BBC, Sky, And Sports.com Will Dominate UK Online Sports By 2003, As Betting Revenue Under-performance Squeezes Specialists, Forrester Warns
Betting revenues aren’t going to salvage ailing UK sports Web sites — this market is still over-supplied, and the next five years will see both the multi-sports and single-sport market decimated, leaving a few leading players, according to a new Report by Forrester Research (Nasdaq: FORR). Forrester advises that survival depends on capturing unique content rights, building a strong user community, and leveraging online and offline promotional abilities.
“UK sports sites believe that betting will generate significant income going forward. They’re wrong,” said Forrester Analyst Rebecca Ulph. “Only 15% of sports sites’ revenues will come from this source in 2006, as technologies like interactive TV attract an increasing amount of betting revenues. Although more than £700 million of bets will flow through sports sites annually by 2006, the retained income will only reach £70 million. Bookmakers will return much of the money placed as bets to the bettors in the form of winnings, and 10% will go in various taxes. Those sites developing in-house betting capabilities will retain all the accrued revenue but will also bear the burden of a higher level of cost. Without this new revenue stream to rely on, the sports site market will still be over-supplied and, despite recent closures, more casualties should be expected.”
At present, the sports site market consists of an abundance of both multi- and single-sport coverage providers, with audiences spread thinly — traditional publishers are already retrenching and even the big pure plays are suffering. The most popular UK sports sites are football clubs’ own sites.
As the over-supplied sports site market struggles with inadequate revenues, sites will look for survival strategies. Those that have unique content and strong user communities and can leverage these through sophisticated marketing will be best placed. The key to driving a significant, monetisable user base is to offer users content that they cannot get elsewhere. Therefore, generic sport sites must acquire online rights, sign up top personalities and enhance coverage with unique new and archive multimedia to survive. For those sites unable to afford exclusive online rights, user-generated content is the solution for providing unique material. Such content is cheap and drives large, loyal audiences, bound together by common interests — content creation, interactive features, and eCommerce integrated into communities.
“To maximise both revenue and traffic, sites need to re-evaluate their promotional offerings,” Ulph added. “Advertising remains sports sites’ key revenue stream: it will contribute 58% of income in 2006, but half of this will come from performance-based deals, up from 7% in 2000. To ensure that they attract advertisers, winning sports sites must offer online replication of offline sponsorship models, develop performance-based pricing, and exploit cross-promotional capability.
“Over the next year or so, three major successful multi-sports players will emerge, leaving just one or two profitable sites covering each sport by 2006. By 2003, Sports.com, Sky, and the BBC will control the multi-sports site market — and those sites that can’t acquire strong, unique, focused content will die. By 2006, the single-sport market will streamline dramatically, with winners being those that successfully leverage the revenue-generating power of communities or defray costs across networks.”
For the Report, “The Online Sports Survival Guide,” Forrester surveyed 31 sports Web sites — pure plays as well as offline media company sites.