Are Broadcast Rights Nearing A Death Spiral?

When live-streaming applications Periscope and Meerkat first came on the scene in March 2015, I became immediately aware of their potential to disrupt the entire sports and entertainment broadcasting industry. It made perfect sense that ubiquitous mobile technology that allows users to stream or view content in one click would catch on like wildfire. To that end, I began to document and study the growth of this type of mobile consumption and, to the extent it was used to pirate proprietary content, dubbed it "nano-piracy." Nano-piracy networks (NPN) are defined as private networks where live-streaming applications are used to stream live or recorded content to the public or a defined group of viewers. In June 2016, Facebook Live and YouTube Live hit the market, and the growth has been impressive, to say the least.

Through technology developed by my company, we were able to document and record streams and viewers in real time. We sampled over 180,000 such streams and documented over 3 billion viewers. During the same period, I was curious to see what, if any, effect this new technology might have on traditional linear television. The numbers have been staggering and present what I believe to be an existential threat to traditional monetization models and digital rights valuation.

Now, to be clear, there are many factors exerting pressure on traditional linear viewing, ranging from new options for streaming services from companies such as Netflix, Hulu, Amazon, Roku and Apple to new technologies like Kodi, CameraFi and other streaming technologies that have multiple uses. For example, CameraFi can be quite helpful and simple for streaming a business meeting to participants located around the world; however, it is equally useful for re-streaming live-broadcast proprietary content to viewers without cost. That's an example of nano-piracy, and it's growing.

In addition to the myriad of new streaming options, the practice known as "cord-cheating" -- which is the sharing of access accounts to OTT and subscription streaming services without paying for the right to legally access the content -- has become wildly popular and, to a large extent, has been allowed to fester unchecked.

Once again, the result is the gradual erosion of traditional linear offerings.

The Rights Death Spiral

According to a study published by TiV0, a staggering 77.3% of the more than 3,000 respondents surveyed indicated a preference for true a la carte television offerings (a pick-and-pay model where customers only pay for the channels they subscribe to).

Taken to its logical conclusion, the reality is that the current trend of massive losses of pay-TV subscribers may be the beginning of a death spiral for broadcast rights. Already companies such as Sling are starting to touch the third rail of pay-TV by marketing a skinny bundle under the somewhat misleading moniker of a la carte TV.