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How Live Sports are Saving Cable TV (and Why Advertisers Should Care)

Posted by Jeff Clement on 11/30/15 4:26 PM

It’s no secret that people are fed up with cable television. With skyrocketing rates, bundles that include hundreds of unwanted channels, and subpar customer service, subscribers are looking for ways to cut the cord for good.

saving cable TVThis puts advertisers in a unique position. While traditional viewership is dropping (minimizing the eyeballs that’ll see ads running on network TV), the cord-cutting also poses a new opportunity to branch out into a variety of over-the-top (OTT) services. But for now, advertisers can bank on that fact that for die-hard sports fans, it’s not so easy to make the cut just yet.

Cable TV is still the most viable option for fans to watch their favorite professional and college teams play in real time, which is why advertisers will continue to invest in the network markets. Here’s what’s happening:

Why Consumers Are Turning Away from Cable

The average price of a cable subscription in 2015 is $123 a month, up from $86 in 2011, according to an estimate by the NPD Group. That’s a 9.4 percent increase in just four years, which is six times greater than inflation. That price surge prompted 6.5 percent of U.S. households to cancel their service in 2014. Estimates show the top eight cable providers lost 463,000 subscribers in the second quarter of 2015.

Cord-cutting Patterns

Almost 37 percent of U.S. households own at least three smart devices like tablets, laptops and smartphones. That’s a whopping 270 percent increase from 2012. These consumers are using these devices to stream tons of different content from services like Sling TV, Netflix, Hulu and Amazon Prime TV.

A study by consulting firm cg24 showed that 53 percent of cable subscribers would cancel their service if they had other reliable viewing options. Many millennials have never subscribed to cable and don’t intend to start. Nearly two-thirds say they prefer to watch content on tablets and smart phones, which will continue to erode market share for cable companies.

Where Advertisers Can Reach Sports Fans

With sports fans subscribing to more OTT services to find their favorite content, advertisers should be focusing their attention on the following emerging platforms to maximize exposure to the lucrative sports demographic:

  • Sling TV, owned by Dish Network, is paving the way for sports fans to ditch cable. Since going online in February of 2015,more than 250,000 households have signed up and the number is growing every day. Targeting millennials, this OTT cut a deal with the top-watched sports network, ESPN, and offers ESPN and ESPN2 at a base price of $20. Other sports networks (SEC Network and NBC Universal Sports, among others) are available for an additional cost. However, to keep too many of their satellite customers from fleeing, Sling TV limits its subscribers to watching just one sporting event on one device.
  • Microsoft is now offering MLB and NBA packages for streaming through their Xbox 360 and Xbox One consoles. All live regular season and out-of-market games are available in real time or on demand. At $200 for a “season pass,” this niche could be a lucrative option to reach sports fans with disposable income.
  • Sony recently launched its PlayStationVue streaming service with limited sports options available through its PlayStation 3 and PlayStation 4 consoles. It’s only available in a handful of cities, but will expand to more in the near future. The sports package offers the YES network, which carries New York teams, including the Yankees.
  • Verizon is jumping into the streaming market as well. It announced that it will launch an app that offers programming from the ACC Digital Network, CBS Sports, 120 Sports, Campus Insiders and limited live games from ESPN.
  • The highly anticipated Apple TV upgrade has yet to hit to market, but will be a huge opportunity for advertisers since this OTT will offer a variety of sports networks, including 120 Sports, which offers content from NASCAR, MLB, NHL, PGA and college football and basketball.

Some fans are reverting to an antenna to watch sports on the big four networks (Fox, ABC, NBC and CBS) over the air. Since these networks upgraded to digital signal in 2009, they are available in HD just like cable, which is important to sports fans.

Why Omni-Channel Messaging is Important in the Cord-cutting Era 

The days of advertising using only one kind of media channel is over. OTT services are quickly carving out a niche with sports viewers, and advertisers must keep on top of these market changes to get the best return on their advertising dollars. That means marketers need to think about how they can get they can create omni-channel messaging that can reach target audiences using all different channels.

If you’re looking to spend your ad dollars wisely on an omni-channel campaign, we can help. Marketing Architects understands the changing TV landscape, and we’re ready to offer you the direct response guidance you need to build the most effective DRTV strategy possible. Give us a call today and let’s figure it out.

Topics: Direct Response Marketing

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