Karate Combat, a full-contact karate league, held its first event in Miami in April.
Only a few hundred fans were in attendance, which was intentional for this niche sports organization that launched this year and is far more focused on making money from media deals than putting people in seats. Michael DePietro, Karate Combat’s chief executive, expects 65 to 70 percent of the venture’s revenue to come from media, including streams of events on the Karate Combat website. Sponsorships, dojo franchising and merchandise will produce much of the rest. Attendance revenue contributes a paltry sum, even though it was once the lifeblood of all sports.
DePietro said he has traditional television offers in hand, but he is using a new playbook for small sports that no longer see an upside in scraping to get on networks large and small. Instead they are focused on digital streaming, a delivery system that does not require fans to pay for an expensive television subscription at a time when those accounts are becoming increasingly unpopular, especially among younger consumers.
“We want to do something that is engaging to younger audiences over time. Right now it is the video game, flash back to the 80s feel,” DePietro said.
Karate Combat fights don’t take place in a ring or a cage, but a sunken pit that allows cameras an unobstructed shot of the karatekas. The goal is to stage fights in exotic locations around the world. The next event will be in the courtyard of the Zappeion in Athens, near the Parthenon and Arch of Hadrian.
The events are presented to look almost like a real life version of the video game Street Fighter. The streams of the fights are accompanied by live biometric data and a chat window. Those innovations directly target younger viewers.
There are also more than a dozen distribution partners around the world who split ad revenue with Karate Combat. A spokesman said more than one million people viewed at least some part of the Miami event, though the figure could not be independently verified.
A decade ago, DePietro would have been forced to rely on attendance, which would have made staging fights in a sunken pit and exotic locations difficult. He would have begged CBS, NBC and ESPN to pay a pittance for the rights to show a few hours of his league in the middle of the night, or paid for airtime himself. Onscreen biometric data and real-time fan interaction would have been nearly impossible.
Today, his options, and those of a host of other new niche sports offerings, are almost limitless. Besides the incumbent television companies, tech powerhouses like Amazon, Facebook and YouTube are experimenting with sports rights. Pure streaming plays abound, with television companies like ESPN, with ESPN+, and Turner, with B/R Live, attempting to disrupt themselves.
Others, like Stadium, Eleven and FloSports, project bright futures for their well-funded start-ups as they hope to become even fractionally as profitable as ESPN. Leagues can also opt to stream directly on social media platforms like Twitch and Twitter.
“It is the greatest time to be a sports fan in the history of the world,” said Burke Magnus, the ESPN executive in charge of programming. No matter how small or unpopular a league or team is, their games are probably streaming to fans somewhere, he said.
To be sure, even with an energetic promotional campaign, streaming services and the niche sports they show face plenty of significant challenges before they become a viable alternative to broadcast or cable television.
Most important, they need more exposure and more eyeballs. A relatively small amount of people know these sports and services exist. The number of subscribers to the services is a fraction of the 607,000 daily viewers ESPN averaged last quarter or the 87 million homes who receive the network. Far more people would stumble across Karate Combat on ESPN than stream it on karate.com.
Streaming services also have yet to figure out a way to take advantage of the economics of bundling. Pay television distributors pay nearly $8 each month for each subscriber who receives ESPN — and more than a dollar each for the NFL Network and FS1, as well as other regional sports networks, even though a small percentage of their customers watch these channels. Streaming services only receive revenue from customers who actively choose to subscribe or watch.
No sports streaming service has nearly the portfolio of rights of even a second-tier cable sports channel — acquiring those rights would take billions of dollars they do not have. With the recent proliferation of digital sports streaming services, it is possible that many, perhaps even the majority, of the services and the sports they show will fail.
And yet, optimists abound. Consider arm wrestling. Steve Kaplan earnestly believes arm wrestling is the sport of the future. It is also a sport of the past. Arm wrestling’s World’s Strongest Man competition was a pillar of the so-called “trash sports” craze in the 1970s that included shows like “The Superstars” and “Survival of the Fittest.”
Kaplan, president of the World Armwrestling League, insisted arm wrestling was ready for a reboot.
“It’s ordinary people doing extraordinary things,” he said. To succeed, the sport has to migrate from the raucous bars that host its competitions to the television or the phone.
Enter B/R Live, the new streaming service from Turner Sports, which signed a multiyear agreement with the World Armwrestling League. Kaplan declined to disclose details of the deal but the league and the streaming service will share revenue. That will give both parties incentive to promote the World Armwrestling League as much as possible.
The World Armwrestling League previously had an agreement with ESPN to televise eight hours of competition. Kaplan praised ESPN, but he said the sport needed more exposure, and B/R Live offered heavy promotion.
In Austin, Tex., FloSports encompasses all of the possibilities and pitfalls of this business. Launched more than a decade ago with the goal of becoming the ESPN of the digital age, it followed ESPN’s early playbook: Begin by buying rights to niche sports, and slowly work toward more mainstream ones.
FloSports is mostly known for its running and wrestling coverage, but it is rapidly expanding. Mark Floreani, the chief executive, said FloSports has signed more than 100 rights agreements this year already, though none is with a major sports organization. He argued that streaming allows FloSports to show niche sports better than a traditional television channel would.
He gave the example of the World Jiu-Jitsu Championship, held in May. In the early rounds there were as many as 20 near-simultaneous matches on different mats. A traditional broadcaster would have had to designate one the most popular and important to show, and then cut to other mats as warranted, similar to how tennis tournaments are usually broadcast.
Instead, FloSports had a sparse setup of camera, graphics, and a play-by-play commentator on each mat, allowing fans to pick which they wanted to watch, as well as the FloZone, a whip-around option showing parts of the most interesting matches, similar to NFL RedZone channel. As competitors were eliminated and the number of mats reduced, additional cameras and personnel were assigned to those remaining.
FloSports aims its coverage at the core fan, and hopes to grow the sport’s fan base. The result is far less money than an established league gets for being on ESPN, but the inventory still pulls in viewers.
That does not mean FloSports will topple the legacy networks tomorrow, but the company is already serving as an alternative in a market that craves them.
ESPN remains the 800-pound gorilla, and its ESPN+ streaming service can afford to take big gambles, like paying $750 million for UFC rights. Magnus, the ESPN executive, believes that between ABC on the broadcast side, the family of ESPN cable networks and now ESPN+, ESPN can meet any sports league’s desired balance between immediate revenue and exposure.
“To be able to get all of that in one place,” he said, “is really the proposition that we are selling to at this point in our evolution.”
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