Beyond the short-term impact of the COVID crisis, the value of football rights in Europe is heading down.
Lower competitive intensity in the broadcasting market is the main reason, and looks unlikely to be reversed.
The leagues must consider long-term initiatives to broaden demand—cash fixes risk worsening their structural problems.
With a lack of live sport, the lockdown weighed on incumbent pay-TV platforms’ subscriptions. SVOD providers leveraged their cheap positioning—Netflix and Amazon Prime Video now rank above other subscription services in Europe, and Disney+ had a successful launch.
Incumbents—Sky, Canal+, Movistar+—all pursue a twin-track strategy. They are positioning themselves as gatekeepers thanks to service bundles, while redirecting resources away from sports towards original series.
European productions are increasingly garnering audiences outside of their home markets, regardless of the production language. Netflix is a major conduit for European exports, due to personalisation of the interface and high-quality dubbing.
Investors warmly welcomed WMG's IPO of non-voting shares in March, valuing the company at $12.8bn, a 388% increase in the company's valuation since Len Blavatnik acquired it in 2011
Investors are placing a bet on music streaming. WMG's strength in the US market due to R&B and Hip-hop in its catalogue allowed it to outperform UMG and Sony on recorded music over 2015-19, an advantage that will dissipate when growth shifts to emerging markets
COVID-19 impacts explains WMG’s 6% decline in recorded music revenues for calendar Q2 2020, despite an 8% rise in digital revenue, as revenues from physical sales (vinyl and CD) sank, and also those from artist services due to the halted 2020 live music season
The UK lockdown since mid March has boosted TV time to levels not seen since 2014, with broadcast TV and online video each growing by nearly 40
minutes/person/day
While trends vary significantly by demographic, news consumption has been a common catalyst for linear TV’s growth, benefitting the BBC above all. Although Sky News has also flourished, Sky’s portfolio has been seriously impacted by the lack of live sport
2019 extended many of the long running trends of the last decade, but, notably, online video’s growth rate appeared to slow among youngsters, in contrast to older demographics. 35-54 year olds watching more VOD will have significant implications for linear broadcasters down the line
In a likely scenario, the suspended football season could be concluded in empty stadiums in a June and July rush, nevertheless with severe financial consequences.
Pay-TV incumbents like Sky face limited risk—at worst they lose four months of subscription revenue for games already paid for. No-contract services such as DAZN must anticipate a more severe shock.
To limit disruption, pain will have to be shared across the supply-chain with players’ pay first in line. But fast coordination in a continent-wide, multi-layered industry is challenging; in places, the issue may turn political.
Amazon aired its first set of Premier League matches in December, with proxy figures supporting reports that it attracted up to 2 million concurrent viewers
Amazon Prime penetration soared in Q4, backing up Amazon’s claims that record numbers of new members signed up on the first two days of its football coverage—an encouraging sign at the time of year when ecommerce spend peaks
As long as Amazon remains principally an online retailer, bidding for premium packages of Premier League rights cannot be justified. In fact, it could retrench from Premier League football altogether after wringing out the value over three seasons
Free-to-air broadcasters, pay-TV operators and OTT services all have a role to play in serving sports audiences.
DTC services will enable sports organisations to engage with and learn about fans.
The industry needs to continue adapting to younger generations’ viewing preferences, particularly if it is to have a chance of combatting piracy.
The Government appears set on reducing the scale and scope of the BBC by dismantling the licence fee, and in its place pushing for subscription or making payment voluntary, without any evidence of the likely impact.
DTT – the UK’s largest TV platform – has no conditional access capability, and so implementation would require another costly and long-term switchover.
A voluntary licence fee would inevitably lead to a huge reduction in income. If just those on income-related benefits were not to pay, the shortfall would be over £500 million – in addition to the £250 million the BBC will be funding for over-75s receiving Pension Credit.
Drawn by its rapid growth and enviably youthful audience profile, incumbent broadcasters are paying increased attention to esports and its followers
Viewership of esports on UK broadcasters’ linear channels is low, with consumption on their online platforms likely the same. The market’s fragmented nature and global audience, along with the dominance of Twitch—and to a lesser extent YouTube—makes this unlikely to change
Broadcasters’ low-cost approach has primarily benefited competition organisers and games publishers. For broadcasters to create real revenues, massive upfront investment would be needed, with the risk of failure high
There has been no shortage of attention paid to declining TV viewing over recent years, but much of it focuses on overall viewing time rather than advertising delivery.
This is to overlook the engine driving most of the UK’s television industry. Commercial impact delivery has held up well relative to overall viewing, and is strong for certain key demographics.
Nonetheless there are generational and behavioural changes afoot which are exerting downward pressures on impacts, especially for younger audiences. An archipelago of Love Islands is needed (Stranger Things have happened).