The English Premier League has reportedly considered the launch of an exclusive direct-to-consumer streaming service that would replace traditional broadcast channels. The league is eager to grow revenues after the value of their domestic broadcast rights package [for 3 seasons] declined from $6.6B to $6.0B during the most recent negotiation cycle. The Sunday Times indicated that the top-flight league intended on testing the OTT streaming service in Singapore, but shelved those plans in favor of extending Singtel’s television rights through May ’22.
Howie Long-Short: Former Crystal Palace chairman Simon Jordan initiated the push to follow the NFL’s lead and “become a broadcaster in its own right.” Jordan envisioned a day where the league “controls its own product”, which would enable it to treble “the revenues it currently gets.” Jordan figured “if you had 100 million subscribers [to an OTT service] at $10.45/mo., you’d be bringing in $13.06B/year – not $11.36B every 3 years like the current [television] deal does.” When the EPL ultimately launches its exclusive OTT service, it’s going to have a devastating impact on the league’s current pay-TV broadcast partners (think: Sky) who rely on soccer rights to attract subscribers.
Simon Jordan’s math is correct, but Wayne Sieve, EVP of Thuuz Sports, explained that an OTT platform isn’t necessarily the attractive proposition it appears to be. “For the EPL to really capture the revenue figures [Jordan] projected, it would have to go exclusive and put all league matches behind a paywall. Club owners would need to be able to stomach the loss of billions of dollars in traditional broadcast revenues as the league works to convert cable viewers to its new digital service; a process that won’t happen quickly. And don’t forget all the marketing muscle (think: tune-in promotions, shoulder programming) that the league’s current broadcast partners bring to the table. There’s an attraction to what an OTT service could one-day bring to the league, but I don’t see how taking on all the risk in the short-term would be a smart move. If the EPL is going to introduce a direct-to-consumer relationship with fans, it would be better served by making it additive (think: NBA’s 4th quarter option) and migrating fans over slowly.”
If the EPL were to introduce a subscription based streaming service, it makes sense to do it in a non-domestic market (like Singapore) without a lot of value – a market where there is zero (or limited) opportunity cost. That dynamic would give the league the opportunity to learn from the data it collects and to iterate and fine tune its technology without feeling the pressure from lost revenues. That said, a market like Singapore brings on its own sets of challenges. “With live sports, charging the consumer only really works if there is no free alternative. If you can’t ensure exclusivity and control access to the programming – and in markets where piracy is rampant [like Singapore], that’s going to be a challenge because any individual can create that pirated stream – it’s very difficult to feel comfortable operating a consumer subscription service.”
The sky isn’t exactly falling on the EPL. While the league’s domestic rights took a haircut, global media rights continue to grow. The Premier League will take in $11.7 billion over next 3 seasons.
The value of domestic and international rights may be headed in opposite directions, but it’s important to understand that the packages are not comparable; the league’s U.K. television offering pales in comparison (200 games available via live broadcast) to the overseas rights package it sells (all 380 games).
Fan Marino: The U.S. market is among the EPL’s most valuable, but the value of its broadcast pact with NBC (worth $1B/6 years) lags far behind the league’s domestic package – despite the U.K. having a fraction of the population. An OTT service might provide the EPL with the opportunity to increase revenues in the U.S. market, but Wayne doesn’t see that as a viable solution to growing the bottom line. “The time zone is going to be a challenge as long as the best content experience remains watching live, especially on the west coast where you’re 8 hours removed from the broadcast window. There’s always going be a limitation on demand.”
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