The problem facing Rogers Communications Inc. and other major companies that paid billions of dollars for the right to broadcast a sports league's games is not just chasing revenue across different platforms. An equal if not more vexing issue is that today's young people simply do not watch games the way their parents do.
Not only do viewers in their teens and 20s tend to watch games online and on mobile devices; many of them rarely sit and watch an entire game. Raised in the Internet era of multitasking, they will often stop watching a game and catch up later by watching highlights or video clips of unusual plays on YouTube, Twitter, Vine or other applications.
It is a trend that Kaan Yigit, president of Solutions Research Group (SRG), noticed in his own home as well as in the viewership surveys he does for his business.
"My son is 13, and in the middle of a big game, he'll say, 'I'm going to bed,'" Yigit said. "'What do you mean you're going to bed?' And he'll say, 'I'll just watch the top 10 plays tomorrow.' Literally, in five minutes, he'll see the top 10 dunks, whatever.
"When we did the research [last] December, all the TV numbers compared to the year before, this is everybody, not just millennials. Fewer people are reporting watching stuff on TV."
SRG's survey showed that most millennials (people aged 15 to 34) do not follow the NHL on television – 33 per cent watch hockey online or on mobile devices or social media versus 31 per cent who still watch games on TV. Their parents, generally baby boomers, remain loyal to television, with 56 per cent using that medium, compared with 18 per cent using the other platforms.
The median age of NHL television watchers in Canada, SRG discovered, is 47 while it is 36 for those who watch online or on social media.
"Given that there aren't that many games online [compared with television], this means they are consuming snippets: Vines, social-media reports and Web highlights," Yigit said.
Compounding the problem for broadcasters is that television viewership is in decline in all age groups. The Wall Street Journal recently published a chart from the ratings company Nielsen that showed the number of hours of TV watched per week by viewers aged 50 to 64 dropped by 1 per cent since 2010. The declines sharply increased in younger audiences, with those aged 18 to 24 watching 32 per cent less television.
This became a grim reality for giant media companies recently after Walt Disney Co. warned investors that profit at its ESPN network was down because fewer customers are buying pay-television packages. This sparked a selloff on Wall Street that wiped nearly $60-billion (U.S.) from the value of companies such as Disney, Viacom, Fox and Time Warner.
Traditionally, when a company like Rogers handed over billions of dollars to a sports league for the right to broadcast its games, the bulk of the money covered the television broadcasts of the games. This remains true today even though deals signed in the past few years include the rights to show games and highlights on other platforms.
But monetizing social media and platforms such as YouTube is in its infancy. Ratings companies such as Nielsen and Numeris can provide some broad numbers of tablet, smartphone and online viewers, but have yet to break them down accurately for broadcasters. This makes it difficult to sell to advertisers. The technology to track Internet users is more sophisticated, but digital advertising rates are low, compared with television.
The bulk of Rogers's digital revenue in the NHL deal comes from its GameCentre Live online service. Scott Moore, Rogers's president of NHL and Sportsnet, said sales of the service jumped 60 per cent in the playoffs, but this still represents a small share of its customer base. Yigit said SRG's research shows that about 7 per cent of the 3.8 million Canadian households using at least one of Rogers's cable, Internet or wireless services also subscribes to GameCentre Live.
Given the increasing habit of millennials to get their sports viewing from YouTube, Twitter or the newest app, Periscope, which can show pirated live broadcasts, squeezing out revenue is difficult. Pirating is also an issue on YouTube because even though Rogers owns the highlight rights in Canada on it, anyone can post their own, at least for as long as it takes YouTube to remove them.
"We haven't gone hard on enforcing it," said Moore, who is pushing for Numeris to improve its ratings on other platforms. "I'd say it's an area we need to work more on. Google [which owns You Tube] has been getting better in the last couple of years in trying to enforce people's copyrights."