystem.
He maintained that offering live streaming content is not just a chance for Netflix to acquire new subscribers, but also to retain existing ones. “Sixty-four percent of Netflix subscribers currently live stream content on other services,” he explained. “By livestreaming, Netflix could retain longer engagement with its service.”
“This is particularly important in light of Netflix’s recent earnings call announcing their expectation that they will lose millions of subscribers in 2022,” he said. “There are several opportunities for a service like Netflix to provide egaming, esports, and red-carpet premiere events as livestreaming entertainment, in addition to sports and news.”
“Netflix appears to be suffering from higher expenses and lower viewership due to increasing competition and behavioral changes as people venture away from their homes.” added Charles King, the principal analyst with Pund-IT, a technology advisory firm in Hayward, Calif.
“Livestreaming popular events could help the company bolster its fortunes,” he told TechNewsWorld.
Not for Netflix
Pachter asserted that Netflix would fail miserably at livestreaming.
“Live streaming is by appointment, and Netflix is on-demand,” he explained. “Its customers will never associate it with events that are watched live, and I think it will abandon the idea after dabbling with it and failing.”
“Netflix is grasping at straws. Its brand isn’t built around livestreaming,” added Mark N. Vena, president and principal analyst at SmartTechResearch in San Jose, Calif.
“I think many of the mistakes Netflix is making are self-inflected wounds,” he told TechNewsWorld. “Livestreaming isn’t going to help them get out of their morass.”
“The amount of content that the average consumer has access to is overwhelming, but Netflix is acting like it’s 2010, not 2022,” he said. “The amount of content available to users is exponentially higher than it was 10 to 12 years ago, when Netflix didn’t have a lot of competition.”
“Now they do have a lot of competition,” he continued. “They’re not going to be able to livestream themselves out of that situation.”