Sports Battle Looms for IPTV
As telco TV matures, operators may try to acquire exclusive sports content to differentiate their services against cable and satellite. But it'll cost them plenty.
That's one of the conclusions of a new Heavy Reading report, "Digital Content in the Telecom Ecosystem: The Sports Factor."
"Securing exclusivity in sports programming is a viable strategy for telcos or any other operator, but the catch is the good stuff is very expensive," says Heavy Reading senior analyst Sterling Perrin, author of the report. (See BT Scores Soccer Deal, NTL Wins Soccer Rights, and BSkyB Wins Soccer Deal.)
"We just saw a very big exclusivity deal announced with Major League Baseball's 'Extra Innings' programming, which after five years of being widely available will become exclusive programming for DirecTV. DirecTV is paying $700 million over seven years for these exclusive rights. So, when a distributor wants exclusive rights on major sports programming, it’s a very big bet."
As the technical kinks of new technologies like IPTV get worked out, operators will no longer be able to differentiate their services by just saying "ours works better." (See Cisco Tackles Video Quality.) The focus will switch to content as the factor that makes one service superior to another.
And sporting events have always been important "table stakes" in entertainment programming. In the report, Perrin points back in time to the dawning of radio, television, and cable television, noting each of those media relied on exclusive sports programming to help establish itself with consumers.
At the moment, new services like Verizon Communications Inc. (NYSE: VZ) FiOS and AT&T Inc. (NYSE: T) U-verse are more worried about just providing a sports lineup that doesn't look bush league next to cable and satellite programming, Perrin says. But that won't be enough in the long term, because offerings that are similar will inevitably compete on price. "Pricing is a major long-term challenge for telco entertainment services, and unique sports content is one possible way to compete beyond price."
More information on the report is available here.
— Mark Sullivan, Reporter, Light Reading