Whether brilliant or bold, the Premier League’s announcement that it would be altering its direct-to-consumer (DTC) strategy for the next media rights cycle has significant implications.
With rival European soccer leagues also ramping up their owned and operated media businesses, perhaps English soccer’s top flight felt it could not wait any longer.
Speaking recently to British media, new chief executive Richard Masters did not give an exact timeframe for when a Premier League DTC platform would go to market, but did suggest that it could be incorporated into its sales model as soon as 2022.
The technical pitfalls associated with launching an over-the-top (OTT) streaming service, experienced most glaringly by Formula One, did not appear to be weighing on Masters’ mind when he said the Premier League “were ready last time and we will be ready next time”. So the consideration during those prior negotiations, and remaining still, is the impact on media rights revenues.
The Premier League saw the overall value of its broadcast rights climb eight per cent to UK£9.2 billion (US$11.7 billion) for the current 2019 to 2022 cycle. Though that sales process culminated in a fall in domestic income, it was offset by a 30 per cent rise in the value of overseas contracts.
With the existing model still clearly successful, London-based Ampere Analysis says that switching to a broad DTC approach in foreign markets would not have the desired effect for the Premier League.
The Premier League has previously considered launching its own streaming service in Asian markets
“When we’re talking about the financial revenues that the Premier League makes internationally, it would be hard to recoup all of that by [relying on] their own DTC service,” explains Ampere’s Minal Modha. “What’s right for another league is not necessarily what’s right for you, so they will be taking stock of where all that broadcast revenue is coming from.”
It seems the Premier League has been taking stock. Speaking at a recent Westminster Media Forum in London, Premier League executive director Bill Bush agreed with Modha’s assertion that the Premier League would likely lose out on revenue if it tried to establish a DTC media operation overseas in the next few years. It is perhaps unsurprising, then, that the Premier League has already declined opportunities to adopt a DTC model.
Ahead of the 2019/20 season – in the wake of the liquidation of its previous Hong Kong broadcast partner, Le Sports – the Premier League decided against launching its own OTT service there. Having received US$400 million from Le Sports during the 2016 to 2019 cycle, the value of that market’s media rights dropped off by more than 50 per cent due to lack of competition. Still, the Premier League was happier to collect US$63 million a year from new broadcast partner PCCW than gamble on going with a DTC model.
It is very important for a competition like the Premier League not to rest on their laurels and to seek out the younger audiences.
Minal Modha, consumer research lead, Ampere Analysis
In February of last year, the league made the same decision in Singapore. According to the Times, the Premier League had been exploring the possibility of launching its own streaming service in that market, but opted instead to sign a three-year extension of its rights deal with telecommunications giant Singtel.
An anecdote from Modha perhaps explains some of the reasoning behind those decisions.
“I was talking to someone at the SportsPro OTT Summit [in November],” she recalls. “They were saying that, even if you have your own OTT platform and you have those capabilities, the localisation side to it costs a lot of money to ensure that you are engaging with the audiences properly. The Premier League will have to look at the benefits versus what they might lose as a result.”
Guaranteed revenue from broadcast rights, even in smaller markets, is clearly still more important for the Premier League and its 20 stakeholder clubs than risking an untried and untested DTC approach – a point Bush reiterated.
Could the Premier League cut back on selling rights to broadcasters such as Sky Sports in favour of going direct to the consumer?
“At the moment the balance is still very much with a territorial broadcaster,” Bush said. “We might get less money [going DTC] because [the broadcasters] know their market better than we do, and that’s probably right for 95 per cent of the countries that we sell into. They’re more willing to take a risk than we are. Also, they monetise it in a range of ways that are not available to us.”
So where and why would the Premier League adopt such a model?
“It is very important for a competition like the Premier League not to rest on their laurels and to actually go and seek out the younger audiences,” says Modha. “They are seeing that people are consuming content in a different way now and it’s not necessarily just through Sky Sports, through BT Sport, or through pay-TV as a whole. There is a rise in SVOD-only households, so why wouldn’t you [take advantage of] streaming capabilities to seed out your content and grow your audiences?”
La Liga, perhaps the Premier League’s biggest rival in soccer, has taken a different approach to DTC. Instead of risking the devaluation of its premium live rights, the league has established LaLigaSportsTV, a free non-soccer streaming service which carries coverage of smaller Spanish sports properties as a vehicle to gather consumer data using artificial intelligence (AI) and other mechanisms.
In France, the Professional Football League (LFP) is doing the same. It recently confirmed the launch this summer of an owned and operated streaming platform called MyLigue, which will test the waters initially by showing non-live content.
But it is the Bundesliga, German soccer’s top flight, that might be the most interesting DTC case to follow for the Premier League. With the launch of Bundesliga Pass ahead of the 2020/21 season, the German Football League (DFL) will take its own OTT service to markets where it does not secure satisfactory rights fees from local broadcasters, as well as territories where the league is looking to grow its brand.
For Robert Klein, the chief executive of Bundesliga International, the platform presents an opportunity to gain more fans in the burgeoning Asian market.
“From our research, there are over one billion football fans in the whole of Asia,” he says. “Within those, one fifth are Bundesliga fans. Now, we want to add fans and that’s what we’re looking for in this cycle; we are looking for partners who understand the value of the DFL.
“We do all of our TV productions, including our localised digital content, while the live component is also going to be significant. But it’s also about how you tell the story around the live [broadcast], particularly in time zones which are slightly different, as we have across Asia. You have to understand that and create concepts that can be appealing to fans and delivered at the right time.”
By leveraging user data and understanding individual consumer needs, Klein insists an owned and operated OTT service will grant the Bundesliga greater freedom to target audiences by region, while also supporting existing broadcast partners in territories where the DFL feels there is room to improve reach.
“The importance of OTT is that it gives you flexibility,” he continues. “It allows you to offer a different kind of content, even in territories where you already have good [media] partnerships. If you have the right partner in a country that’s distributing through their own network and giving a priority to Bundesliga that we want and expect, [Bundesliga Pass] is probably not so necessary.
“But that is why we have an OTT service ready to go. Depending on the conversations we have, we have that flexibility to offer a Bundesliga Pass, if necessary, or [just] to complement other services. We have a lot of content that is relevant and localised, and if we feel there is a need to push more content out there, we are able to do that.”
Robert Klein, CEO of Bundesliga International, believes a DTC service will give the German top-flight more flexibility
Rights holders ranging from the National Football League (NFL) and the National Basketball Association (NBA) to Formula One have all built their own OTT services to sit alongside existing broadcast partnerships. However, those properties do not compete in the crowded global soccer marketplace.
As soccer’s clear leader in generating overseas media rights revenues, the Premier League’s goals for discovery are also not going to be the same as those of the Bundesliga. The Premier League already has a significant and growing presence in Asia. In China, for example, the league grew its broadcast audience by six per cent last season. The league’s media rights deal with Suning-owned streaming service PPTV is worth US$700 million; when that was signed in 2016, it marked the Premier League’s largest overseas broadcast contract.
“What the Premier League did very well early on was to schedule its matches so that they appealed globally,” Modha explains. “Something as simple as having a 3pm kick-off meant that countries in Asia could watch it, as well as those in the US, and especially those on the east coast. So they have been able to reach a huge audience simply due to the timings of their matches.”
Being so well-established globally means that the decision of where to adopt a DTC model must be made on a case-by-case basis. When assessing options closer to home, however, there are other factors for the Premier League to consider.
Ampere Analysis claims that Amazon Prime Video’s December debut as a domestic Premier League media partner helped increase its UK audience reach by as much as a third. That suggests little more than British consumers were keen on getting free access to Premier League games and next-day product delivery around Christmas time by purchasing an Amazon Prime subscription. However, it could also indicate that there is considerable untapped interest domestically for a Premier League streaming platform.
OTT allows you to offer a different kind of content, even in territories where you already have good media partnerships.
Robert Klein, CEO, Bundesliga International
Steve Norris, who was head of commercial sports rights at BT Sport when the UK pay-TV broadcaster first got on board with the Premier League in 2012, says that the days of “all-out bidding wars” for media contracts are a thing of the past.
As broadcasters better understand the value of content to their subscribers, the battle for domestic Premier League rights, according to Norris, will continue to mellow. Now a director at Gravity Media, a London-based production studio, he insists that trend, coupled with cheaper production costs, suggests there could be a swing towards DTC in the future.
“In general, the trend in the UK [rights spend] is levelling off, if not going down,” he says. “Clearly, it’s a challenging market and the third and fourth-tier rights holders are thinking that they need to be a little bit more proactive in how they monetise their content.
“To a large extent, TV is becoming cheaper and technology is making it more accessible. You can still spend a fortune on production but actually, in terms of straightforward broadcasts, their costs are coming down, and direct-to-consumer is becoming easier.
“There is a great advantage when you go direct to the consumer. You get to keep all the user’s data and get to really understand your customer and what they perceive as value. From that perspective, to own that data is also a massive appeal for federations; it is going to make them a lot more commercially driven.
“They have to be more proactive to survive. The days when a [broadcaster] would wave a reasonable cheque in front of you, and your problems are set aside for three years, though that model still exists, I think it certainly is being challenged.”
Amazon Prime Video made its debut as a domestic broadcaster for the Premier League in December
While opting to circumvent the likes of Sky Sports, BT Sport and Amazon would be a radical move, further stagnation in domestic rights revenues could yet prompt the Premier League to launch its own OTT platform in the UK.
“When you look at the Premier League, you can’t rule anything out,” Norris expands. “They will do what’s right for the Premier League and for its clubs. The current model works very well for them, and particularly in the UK. Though they didn’t command the same numbers in their most recent rights tender, it is a unique property and has such global appeal.”
It appears, then, that a DTC play could be some way off for the Premier League. Given the league recently signed a six-year deal with the Nordic Entertainment Group (NENT) worth a reported UK£2 billion (US$2.59 billion) – a 20 per cent rise on the previous deal – for now it seems the threat alone of going DTC is enough to achieve growth in rights revenue, at least overseas.
Whether that threat remains credible in the long-term remains to be seen.
