Other articles in this series:

Interactive Rights is a rule-defined and rule-driven domain, that is fundamentally based on two broad sets of rules – compliance and financial. Inside these two sets of rules, the compliance rules break out into three distinct areas: content, advertising, and regulatory. All the rules are operated in a highly automated and scalable technology ecosystem that can manage and track billions of transactions.

The all-important Users who engage with interactive content are in a separate category of their own – “playing” within the rules of the system, but yet strengthening and weakening many of the rules by their collective and individual actions.

Sports is obviously one of the best examples we have of rules-based content we see on our screens. Each sport has a clear set of rules governing how it is played. Appreciating the sport requires a good understanding of the rules in play, and the commentators and producers invest significant time in ensuring that the rules are understandable. Through interactivity innovations, viewers now find themselves becoming even more intrinsically linked to the rules of the game, being involved in its moments in new ways, and playing their own game alongside the game they are watching. Sports viewing is moving forward once again, forever pioneering alongside the actual sport, and engaging us in the action more deeply than before.

In the technical ecosystem of Interactive Rights, the Rules live independently of the service’s users. But they drive and structure the interactive experience. Setting the rules is based on a mixture of brand, commercial, and legal drivers to ensure consistent experience, maximized commercial outcomes, and legal compliance. Ultimately, just like the Sports that IR works with, the rules set the boundaries of the game, within which the goal is to play as hard as possible.

In Article 5 in this series, the following diagram explained the overall Interactive Experience Workflow. As shown, the Compliance Rules are implemented after the analysis of user behavior and drive the presentation of information to the user. The Financial Rules are applied after the interactive event to drive the revenue to the stakeholders.

How The Compliance Rules Are Defined

Content Owner Compliance Rules

The purpose of this set of rules is to define the Fan Experience of interactivity, and to drive the ROI associated with the costs of interactivity. These rules are therefore set by a combination of the Rightsowner (i.e., the Sports body, e.g., league, tournament, competition, club) and the Rightsholder(s) (i.e., content distributors, e.g., broadcasters, streamers). In this category, the Brand experience is typically a shared responsibility between Rightsowner and Rightsholder, the Fan experience is largely driven by the Rightsowner, and the ROI decisions are largely driven by the Rightsholder.

These rules are generally directed towards the timing and the positioning of interactive experiences (IE) on the viewers’ screens, addressing questions like:  

• When in the program will IE be presented?
• For how long will the IE be presented?
• Where on the screen will the IE be presented?
• What format will be used to present the IE (e.g., squeezeback or overlay)?

In soccer, the following are examples of rules that may be set:

• IE cannot be presented immediately before or during a Penalty.
• IE can be presented during open play when the ball is in the middle of the field, and during breaks in play.
• IE can be presented, but with specific conditions, before a free-kick.

Early-stage best practices are already emerging between sports bodies, assisted by the experiences of the cross-sports vendors operating in this space.

This group of rules is set in advance of an event and embedded in the Interactive Rights technology stack. During the event itself, the rules are executed according to the contextual moments in the event that have been defined. For now, especially while we are at the beginning of the Interactivity journey, there is no real dynamism in rule setting during live events. In fact, it is not yet common practice to conduct A/B testing to assess the efficacy of the rules in engaging viewers. Currently the focus is squarely on establishing rules that drive general engagement without overplaying the interactivity and inadvertently ruining the fan experience.

As time passes and each Sport rightsowner learns how its fans and viewers engage with interactivity – “the second sport” – as they watch “the first sport”, then A/B testing is likely to be used to determine efficacy, and the fixed timing of rule setting may change to become more dynamic.

Advertiser Compliance Rules

While known as Advertiser compliance rules, these rules are all about the style and branding of the interactive experiences. They affect all of the advertising and sponsorship stakeholders of the sport and are created by a collaborative effort between the Rightsowner and Rightsholder(s). The collaboration is generally spearheaded by the Rightsowner Production Team. Standard brand guidelines are applied, but given the newness of IE on the screen, new and creative approaches are being continuously developed. The goal of these rules is first to ensure compliance with brand style guides and advertiser/sponsor rules, leading to satisfaction with the monetization outcomes.

The rules break down into two areas: Style and Brand. In the Style category, rules cover look, feel, color, on-screen entrance/exit formats, durations, and the interactivity integrations between the standard Sports “bugs” such as a score-box. For example, a color rule could simply be that color palettes used in interactive elements must match the associated team’s colors. In the Brand category, rules are concerned with avoiding brand conflicts between sponsors and advertisers in different stakeholder relationships. For instance, the Rightsowner may have a global advertising partner, and none of the local market Rightsholders will be able to have a competing brand to this global partner involved in this sport’s interactivity experience.

Unlike the potential dynamism of Content Owner rules, the Advertiser rules are firmly defined in advance and embedded in standard templates that are used during each interactivity moment. Changes are managed entirely offline to any live event and are typically linked to some sort of brand refresh or major sponsorship change. 

From a best practice perspective, each Sport has its own way to proceed according to its knowledge of its fans and its viewers. In principle, Style rules are a very adaptable and easy to change element of the overall Interactive Experience, and it is expected that each Sport will learn and evolve over time. The technical implementation of Style changes is managed in the presentation layer technology, which by design is intended to be very flexible.

On the other hand, Brand rules are operated in a very human and manual way, assessing brand conflicts from multiple angles of competitive positioning, appropriate side-by-side or ad-following-ad combinations, and more. But this will become much more automated as real-time bidding for advertising spots in Interactive Experience workflows becomes more common. On the Ad Tech side there needs to be a method to ingest IE-based advertising opportunities according to the contextual data provided by the interactivity solution. Then the ad spot can be bid on, won, and the ad can be placed. Inside the IR tech stack, the data sets are ready to share with the Ad Tech platforms once the Ad Tech platforms are ready to receive them.

Regulatory Compliance Rules

As the name suggests, these rules are set by regulators in the territory in which the content is officially available.  

Normally, the scope of these rules is focused on protecting the consumer from inappropriate forms of advertising, such as age-appropriate or culture-appropriate products and services.  Alcohol, Tobacco, and Gambling are three obvious categories where regulations are strict and can differ dramatically from territory to territory. Interestingly there can be different rules for fixed on-court/on-pitch advertising vs. on-screen advertising. For instance, if a gambling business has its logo painted onto a tennis court that is visible as part of a source feed from the tournament, then even if gambling cannot be advertised in a particular country, this logo will remain on screen in front of the viewers. The regulatory rules for IE relate directly to how the interactive elements work, and compliance with the rules during interactive moments is the focus.

In addition, some regulatory rules are focused on protecting the consumer viewing experience, such as the number of breaks and types of interruptions that can be applied during the event. These rules are being interpreted and applied to Interactive Experiences.  Ultimately, to protect rightsowners and rightsholders from rule infringements and potentially large fines, all these regulatory rules are stored and managed inside the back-end systems, to be strictly executed against when interactivity choices are being made.

How The Financial Rules Are Defined

Financial Rules are the terms by which revenue that comes into the backend Clearinghouse is disbursed amongst the various stakeholders. These rules are contained in contracts, embodied in the Clearinghouse system, and fixed for the contract duration. Some contracts contain variations to revenue share percentages based on the value of revenue or the volume of transactions achieved in specific areas of interactivity.

The disbursement model is often based on stakeholders sharing a percentage of the total revenue. Best practice in this area of rule-setting is that simplicity is more important than complexity, even if complexity can be proven to distribute the revenue in a more accurate way. It is observed that most stakeholders want to have a clear line of sight to the money coming into the ecosystem, which complexity can obscure. Overly complex arrangements, if insisted upon, can lead to breakdowns of rights deals, and so there are strong motivations on all sides to keep the revenue share rules simple.

The Clearinghouse mechanism is essential to track transactions with transparency and to have clarity around revenue intake and disbursement. There are potentially millions of transactions in a single event which may all have revenue share implications. As micro-transactions become even more prevalent with gamification and e-commerce interactions, the tight management of this dynamic environment becomes even more important to all rights stakeholders.

The Role Of Viewer Rules

Users do not drive the rules. Users drive actions.

A user profile can drive some rules more than other rules. For example, geo-location rules or age-related rules determine if a user can or cannot be presented with certain information. As mentioned previously, the rules that drive what a user gets to interact with can be static or dynamic rules. But in the end, users cannot cause a rule to be created.

What users do that is fundamental to the Interactive Experience Workflow is to strengthen or weaken a rule over time. The time period may be during a single event, but mostly a rule’s strength is adjusted over a longer time period. Normally, rule effectiveness is assessed in non-real time, after an event. Rules are then tweaked to determine a more effective implementation to achieve certain goals, such as engagement, potentially measured by link clicks. In this example, if a user does not click on a link, then this may stop a certain type of content from being presented to that user.  

The Rules Of The IR Deal

The rules for selling sponsorships and advertising packages are also fairly simple. Often this is due to the complexity of accurately forecasting what will happen in any given sports event.  IR is a contextually driven activity. How the sport works in a structural way (its rules) vs. how it actually pans out (its results) both need to be considered.

Historic averages are used as a baseline for formulating a proposal – e.g., average number of goals per game, average number of pitches per game, average number of dunks per game.  The deal is done to sponsor/advertise/offer interactivity on this basis. Then, in practice, if the season has a lower or higher average, it goes against or for the sponsor/advertiser. Because of this, deals are often based on a seasonal total, not a specific average per game.  They are designed to maximize the impact of IR, and the rules will keep evolving to keep up with the sport.

Sometimes, a real rule-change in a sport can dramatically impact how a package of interactive rights can work. For example, a pitch clock was introduced into Major League Baseball in 2024. This shortened each game, changing the time available for interactivity to operate.

Different sports bodies have different approaches to setting their IR rules. Some have a lot of rules about how interactivity can be surfaced – e.g., how many times, how large on the screen, and at what point in the game/match/event – and yet do not have strict rules over revenue sharing. Others have less rules but want strict revenue share or a reserved share of advertising inventory to manage themselves. But experience so far shows that rightsowners, whether large or small, have the same basic interests to control their rights and maximize their returns. How they do it, and how much power they have to do it, are the key differences.

The Rules Of Power Plays

There is also an emerging dynamic, and associated set of “rules”, related to the power dynamics of rightsowners vs. rightsholders. Clearly, the interests of both groups are mostly very well-aligned, because each group wants to maximize the ROI of their asset. At the same time, the distinctions between a global or national sport, or a local broadcaster or channel aggregator, or a regional or global streamer, can sometimes become quite stark.

The emerging scenarios as IR finds its feet and takes its first few steps are:

A single rightsowner working with multiple rightsholders:

• Much is centralized and standardized, such as the global feed and the global sponsorship positions.  Often the rightsowner will have a set of standard global sponsorship positions, and the rightsholders will have the right to insert their own set of localized sponsorships.
• Some things need to be localized based on local regulations. An example is whether a sponsor in the tobacco, alcohol, or gambling industry can be shown in a televised feed. 
• Branding and styling and the actual IR rule sets are normally standardized, at least for now.  Simplicity is outbidding sophistication, although it is likely that sophistication (i.e., smart complexity) of the IR landscape will increase as it matures.
• The relationship between sport and club/tournament and athlete creates extra complexity in this picture. Sometimes leagues/tours have more power than clubs/tournaments, sometimes it’s the other way around, depending on how a league/tour governs itself. There are a small number of very powerful athletes that can dictate how some club/league or tournament/tour level rights are managed, and there is a much larger second tier of athletes with NIL (Name Image Likeness) rights that come into play. This athlete dynamic affects how rightsowners and rightsholders sell advertising and sponsorship for Interactive moments involving those athletes.

A single rightsholder working with multiple rightsowners:

• We are early in this journey as only a few rightsowners have adopted IR so far.
• Up to now, there is not an obvious drive towards standardization across sports.
• But there are some visions of single rightsholders having “Interactive Zones” where sports engaging in IR will feature.
• There is also an idea that sports rightsholders can aggregate viewers across multiple sports, enhancing their collective experience as sports fans.
• For now, we are in a pioneering do-and-learn phase for the leading sports rightsowners and their selected rightsholders. So let’s see what happens next.

A single sponsor working across multiple rightsowners:

• This is enabled by the IR framework but is not yet a real situation. What happens in one sport is unlikely to affect what happens in another sport, but if a large corporate sponsor of multiple sports is looking for an umbrella approach, then they will have to manage this process themselves.

In many ways, the Rules of IR are based on what has worked previously in the Sports & Entertainment ecosystem. Some could say that IR simply creates a new playing field on which to implement the rules. It is true that the fixed structures that hold rules remain intact, such as the rights contracts, but how they will now drive the engagement and financial results in a dynamic, interactive experience environment remains to be seen. Game on!