Dive Brief:
- Media companies are anticipating new opportunities, including increased viewership and advertising revenue, following the U.S. Supreme Court's decision to strike down the federal law banning sports gambling, The Wall Street Journal reported.
- The change, which will open the door for states to individually decide whether or not to allow legal betting on sports, could boost the value of leagues, teams, sports media properties and TV rights deals. Turner, which owns networks like TBS and TNT, could use its Bleacher Report website to offer stats for bettors and possibly partner with online betting platforms, in one example highlighted by the Journal. ESPN predicts that legalized sports betting could draw larger audiences as well.
- The decision could also lead to a resurgence in ad spend from daily-fantasy sports companies. Previously, daily-fantasy sports leaders like Draft Kings and FanDuel contributed substantial ad revenue to sports networks, but have scaled back following growing scrutiny over whether they violate gambling laws. FanDuel spent $189 million on U.S. advertising in 2015, but only $10.7 million in 2016, according to Kantar Media data cited by the Journal. DraftKings spent $247 million in 2015 and $18.4 million in 2016, but slightly increased its investment last year.
Dive Insight:
Linear TV networks are in dire need of a lifeline as cord-cutting accelerates and ad revenues face steep declines, and the legalization of sports gambling might be an unlikely candidate to fill the role of winning back viewers and advertisers. Sports are one of the last bastions of destination live TV viewing, with bettors being a key audience segment. Sports bettors comprised 25% of the NFL's TV viewership in 2015 and 47% of all minutes viewed, according to a Nielsen Sports study commissioned by the American Gaming Association and reported on by The New York Times. Betters also watch about 2x as much sports coverage as non-bettors.
While the change in federal law creates a window of opportunity for sports brands and media companies, they will need to innovate their programming and potentially take a more cross-channel approach to truly engage these audiences. Sports fans' viewing habits have been evolving over the past few years with many opting to watch game highlights, interviews or other content over live games. A Google analysis of YouTube sports content viewership found that consumers prefer watching across multiple screens. Among sports fans who do watch live sports, a majority report using their computers or smartphones to search for player stats and scores or to message other fans.
These shifting viewing habits have done considerable damage to the TV ad space. Last year, TV ad sales dropped 7.8% to $61.8 billion, the steepest decline in the past two decades outside of an economic recession, according to Magna Global data. The firm's forecasts for 2018 weren't much brighter, and the changes to sports gambling law on the state level will inevitably take time to enact, per the Journal. However, over the long term, they might be just what TV networks need to survive in an increasingly mobile- and digital-first world.
