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Abu Dhabi, UAETuesday 19 June 2018

Tech majors look set to value add with live sports

Amazon, Facebook, Snapchat are all targeting the new revenue jackpot

Facebook has a deal to live stream World Surf League meetings.  Kelly Cestari / EPA
Facebook has a deal to live stream World Surf League meetings. Kelly Cestari / EPA

There has been a saying associated with the internet for much of its history that “content is king".

So far in the internet age, television has enjoyed a variation of that maxim where, if content is king, sports is the king of all content.

After all, you can get many of your favourite shows through Netflix and other streaming services, but if it is live sport you want then subscribing to cable TV is still the way to go.

That status could soon change, if big technology companies have their way. With Amazon, Facebook, Twitter and others increasingly getting interested in streaming live games and matches, it may soon be that content - and especially sports - becomes just a mere a value add.

A lot of it is already at that level. Music and e-books are good examples.

Ten years ago, Apple’s iTunes was the best place to get digital music while Amazon’s Kindle was the ideal device for accessing e-books. It was tough to get that content through other platforms.

Today, after the rise of subscription services, it is exceptionally easy. Apple is shifting its music offerings to iMusic, which is available on both iPhones and Android devices. The same goes for Google Play Music. Spotify and other music streaming services, meanwhile, can be accessed just about anywhere.

Amazon, too, has made its e-book content available everywhere. Kindle is now as much an app as it is a device.

Music and e-books are no longer exclusive content that fuel gadget sales, but rather commoditised table stakes that tech companies are now expected to offer through their respective platforms.

Television - and televised sports - is in the early days of this same shift, if the raft of deals between leagues and tech majors is any indication.

This year alone, Facebook announced agreements in the United States to stream football matches from Mexico’s Liga MX and Major League Soccer, plus similar sport stream arrangements with the World Surf League and Major League Baseball (MLB).

Amazon has also been active, with an announcement in April of a US$50 million deal with the National Football League that will see the online retailer stream Thursday night games via its Prime video service.

Facebook, Twitter and Snapchat, meanwhile, are all seeking online video rights to next year’s Fifa World Cup, according to a recent Bloomberg report.

All of this follows a host of moves last year, which included Twitter agreeing to live-stream MLB and National Hockey League games and YouTube broadcasting the Champions League and Europa League football finals.

The common denominator behind most of these deals, with the exception of Amazon, is that the services offered by the tech companies are advertisement-driven. There is no fee to the end user on Facebook, Twitter or Snapchat.

Their currency is, instead, attention and their interest in sports is being fuelled by a desire to attract more of it, which in turn will help boost their advertising fortunes. With the global TV ad market - of which live sports is a big part - comprising an estimated $532 billion, they are going after a veritable revenue jackpot.

Amazon’s interest is slightly different but fundamentally the same. The retailer is looking to use sports to drive subscriptions to its Amazon Prime service, which costs $99 a year in the US. Mainly a shipping service for purchases, Prime also gives subscribers music and TV show streaming. Prime is available in the UAE, but only the video streaming portion for now.

Rather than attracting advertising dollars, Amazon is hoping that sports will bring in new subscribers who will then shop more on its website. Studies have found that Prime subscribers spend up to three times more than non-subscribers, which means Amazon’s sports interest is actually rooted in retail ambitions.

In both cases - whether it is tech companies soaking up more advertising dollars or getting consumers to purchase more of their goods - the value of live sports is significantly different than it is for traditional television providers.

For broadcasters, sports has been and will continue to be a veritable cash cow that keeps the business going, at least for the foreseeable future.

But for the tech companies, live sports are merely going to be one tool among the many they use to grow their primary businesses, whatever those may be.

Sports is not king to these companies. Like music and e-book content before them, there is a high likelihood that sports will inevitably be just another commoditised table-stakes app to them.

Winner of the Week: China. The country has unveiled an ambitious plan to become a world power in artificial intelligence programming, with an aim of developing a $150bn industry by 2030.

Loser of the Week: Nintendo. The Japanese video game maker has upset fans with its described plans for a voice chat app. Players are angry that the app, which they will be able to use to talk to one another during games, will run on smartphones rather than the Switch console and will require the phone’s screen to stay on.

Peter Nowak is a veteran technology writer and the author of Humans 3.0: The Upgrading of the Species