The German football league has suspended its media rights auction after protests by DAZN over the award of the top package.
DAZN surprised the market by aiming to become the Bundesliga’s primary broadcaster.
The situation in Germany reveals the contradictory impulses weighing on leagues at rights auctions.
The German football league’s rights tender for its 2025-29 cycle is designed to create competitive tension between Sky and DAZN.
Based on precedents and public statements, we would expect Sky to increase coverage and DAZN to scale it down without a head-on bidding battle.
With low international potential, the Bundesliga can only count on its deep fan base to meet competitive pressure from the Premier League.
IFPI reports trade revenues from streaming rose 10% in 2023 to reach $19.3 billion, and we estimate Spotify contributed about $7 billion. Spotify also rewarded music publishers with about $2 billion in royalties.
Spotify’s Loud & Clear data on royalties paid to the 225,000 professional and aspiring artists served to its 600 million users reveals a bulge in the middle part of the distribution in favour of Spanish language artists as the service expands in Latin America.
The top 1,000 earners are mainly artists at the top of the charts in the US and UK markets, which together contribute half of Spotify’s revenues and thus royalties. Top earner and top all-time streamed artist Taylor Swift earned over $100 million in 2023.
Public service broadcasters are in a position to plan for the long term with commercial licences renewed for ten years, an updated prominence regime via the Media Bill and a government broadly supportive of the BBC.
With the Premier League and EFL rights secure to the end of the decade, Sky can plan for the future from a position of strength.
Relationships between Sky and the PSBs have improved markedly recently, and as all can now plan for the long-term, this should provide further opportunities to cement relationships for the benefit of the broadcasting ecosystem and viewers.
With pay-TV competition faltering, UEFA is aiming to stimulate demand for 2021-24 TV rights with early auctions, a possible relaunch of FTA broadcasts, and even, unrealistically, by considering an online service of its own
In the recently completed UK auction, facing no major threat from Sky, BT kept the rights at an almost flat price – probably missing a cost saving opportunity
In the upcoming auctions on the Continent, with former buyers such as SFR, Mediaset and Vodafone having cut back on premium sports, the major platforms’ bids will probably be unchallenged
Spotify is investing heavily in podcasting through acquisitions, original content and product innovation
It is under pressure to reduce dependence on record labels, whose power makes generating large profit margins difficult. Podcasts promise a non-music content genre where Spotify can capture more value
Secondary benefits abound: Spotify can take an active and lucrative role in modernising online audio advertising, it can solve the podcast discovery problem, and engagement across more forms of audio will improve retention
Ofcom’s recommendations to Government suggest updating EPG prominence legislation to cover connected TVs, and were warmly welcomed by the PSBs
Balancing various commercial, PSB and consumer interests will be key; determining what content qualifies for prominence will be a particularly thorny issue to resolve
Extending prominence to smart TVs and streaming sticks is critical, but implementation will be challenging
Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends.
However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive.
Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years.
Addressable linear TV advertising, where precision-targeted ads overlay default linear ads, could enhance the TV proposition for advertisers, agencies and viewers, benefiting all broadcasters
In the context of dwindling linear viewing and rocketing online video ad spends, the adoption of Sky AdSmart and similar services on YouView and Freeview could take addressable TV ads from a sideshow to a pillar of revenue
Addressable linear is a bigger and more strategic prize for broadcasters than BVOD ads. Sky holds the key to wider adoption of its AdSmart platform if it can find a way – or a price – to bring ITV Sales and/or 4 Sales on board
Across the EU4, pay-TV is proving resilient in the face of fast growing Netflix (with Amazon trailing), confirming the catalysts of cord-cutting in the US are not present on this side of the Atlantic. Domestic SVOD has little traction so far.
France's pay-TV market seems likely to see consolidation. Meanwhile, Germany's OTT sector is ebullient, with incumbents bringing an array of new or enhanced offers to market.
Italy has been left with a sole major pay-TV platform—Sky—following Mediaset's withdrawal, while Spain's providers, by and large, are enjoying continued growth in subscriptions driven by converged bundles and discounts.