Even as Wall Street investors reacted skittishly to WWE's news that its leap from pay-TV to online video would not reap benefits for several months--causing its stock to slide more than 40 percent in a day--sports programmers are wading ever deeper into the OTT pool.
ESPN, most recently, said it is looking at offering its Major League Soccer programming as an over-the-top option, unbundling the sport from its pay-TV channels. And the Tennis Channel launched an OTT service that features classic tennis matches and other content that it says is complementary to its linear sports programming.
Of course, NBCUniversal has been growing its OTT offerings, making its exclusive Olympics coverage a prime jewel of its Live Extra app and website.
So, what's the endgame here for sports programmers? Live sports are still a moneymaker for programmers, distributors, broadcasters and cable and satellite operators. Do they really need to shift their content online?
One might look at ESPN's move to unbundle MLS as a way to offload a less-popular sport to an OTT playing field. But that's not necessarily so. The U.S. Hispanic market is keenly interested in soccer, with viewers subscribing to alternative OTT services that bring in games from their home countries. ESPN's move could draw in many soccer fans who are already comfortable with the online experience, giving it an additional revenue source.
WWE has made what appears to be the biggest leap of faith, moving its pay-per-view business, including its hugely popular Wrestlemania program, to a subscription-based online video platform. The move is clearly being closely watched by other sports programmers looking to capitalize on OTT in some way. And while investors appear to have some buyers' anxiety over the decision, WWE has held firm, with George Barrios, chief strategy and financial officer, telling investors in Boston last week that the shift in focus to WWE Network wasn't done lightly.
WWE spent two years in what he called an "investment phase," looking at the feasibility of launching WWE Network and staying profitable.
The granddaddy of all these OTT experimenters, one that has quietly grown its infrastructure and offerings over the past decade, is Major League Baseball. Its Advanced Media unit, launched in 2002, is not only providing out-of-market games to viewers for a subscription price of between $110 and $130 per season; it's also powering some of this year's biggest live-streamed matches. Turner's March Madness tournament, which broke its previous records for live streams, relied on MLBAM's infrastructure to handle the traffic spikes its games caused. WWE Network is also utilizing the platform to handle viewer traffic around its live-streamed events.
MLBAM's success--it recorded $700 million in revenues in 2012--may have been a factor in WWE's decision.
A year from now, WWE Network will likely be a success story on par with Netflix's meteoric rise to online video dominance. Given the right infrastructure and a clear business strategy, ESPN may find itself playing catch-up to both big sports rivals like NBCU, and smaller, agile players alike.--Sam