FAANG causes sports rights inflation
January 23, 2018
By Chris Forrester
The cash-rich technology giants of Facebook, Amazon, Apple, Netflix and Google (FAANG) could put “tremendous pressure” on traditional TV, pay-TV and cable operators in the race for exclusive content, says a note to investors from investment bank Exane/BNP-Paribas.
The news that Facebook has hired away Eurosport CEO Peter Hutton, and that he will join Facebook immediately after the upcoming Winter Games, suggests to analysts at the bank that Facebook is ramping up its efforts to win TV viewers to its “Watch” service. It is already known that Facebook plans to invest $1 billion in original content.
But $1 billion is just small change to the likes of Amazon and Netflix, and while Netflix is on record as saying that Sport is not a high priority, the market certainly has the jitters.
The bank says: “We believe that that content rights – be it premium sports or exclusive entertainment content such as Hollywood movies and TV shows – will continue to appreciate. This puts pressure on broadcaster’s bottom line at the same time as they lose viewership market share with consumers accessing content on OTT services like Netflix. All this only adds to the continuing pressure we see on the traditional broadcasters.”
“Netflix’s and Amazon’s growth and cost advantage create a virtuous circle that will see content budgets rise further, in turn fuelling future growth. For FTA broadcasters the equation works in reverse: declining traditional TV viewing hours will put pressure on ad revenues and constrain future content investment. Local and own-language content provide some protection, but Netflix and Amazon are rapidly increasing local language investment, with potentially a lot more to come,” adds the bank.