Feature

Sky no longer the limit for sports rights as digital players make their presence felt

25 years after Sky showed its first Premier League football match and kicked off a television revolution that would change the face and fortunes of British sport beyond recognition, a new era of broadcasting is underway that has the potential to radically transform how we watch sport once again.

Just as the 1990s had its satellite dishes, today’s sports shake-up is also being fuelled by technology. But this time it’s Silicon Valley platforms Facebook, Amazon Prime Video, Twitter, YouTube and Snapchat, along with a new breed of ambitious digital publishers like Goal.com, Dugout and Copa90, that are challenging traditional television broadcasters for sports rights. And what’s more, these new players are starting to win.

Yesterday it was revealed that Amazon had paid about £10m to lure the UK rights to the ATP World Tour from Sky, meaning practically all elite men’s tennis other than the four grand slam tournaments will now only be available live on Prime Video. The deal represents Amazon’s second major raid for sports rights in four months after paying in the region of $50m to stream the NFL’s 10 Thursday night games this coming season, a contract it is taking over – sign of the times – from Twitter.

The ATP news came just hours after the Professional Golfers’ Association confirmed it had struck deals with Twitter, and Facebook-focused publisher GiveMeSport, to broadcast next week’s US PGA Championship online. They will share live coverage of the tournament with the BBC, which unexpectedly reversed its own drain of sport to Sky by clawing the UK TV rights from its satellite rival last month. “By delivering this season’s final major to fans of all ages across BBC, Facebook and Twitter, we hope to serve the core golf audience and invite new fans to enjoy major championship golf across the platforms they frequent,” said the PGA’s chief executive, Pete Bevacqua.

Rights holders score digital deals

These are only the latest in a slew of digital broadcast agreements that have been put in place since the European soccer season culminated with the showpiece Champions League final being played out on YouTube for free in the UK in May.

The English Football League has launched its own streaming service for overseas fans, enabling them to watch all their team’s league matches live this season for £110. Online publisher Dugout announced today that it will show Scottish Football League action. Formula One has inked a highlights deal with Snapchat and its chief executive, Chase Carey, has dropped heavy hints that an owned streaming service is on the way. Even Copa90, which launched five years ago as a YouTube football channel with no rights but has reached 80m views a month across a breadth of digital platforms regardless, is about to start broadcasting games.

David Beckham shoots a scene with Copa90

James Kirkham, who heads up Copa90, is convinced we’re on the cusp of significant disruption for the traditional sports rights model. “I have a feeling this is going to be a mad 12 months in terms of what you’re seeing, who’s showing what and different formats,” he says. “All these bits are early sighters of what’s increasingly going to happen. It’s up for grabs.”

Copa90 will dip its toes into live action by showing friendly fixtures and leftfield European league matches, but the most sought-after sports rights in the UK are for the Premier League, which owes its status as the richest league in the world to exorbitant broadcast deals. At the last rights auction in 2015, Sky paid £4.2bn to show 126 live Premier League matches a season from 2016 to 2019 and BT paid £960m for a batch of 42 games a season – a 70% increase on the previous agreements. But while the value of the rights has risen to new heights, TV audiences have fallen.

Average viewing figures for Sky’s live channels fell 14% to a seven-year low over the course of the 2016/17 Premier League season, while BT’s coverage suffered a 2% drop. There were mitigating factors, such as clubs with smaller fanbases like Burnley and Hull taking the place of those like Newcastle United and Aston Villa who would command bigger audiences. There are also more games being shown – perhaps too many. But there was another trend at play that would seem to point to where sports broadcasting is heading.

A changing TV landscape

While Sky’s TV audiences declined, it saw a 31% increase in viewing through its Sky Go streaming services, which allows subscribers to watch on mobiles, tablets and computers. It has also made its sports channels available online without subscription for a day rate of £6.99 through its own over the top (OTT) service, Now TV. “As we anticipated, the way customers engage with live sport is changing – with strong growth in newer, digital-first platforms – though linear viewing remains important for those big moments that matter,” a Sky spokesperson said when the figures were published. They did not respond to an interview request for this piece.

Joel Seymour-Hyde, the senior vice president of sports and entertainment agency Octagon, says the shift in viewing habits does not equate to a doomsday scenario for Sky. “When you talk specifically about Sky, and its future, the misnomer is probably getting too set on the screen as such, trying to debate TV vs digital vs any other platform,” he says. “What’s important, ultimately, is who owns the rights. The channels by which they choose to distribute those rights will change.”

Sky is responding to this new media landscape by preparing to make its full television service available through the internet for those who can’t – or won’t – affix a satellite dish to the side of their home, and it has drawn up plans to create 300 new tech roles to keep pace with Amazon et al. It has also radically revamped its sports channel line-up and subscription options to something more akin to a Netflix model. Sky Sports 1, 2, 3, 4 and 5 were recently scrapped and replaced by channels dedicated to specific sports. This change also entailed the introduction of a number of new subscription packages, some of which are two-thirds cheaper than current offerings.

The challenge it is up against is not technology, but technology companies. “Sky’s biggest threat is an over the top provider buying up the rights it has, not necessarily the changing viewing habits of the audience, because if Sky has the content, it will find the ways to reach those audiences,” says Seymour-Hyde. “It’s more a question of – what will the rights holder do with their rights come to the next cycle?”

We'll find out when the Premier League puts its rights out to auction once more next year, and the likes of Amazon, Twitter and YouTube are tipped to be among the bidders. Whether they are in the mix for the most lucrative television packages, or the Premier League instead carves out a specific digital bundle in the style of the NFL’s Thursday night games, remains to be seen. “Google and YouTube and Yahoo and those guys, they just won’t be interested in bidding on that traditional package and taking on Sky at their own game,” says Carsten Thode, chief strategy officer at Synergy. “The whole model will change significantly.”

Framed like this, it is hard to disagree with Thode’s argument: why would Facebook pay billions, or at least millions, to show live content when the publishers who occupy its platform will foot the bill on its behalf?

For publishers, the appeal of sports rights is obvious. Take Goal.com, which garnered 482,000 views yesterday – according to Facebook’s own metrics – for a live friendly between St Pauli of the German second division and Stoke City. This is not, on the face of it, a glamour tie, but if Facebook’s figures are to be believed, the match commanded an audience not dissimilar to those for a mid-table Premier League clash on Sky Sports.

Leeds-based Goal has a 50 million-plus Facebook following across its various international pages, which include Arabia, Americas and Thailand editions, and though it is experimenting with live action, it has enjoyed most of its success so far with short clips from France’s Ligue 1 and the booming Chinese Super League. “Everyone in the industry has got an eye on how Facebook monetisation of video develops,” says Goal’s head of audience, Sam Brown. “It’s practice for that.”

While an English football fan is unlikely to have much enthusiasm for 90 minutes of Angers vs Troyes, they will watch highlights of Monaco’s Kylian Mbappe, one of the most coveted and exciting prospects in world football, or former Chelsea playmaker Oscar as he adapts to the new surrounds of Shanghai SIPG. “It’s not always just about the biggest and best players and best goals,” says Brown. Proving that point, Goal’s best performing video from China was a 48-second clip of the former Premier League journeyman Demba Ba breaking his leg. The footage – in all its slow-motion, broadcast quality gore – racked up 5m views.

90 seconds vs 90 minutes

To test its theory about what audiences are looking for, Goal will stream the European Freestyle Football Championships from Manchester on 3 September. The competition will be akin to a rap battle, with players taking it in turns to demonstrate their array of ball juggling tricks, and while the stream will last a few hours, Goal’s marketer Paul Rayment expects viewers to dip in and out. “It’s a way to bring live football to a Goal audience but still do it in a snackable, digestable way that fits Facebook,” he says.

This is symbolic of how sports rights holders are having to think in a 90-second mindset now as much as a 90-minute one. And what viewers – particularly those of a younger demographic – expect from the broadcast is changing drastically, according to Marcello Fabiano, managing director of SPORF, the youth sport arm of Social Chain. “[It's] how can I share this experience with my friends? How can I share my opinions in real time? How can I see what the most influential people to me are saying about this broadcast in real time? And so on. Traditional media seems to be very slow to understand this behaviour and comfort these needs, especially when being trapped in large broadcast deals signed a period ago.”

One of the rights holders experimenting with new ways to reach its audiences is Wimbledon, which amplified the live television coverage of this summer’s event with its own digital television station – The Wimbledon Channel – broadcasting highlights, behind the scenes footage and magazine programmes on Facebook, Twitter and YouTube.

Alexandra Willis, head of digital for the tournament, tells The Drum viewing figures were in the region of 150-200,000 for its breakfast show on Facebook and closer to 500,000 for its evening wrap-up, Wimblewatch Live. She is impressed by the digital platforms’ reach, and admits that “being surrounded by Grand Tour stuff every time you order an Amazon package proves what they can do when they activate their channels”, but she won’t be trading in the BBC just yet.

“Streaming numbers – whether that’s via digital, OTT – are up across the board [but] in the broadcast sense that still represents a fraction of the linear audience,” she says. Case in point: Rafael Nadal’s 66-game epic with Gilles Muller was the most popular live match on the BBC Sport website and iPlayer this year, with 1.4m stream requests. But that pales in comparison to the 7.4m UK TV viewers who tuned in for the semi-final between Johanna Konta and Simona Halep, the highest Wimbledon women's audience on record.

Willis likens the digital fragmentation we’re seeing now to the birth of pay TV, and the temptations for rights holders are similar. The England and Wales Cricket Board, that other quintessentially British summer sporting body, was lured to Sky just as the sport was reaching the peak of its modern-day popularity in the wake of the 2005 Ashes triumph, broadcast in its entirety on Channel 4. A £280m deal with Sky proved too alluring to resist, but while revenues went up considerably, viewing figures went down and concerns were raised about participation levels. To combat this problem, the ECB’s new broadcasting deal, signed in June, includes a provision for some matches to be shown on the BBC. It is also investing significantly in its digital operation to find younger fans.

Reach vs revenue

Willis says pay TV created a “trade-off between finances and audience size”, and sports rights holders are now faced with the same dilemma once more. “I guess we have to do the same thing when thinking about audience size, the right audience and what that means in terms of exposure,” she says. “Snapchat is a good example where the live stories are amazing and they’re definitely taking us to a different audience, but there are so many live stories now, so how will we know that we’re standing out? It’s a watching brief I think for everybody.”

For now, Steve Martin, chief executive of M&C Saatchi Sport & Entertainment, advises rights holders to keep their options open. “The golden rule as far as I’m concerned is don’t put all your eggs in one basket,” he says. “If I’m sitting there as the central owner of rights I would be thinking, how can I connect to multiple audiences through multiple platforms and multiple screens? Albeit now, money talks.”

‘Twas ever thus. After blowing ITV out of the water with a £191m bid to secure the first Premier League rights in 1992, anchor Richard Keys introduced viewers to its opening programme with the greeting: “Weekends will never be the same again. It’s a whole new ball game for all of us. And remember – this is the only place you’ll see live Premier League football.” 25 years after thoroughly disrupting the television landscape, Sky is learning the lesson that other broadcasters had to – it can’t have it all any more. A whole new ball game awaits.

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Cameron Clarke

Cameron Clarke is The Drum's Deputy Editor, and has covered the marketing industry for the title for a decade. Based in the UK, he is now primarily responsible for commissioning and editing The Drum's opinion coverage. He also writes features about brands with unorthodox approaches to media and marketing, such as Brewdog, Patagonia and De Correspondent.

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