Technology is our friend: A new era has begun
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June 21, 2011

A new era has begun

A few days ago, YouTube announced that it will stream the Copa America 2011 Live. I learned it today and just pinned down some initial thoughts. This is a topic I will closely follow and cover in this blog.

YouTube has already had some sports events, among those the Indian Premier League in Cricket. But it never had such a huge Sports Event and this may be an indication for a new era that is just beginning.

The Copa America is not some other notch in their sports bedpost, but a whole new league: First of all, it is soccer, which is the most popular sport worldwide. Secondly, after FIFA World Cup and UEFA EURO, it is the biggest single event for national teams and we have Argentina, Brazil, Uruguay participating who obviously list some of the world's best players. And third: This is the first time a "neutral" internet platform is used as a real broadcasting partner. In their blog, YouTube does not reveal much.
We learn that

  • every game will be shown live, from pool games to the final
  • every game will be available on demand 
  • there will be highlight reels and round-ups
  • the matches will be available in 50 countries
  • the countries are obviously not disclosed yet
I am trying to get details of the deal and its background and haven't got any yet, but the reason I am so excited is that up to now, the internet was not really used as a widely accepted distribution channel in soccer. The NBA has their League Pass, just like the NFL, and you could watch the Ice Hockey and Handball World Championships online or the FIBA World Championship and Euroleague Final Four in Basketball. But these are pay-models and conducted by the governing bodies of the respective sports tournaments. The "real" broadcasting rights are with television, still negotiated on a local (national) level from country to country to squeeze out maximum value. Up to now, internet broadcasting partners were not an option to consider. The last FIFA world cup broadcasting package even bundled TV and internet streaming rights; the national TV stations could decide to stream geoblocked live games. But in this case, YouTube shows itself as a broadcasting partner, just like a TV station.
We don't know how big the deal is until we know the 50 countries involved. And of course they will be geoblocking content for all the other countries (which will include Germany, I am sure). But still, a platform like YouTube eases the tight grip that television stations had on broadcasting rights. Every internet user is tired of not being able to access content that is just there but is being withheld from them for reasons that origin from a time where content was by far less accessible than it is today. Many people from countries that are excluded in this deal will use VPNs to watch Copa America. Others will rip the stream from YouTube and put it back up online, on the same or other platforms, but not geo-blocked. This is the snowball that will get the avalanche started:

It is a warning sign for rights holders: The value of the rights will decrease with television stations. But will the gap be filled from earnings through direct marketing of content and internet broadcasters?

It is also a warning sign for TV stations: They will get serious competition either from rights holders themselves who will consider if they market their broadcasts themselves or in cooperation with internet platforms with major reach, just like YouTube. If I were Sky and had the German broadcasting rights for Copa America, I would not be happy about this deal at all, even if Germany would be on the list of geoblocked markets. But I would worry even more about the value I will be able to bring to the table in future if I were to keep a position in the value chain.

If you look at the reach YouTube has, there have to be monetization models possible that will lead to serious money. In Germany, in April 2011, over 4 billion videos have been viewed online. 3,8 billion were watched on Youtube. 

Since internet broadcasting is much less regulated than TV broadcasts, there have to be advertising models to capitalize on this massive reach also during the live stream of a football match, geo-tagged and maybe even targeted to the profile of the YouTube user. Probably you can set new CPM records with live broadcasted soccer highlights and targeted ads on YouTube. With a reach like that, you must be an attractive broadcasting partner to holders of sports broadcasting rights. With a monetization model of some kind - and I am keen to see what will happen during Copa America or to learn from whichever source what the deal behind is - this can be the future of live sports broadcasting and therefore the beginning of the end of linear TV, since live events were always considered the last stronghold (besides the nature of huge markets to move slowly on innovation, but that is not a stronghold but a lucky incident). 

Additionally, you can monetize internet reach through TV, at least for the transition phase of parallel linear TV and internet usage. The NBA had over 3 billion video views online during the past season, and still had the highest TV ratings for years. Maybe the thought behind Copa America is exactly this: make Southern American football more popular through Copa and monetize your future broadcasting rights on Copa Libertadores and local leagues better. The German Bundesliga for example gets 35 million EUR a year for all TV broadcasting rights outside of Germany. If they were to use YouTube for a period of time, lets say, outside of Europe, is it possible to get a higher price for your broadcasting rights in future, be it online or linear TV?

Another huge market gets disrupted, and now is the time for all parties involved to play their cards right. I am excited.