Sky Sports has made a surprise play this season, putting Premier League highlights on YouTube for free shortly after matches end. In sharing its coveted rights with a third-party platform, is the pay-TV provider conceding to the growing obsolescence of its subscription business model?
Tomos Grace, YouTube’s head of sport for EMEA, dismisses the suggestion that Sky Sports has cannibalised itself as he talks The Drum through the immediate effects the deal has had on Sky's audience, revenue and marketing funnel.
At a time when Sky's subscribers have slowly slumped from highs of 9.46m in 2012 to 8.61m this year (not counting Now TV daily and weekly passes), it joins the many broadcasters entering an alliance with YouTube. In particular, sports broadcasters like Sky are weighing up whether it's more valuable to ringfence exclusive content or give some of it away as a marketing tool. Despite premium live sports largely maintaining impressive linear TV audiences, Sky Sports is now opting for the latter.
On Sky TV, Premier League matches can attract live audiences between 250,000 and 1.5 million viewers – significantly lower than the numbers that could be commanded by free-to-air broadcasters. (26.5 million watched England's men lose to Croatia in the 2018 World Cup semi-final on ITV, while England's quarter-final victory over Norway in the Women’s World Cup this year attracted a 7.6m audience on the BBC despite women's football's infancy as a broadcast sport). There is a UK audience that Sky Sports is failing to connect with despite dominating rights to one of the hottest football properties in the world.
As a result, Grace suggests Sky Sports' investment into YouTube has been driven by two factors – revenue and audience.
“There is a revenue factor. It's not just turning analogue dollars into digital dollars. There is meaningful revenue that partners can make on YouTube.”
YouTube channel Sky Sports Football boasts 1.33 million subscribers and 1,445 videos. Matchday three’s highlights hit 3.6m views in just over 24 hours, with Liverpool v Arsenal the most popular fixture with 873,000 views. YouTube's algorithm has also funnelled countless thousands of viewers towards Sky Sports Football's supplementary post-match analysis and interviews. The channel has added 200,000 subscribers (432% growth) this month, along with 48.5m views to its lifetime tally of 355m.
This shows the pulling power of the highlights rights Sky Sports was sitting on – and it's not an anomaly. Rival BT Sport boasts lower linear audiences but embraced YouTube earlier in 2013. It now has 2.19 million subscribers and 783m video views on its channel (which hosts a variety of sports). It is no surprise that Champions League and Europa League highlights, in addition to live free broadcasts of the finals of both competitions, form the cornerstone of its channel.
“There is a large potential audience on YouTube, a younger audience.” Grace says. “Some of [Sky's] Premier League highlights have already had over a million views. The UK population is only 60 million, so it is an impressive start.”
While YouTube’s global ad click rate is decreasing (perhaps down to channel demonetization in the name of brand safety), it is building up its sports portfolio to become the “home of highlights”. The Cricket World Cup, Formula One, the Champions League, the Europa League, the Premier League and the EFL are just some of the properties it has rights to broadcast. “We are putting together partnerships with a number of different organisations to build a comprehensive, timely, official set of highlights," explains Grace.
Broadcasters and federations are seeing the increasing appeal of the platform. Grace says they chase direct ad revenue and aim to drive audiences to first-party properties. “The fact that we have worked with BT Sport on the Champions League and the Europa League for four years shows it isn’t just a one-off, or a publicity stunt. They actually get quite a lot out of that partnership.”
In many of the highlight videos, there are overt signposts to Sky Sports and BT Sport to pick up a subscription. But there is another layer to this. Broadcasters find potential customers that they can retarget ads to across the internet. The partnership is less a concession that pay-TV is declining and more a play to swell the subscription ranks. As Grace puts it: “I think both BT and Sky see the benefit of YouTube as a marketing tool too.”
There is another factor. Grace claims YouTube sports content views are growing by 60% a year, and that highlights consumption is up 80%. “[For broadcasters], there is a calculation that there comes a point it is worth investing in. They now see there is money to be made and there is an audience there. It is a meaningful audience you want to engage with, associate with your brand with, and drive to pay-TV.”
The immediate revenue is generated from pre-roll ads on each highlights video, either unskippable ads (15 seconds) or five-second skippable ads. Viewers who watched the 10 highlights will have seen at least 10 ads. If it is the right ad for the right viewer, clickthrough rates will be high.
Grace says: “We need to strike the balance between a great user experience, which ultimately drives engagement and therefore benefits for partners and brands and for YouTube, with an ad product that makes sense for our sales team and for advertisers. And we think we're always tweaking that and it can always be improved but we think we are striking the balance at the moment.”
But there is another important balance to strike: YouTube is morphing into a TV provider, so is there still a place for the grassroots creators that built the platform if all the traditional broadcasters are there? Grace believes so.
The “quote-unquote traditional sporting organisations are increasingly working with YouTube creators”, he points out, citing the likes of club fan channels, Sky’s Soccer AM channel (1m subs) and even esports figure Spencer Owen commentating on Spanish football.
“There is less division between creative and traditional now, it’s just online football and everybody works increasingly successfully together,” concludes Grace.
Another consequence of Sky's move is that football fans no longer have to wait until 10.30pm and Match of the Day to see highlights of their teams in action. Grace insists the two can coexist.
“People remain huge football fans but they want choice in how they consume. Some watch Match of The Day because of the analysis, the longer highlights, commentary and the quality of the studio programming but others are very happy with the shorter highlights available on Sky Sports Football YouTube immediately after the game.
“It's a different kind of consumption.”