What is coming up in the near future for sports betting streaming and what are some of the current challenges to optimizing the necessary technology? Steve Nathans-Kelly, VP and Editor-in-Chief of Streaming Media and Video Publishing Director at Information Today Inc., sits down with Jennifer Kent, VP, Research, Parks Associates at Streaming Media West 2022 to discuss how sports betting and other live events are fueling the drive toward ultra-low latency streaming. Kent also speculates the timeframe for when OTT may entirely surpass traditional broadcast TV, and she discusses the digital divide that still needs bridging to reach that point.
Nathans-Kelly kicks off the chat by mentioning that Kent just finished a panel on real-time streaming and sports betting. He asks her to elaborate further on the topics she addressed.
“This panel was all about real-time streaming and new immersive sports experiences, particularly wagering [and] betting,” Kent says. “And what that is going to look like when laws have changed.” She notes that the legalities of online sports betting are essentially state-by-state in the US at the present time. Meanwhile, she says, “There are new technologies and new services coming that will make the sports spending experience and the streaming viewing experience much more engaging and interactive. And so we talked about consumers’ appetite for that. We talked about the technology, [the] hiccups that still need to be addressed to make that real.”
Nathans-Kelly asks Kent if 5G is a critical component of the future of online sports betting. “This is a sort of mission-critical, real-time application because if you’re betting on balls and strikes, you’re betting on something that’s going to happen almost instantaneously. There can’t be any delay, right?” he says.
“Absolutely,” Kent says. “As you might imagine, a lot of our discussion did revolve around latency. So you have the streamers watching at home, and then you have the people who are in the stadium in real-time. Can they make bets? Can they access a second-screen app in time to make a bet and get back to the sportsbook? 5G is really the technology that’s needed for that sports van in the stadium in order to make that happen. And there are benchmarks that 5G has to deliver on latency to make that happen. We [also] talked a lot about the home experience. So when you’re not in the stadium…there’s certainly going to be a delay from that person in the seats all the way to that person at home. Even if the industry likes to say, ‘we’re sub one second, sub two seconds, the reality is, streams aren’t synchronized. You’re dealing with consumers’ premise equipment in their homes. You’re dealing with consumer Wi-Fi networks…a lot of things can impact when the stream hits you. And so what does that look like as we build these betting experiences for people who are not at the stadium?”
“How are you getting at that from a research angle?” Nathans-Kelly asks.
“Parks Associates is a market research firm, and we study consumer trends and consumer behavior and what they’re looking for, what they might like to do,” Kent says. “We survey 10,000 US internet households every quarter. And recently we did ask about current betting behavior as it relates to sports streaming.” She says that Parks Associates found that 18% of sports viewers, whether they are streaming or watching traditional broadcast legacy pay TV, use a second-screen betting app to make bets while the game is underway. “So [this] gives you a little bit of a sense of kind of the scale of current consumer behavior,” she says. “But we asked how likely would you be to use a sports betting feature if it was brought directly into your stream on whatever device that you’re watching and maybe directly onto the TV.” They found that over a third of viewers are open to this idea. “So there’s definitely an untapped market of people who, for whatever reason, may not consider themselves betters, but if you kind of make it easy and bring it into the experience in a new way, there’s an opportunity to really expand the market,” she says.
However, Parks Associates also found that there is a relatively strong contingent of consumers (51%) who have reservations about bringing betting options directly into live streaming. “I think there’s a little concern among consumers of how is this going to disrupt [their] experience of watching the game,” Kent says.
Since these emerging technologies are very experiential, Kent stresses the importance of creating user-friendly interfaces. “You have to see how it actually is designed onto your screen to know if it’s something that’s simple enough to do and engaging enough to do,” she says. “And so…my call to the industry is that user interface design matters and you have to be able to give consumers the choice of whether to bring some of these options into your game viewing experience.”
“That makes sense,” Nathans-Kelly says. “With the tickers and everything, you’ve got scores from across the league coming through all the time, and it just gets to be too much, right?”
“Exactly,” Kent says. “There are ads, there are tickers, there are interactive stats…live chat options very much like a Twitch-type experience, then you bring in wagering as well. What will the actual user experience look like? And so I think that it can be done well, it can be done thoughtfully, and there’s a lot of opportunity here. But there’s a huge chunk of not just general consumers, but actual sports viewers who are wait and see about this and are not yet convinced. And so we’ll see how those sentiments change as more of these experiences actually come to market.”
Nathans-Kelly then asks Kent to talk about the content of her opening keynote talk for Streaming Media West’s Content Delivery Summit.
Kent first mentions that the CDN Alliance was at Streaming Media West and that she appreciated the opportunity to address that group. “The central question was, many different statistics…show that for the first time now streaming, in terms of minutes consumed, has surpassed broadcast and traditional paid TV,” she says. “This raises a really interesting question – is there a future in which we hit 100% streaming, where the distribution method is OTT, and broadcast and managed cable or satellite delivery over a managed network to managed equipment really go away? And so it was an interesting thought exercise on, what are the gating factors that keep us from here to there?”
Kent breaks further breaks down the numbers. “Our data absolutely shows that streaming is the primary method by which consumers are watching the most amount of video today,” she says. “I went back 10 years and then to today…back in 2012, people were reporting only about six hours of video of any kind. We’re talking YouTube, Netflix, any sort of internet video – only about six hours a week, and it’s over 20 hours today. Whereas it was about 20 hours of broadcast paid TV 10 years ago. So 10 years from now, are we actually going to be at a point where there’s no longer broadcast? For me, it comes down to three or four different core elements of what I would consider gating factors. One is a connectivity factor.” She says that 90% of households have high-speed internet. “Whether that’s fixed or mobile in their home that they [can] view video that’s streamed. But there are still 10 million households in the United States where that’s not really true. So that’s always gonna be your ceiling, right? This vision of having a 100% streaming future is capped out with high-speed internet access in the United States.”
“A digital divide,” Nathans-Kelly says. “Do you think we’ll ever have an accelerant like the pandemic was three years ago for streaming adoption? And has that trend kind of slowed down at all from what you’re seeing?”
“The pandemic was absolutely an accelerant both for baseline connectivity and also for streaming,” Kent says. “The numbers are really astounding when you look at the streaming stack. So we are no longer in a situation where most households just have a few foundational services like Netflix and Prime. The majority of consumers tell us they have four more services, and 20% of households say they have nine or more. So people are remaking their own bundle, and that bundle really grew specifically across the pandemic. But what we’re also seeing along with that actually is a move back towards some demand for aggregation. This is a very fragmented experience for users. Trying to find what it is that you want to watch is difficult. And so we saw also alongside this growth, a lot of growth in streaming TV and the vMVPD (virtual Multichannel Video Programming Distributor) players. So it doesn’t yet make up for the losses that traditional pay TV service providers are seeing. But I think our latest stat of Q3 this year is 23% of households have now moved on to a streaming TV package of some sort. So that’s really interesting as well.”
“I think also that probably explains [why] we’re seeing more diversification in terms of how streaming is monetized, right?” Nathans-Kelly says. “We’re seeing more hybrid services and more ad-supported services just because most people can’t have nine subscriptions.”
“That’s exactly right,” Kent says. “And when we talk about really getting all households involved in streaming, you have to expand the business model to the free ad-supported (FAST). And we see a big rise in our data of people who are using [FAST], whether it’s AVOD or FAST kind of live linear model services that are on the market today. But we’re seeing the big players bringing ad-supported tiers to market, [with] Netflix and Disney both doing this at the end of this year. This to me is a huge key to taking streaming to the next place it needs to be. You’re going to be attracting new households into streaming. You’re going to be attracting people who are password sharing right now that may go ahead and make their own accounts that they can view free without ads. And then importantly, you’re really bringing advertisers over from the traditional pay TV world by having some of these very large library-leading services offering ad-based tiers. And I think that’s going to be really necessary for the long-term profitability [and] sustainability side of the industry. You can’t necessarily make all of that money on subscriptions alone…as we saw, traditional pay TV subscription plus ad revenue together make for a sustainable business. And so that’s where we see the industry heading today.”
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