Analyst: Web giants eyeing global EPL rights

According to Paolo Pescatore, VP, Multiplay & Media, at analyst firm CCS Insight, although web players such as Facebook, Amazon and Twitter have been active and successful in securing a range of live sports coverage rights, they are more likely to be successful in acquiring overseas streaming rights than displacing current incumbents Sky and BT Sport in forthcoming rights upcoming auction for Premier League football matches.

Negotiations are set to launch later in 2017 and end around February 2018, and the rights to football matches will be valid for three years from the 2019 season.

Pescatore notes that in August 2017, Amazon outbid Sky for the TV rights to live ATP tennis matches A month later, Facebook was unsuccessful in securing IPL cricket rights, but did win a multi-year programming deal to distribute official NFL video content. Twitter has also been steadily increasing its presence in live sports. Others are taking a different approach. For example, Perform Group, which operates the DAZN brand, has won rights in numerous countries and positions itself as the Netflix of sports content.

“These efforts clearly point to a growing interest among Internet companies to launch live sports platforms,” advises Pescatore. “But this is unsurprising. Sports is one of the few genres still driving live TV viewership on all devices. However, Web providers are not known for this type of content. They’ll need to raise awareness among consumers and sway them to sign up to another service,” he suggests.

According to Pescatore, the pricing strategies of Internet companies will differ from those adopted by traditional broadcasters. Amazon seems adamant to lure users to its Prime subscription service, with Facebook, at least for now, seeming keen to take a significant share of the TV advertising revenue, as Google has done.

“I believe the Premier League would be very concerned about making its crown jewels available to users for free on an ad-funded basis. Although this is a great opportunity to extend its reach and build its audience, it does devalue the asset somewhat,” he says.

Another aspect to consider, according to Pescatore, is whether Internet players really want to move into live sports production. “In my view, this isn’t the case. It’s an area that needs significant resources and investment. Both BT Sport and Sky Sports have done a great job. As an example, the deal Amazon signed for ATP tennis rights means the company will only distribute the live feed produced by ATP Media to its customers online,” he notes.

“The upcoming auction will force bidders to pay top dollar. And that’s just for the UK rights, as the international broadcasting rights are sold by territory. In 2015, Sky spent £4.2 billion to show 126 matches per season, while BT Sport paid £960 million for 42 live games. The overseas rights sold for about £3.5 billion. To put this into context, Amazon will pay £10 million a year to show ATP tennis and Sky spends £11 million per Premier League match,” he advises.

“Despite growing interest from tech players in this space, I doubt they will be successful in dethroning BT Sport and Sky Sports (under the current format). In my opinion, they will be much keener on securing the rights to stream matches online globally. For this to happen, rights packages need to change, and the Premier League will not want to dent its existing revenue. The value of the rights auction has grown significantly: in 2014 the process generated £1 billion,” he advises.

According to Pescatore. the most intriguing aspect of the upcoming bidding battle is what happens to the existing rights holders. At the previous auction, BT Sport paid more for matches shown on Saturday nights, effectively swapping the lunch-time game with Sky, and this led to a rise in viewers. Now, the popularity of illegal online streams means there’s growing demand to air Saturday games at 3 PM.

“Over time, BT Sport has taken the fight to Sky Sports. The big question now is whether it can outplay the latter by securing a ‘Super Sunday’ game. It would need to invest more money, which may be an unlikely scenario, having been hit by a number of scandals over the past year and its daunting pension deficit,” he notes.

According to Pescatore, one thing is clear: costs will rise massively. “Consumers will be forced to pay more and this could lead to a tipping point. They will also not want to subscribe to a slew of services to be able to watch a range of sports. In my view, fragmentation in the media market and growing customer frustration will spur a consumer backlash. Rights owners need to tread carefully,” he warns.

“The online players are entering the fray and have growing aspirations to strengthen their video offerings. Sports content will play a major role in their strategies. I expect to see more Web providers enter future auctions for sports rights, be that in the UK or overseas,” he concludes.

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