Original Article: JohnWallStreet, by JohnWallStreet, March 26th, 2024

Savvy sports executives are trying to figure out how to monetize the content and data powering generative AI large language models (LLMs). Industry insiders believe succeeding on that initiative can help keep media-related revenues tracking up and to the right.

But OpenAI’s recent launch of Sora, a text-to-video AI model, has the potential to have an even greater impact on the industry by increasing the universe of ad buyers. If there are more companies willing to market themselves during live sporting events, then those broadcast rights should become more valuable.

Sora, currently available to just product testers and creative professionals, is not the first AI platform to enable users to turn text-based prompts into production-grade videos. Meta is among those with (or working on) a similar offering.

However, OpenAI’s ability to take a technically complex process and make it easy for everyday consumers to use (like it did with ChatGPT-3) has business leaders inside and outside of sports paying attention to the product before it has even been fully released. 

Inside sports, the focus has been on how Sora can help to democratize commercial production, and how that will influence ongoing and future media rights negotiations. 

Rights holders generate most of their revenues from carriage/affiliate fees and advertising. But because the process of creating commercials has historically been both costly and time-consuming (think: creative ideation, securing talent, production shoots, post-production editing), the pool willing and able to invest in them was limited. Only large-scale corporations with multi-million-dollar budgets could afford to produce spots for international, national, or regional broadcast. 

“The leading media companies generally serve the top 100 sports TV advertisers,” John Kosner (president, Kosner Media) said.

Of course, those are not the only businesses that could benefit from –and would have interest in– advertising during sporting events. There is little else on television that enables a marketer to reach as many viewers at once, and “diehard” sports fans tend be younger, more educated, and have higher-incomes than the median population.

“Sora could make [sports broadcasters] bigger players for the 4,000 or so [other businesses] that power Meta,” Kosner said.

Coincidentally, no company has done a better job of demonstrating that a broader market of advertisers likely exists for sports properties than Meta. Several times in recent years large sports advertisers have suspended ad buys across Facebook or Instagram (see: Coca-Cola, Diageo, Mars, HP, and CVS Health’s ad pause in 2020), and none of those protests made a substantial dent in its business. 

That is because the tech giant generates the bulk of its advertising revenue selling to smaller companies.

Meta generates billions in advertising dollars enabling rights owners to monetize content of all lengths and audience sizes, and by making it easy for niche brands to reach their target audiences. Remember, Meta has extensive data on the billions of people who use its platforms daily (think: specific interests, behaviors).

Sora can help companies, of any size, create video campaigns befitting all types of sports content. 

That includes the tech giants, Amazon, Apple, and Netflix, who have all started to dip their toes into the sports broadcasting space. 

“Having trained SVOD entertainment audiences to watch and binge their favorite shows with no commercials, leading streamers [now] need sports to establish robust ad businesses,” Kosner said. “That's why many of us expect the leading digital companies to become bigger and bigger ad buyers.”

And like Meta, Amazon, Apple, and Netflix all have billions of data points on their customers. These companies should be able to leverage their sports content and insights to help brand partners, regardless of size and budget, reach their target demo. 

Legacy rights holders should be able to benefit from platforms like Sora too. In addition to having their own streaming services that need to be marketed, the broadcast networks are gradually obtaining data from connected televisions and able to provide granular details on viewers to advertisers. 

But it takes more than just reaching the target audience to run a successful campaign. Brands also need to develop commercials that can drive their desired outcomes and objectives. 

And that’s where Sora can really help resource constrained companies. Its platform allows them (and content creators) to quickly –and cost effectively– develop and test creative concepts. 

Media experts believe text-to-video platforms will be particularly beneficial for emerging sports properties that have traditionally struggled to sell larger corporations on advertising due to their audience sizes. 

Removing the creative bottleneck should enable rights owners and holders up and down the value chain to generate more money from live sports rights. But there are headwinds that could slow adoption of the tech. Sora, like many other AI offerings, will still needs to address intellectual property concerns. 

“While [these models] may ultimately enable near-instant production of videos for a creative concept, if the reference content that underlies that creative isn’t in the Public Domain, then the derivative creator –the broadcaster, advertiser– will still need to license the necessary IP rights to use it for commercial purposes,” William Mao (SVP, global media rights, Octagon) said.

However, the emergence of text-to-video AI should be viewed as a net positive for the industry. Growing the number of potential companies capable of creating and leveraging advertising during live sporting events will result in short-term revenue gains for rights holders and make those rights more valuable over the long-haul.