• by Darryl La Rue , October 14, 2010

With the proliferation of DVRs, the ubiquity of TiVo, and the rise of online video, the age-old way of watching television shows has shifted dramatically. People are no longer forced to watch their favorite shows at specified times - making a big dent in prime-time viewership.

With the advent of Hulu and YouTube, the Internet has become an increasingly more viable way to watch videos, TV and movies. One-third of adult Internet users view full-length TV shows online monthly, according to eMarketer, and live online video broadcasts are especially popular. Over the past year, the amount of time American audiences spent watching video on the major live video publishers has grown 648%, to more than 1.4 billion minutes, according to comScore. By comparison, the amount of time American audiences spent watching YouTube and Hulu increased 68% and 75%, respectively, over the same time period.

Despite the growing popularity of live online video, people are still turning to their TVs for one specific type of program: the live sports broadcast. Because most live sports broadcasts are TV exclusives -- with rights given to just one broadcaster -- and are televised at set times, they exert a powerful pull over viewers to tune in at specified times. In other words, there is only one time and one channel on which to watch a match, game, or competition, so you'd better not miss it.

Advertisers, of course, love the highly engaged, dedicated, captive audience of sports fans, which is why they pay millions to run spots during live sporting events. But what if there were an even better way to build brand recall with sports fans -- and it cost much less than advertising during a live TV sports broadcast? A move toward live sports broadcasts online is already happening, and quickly shifting the power in the ages-old trifecta of cable company, sports league, and advertiser.

Many sports leagues, such as The PGA, MLB, NCAA and Indian Premier League (cricket!), are exploring online-only distribution rights through their own websites, YouTube, or other licenses. For example, MLB.tv presents all of its live games online and then fills standard commercial breaks with digital ads.  Viewers have access to the games of their favorite baseball teams wherever they watch video and the sheer volume of games played a year-162-opens up the restrictive volume of true video advertising.

The recent World Cup games in South Africa exemplified the potential of online reach when it comes to live sporting events. ESPN estimated 99.2 million people "consumed" 2010 FIFA World Cup content across all ESPN platforms during the first 10 days of the tournament. ESPN.com also reported it kicked off the 2010 NFL season with 225.9 million page views and more than 318 million minutes viewed -an 18% increase over last year. Meanwhile, DirecTV is offering its highly lucrative "2010 NFL Sunday Ticket" package of games - virtually all NFL games played during the season - for $350 a year to view games through online platforms, including mobile phones.

The Promise of Interactivity

Live online broadcasts of sporting events -- allowing people to watch on their computers, iPads, or mobile devices -- have the potential to grow viewership for these events significantly, because viewers aren't tied to their TVs at home. Live online broadcasts will also present unprecedented opportunities for brand advertisers to connect with engaged viewers in a more interactive way than a TV commercial, through banner ads, full-page takeovers or widgets.

Sports fans love to interact with one another, their favorite teams and favorite brands. Live online sports broadcasts often integrate fan chats, up-to-the-minute data and commentary feeds, social networking, and dozens of other interactive features that pull viewers in and get them to interact more deeply with the game. Brands can insert themselves into this interactive environment through real-time e-commerce or social apps, sponsorship, their own interactive video advertisements or games that tie into the broadcast.

It's quickly becoming apparent that TV can't compete with the level of interactivity found online, which is causing more and more sports leagues to question their exclusive relationships with broadcast and cable companies. If leagues can just broadcast their games online, add tons of interactive apps, and charge advertisers directly, why do they need to give exclusivity -- and a large chunk of advertising revenues generated during a game -- to a TV channel?

What's in it for Brands?

Advertisers, for their part, will spend $65 billion on broadcast TV advertising this year, and another $27 billion on cable networks, according to PricewaterhouseCoopers. If brand advertisers could get better results -- higher customer engagement, more interaction with their brand, and direct click-through to their sales websites -- by advertising on live online broadcasts, why wouldn't they do it? Of course, this isn't going to happen overnight. TV is still currently the largest advertising market by far, and the broadcast and cable giants will do whatever it takes to hold onto that mantle. But the way people watch TV will continue to change, and live, interactive online sports broadcasts will only increase in popularity -- and isn't it  just a given that advertisers will follow the most engaged eyeballs?