An ancient Chinese proverb says: "When the wind of change blows, some people build walls, others build windmills." This feels apt given the excitement surrounding the tender for the 2019-2022 English Premier League broadcast rights currently taking place.
The rumour mill has been in overdrive with speculation that over-the-top platforms and other non-traditional players are going to enter the market and secure rights with monster bids.
To be clear from the outset, we are not claiming to have any inside knowledge of who is going to triumph in the bidding process and what prices they will pay but we do believe the stage is set for change and that if it does come it could revolutionise the world of football marketing.
The key things to know about the tender process
The tender is live in the market with bids submitted and the first winners expected to be announced from February, starting with the domestic UK rights.
The number of matches available to broadcasters has increased. Some 200 out of 380 will be available, 42 more than now.
Of these 200 matches, no single buyer will be allowed to purchase more than 148 matches.
Buyers can bid across seven packages, the most notable change from the current situation being that the Premier League has green lit all matches to be broadcast live on one bank holiday and one midweek round of fixtures.
Why do we think the stage is set for new players to enter the market?
Well firstly, the Premier League's chief executive, Richard Scudamore, said as much in an interview with the Times in November 2017: "We envisage anybody really being able to come along and bid for those rights." He went on to say that distribution criteria needed to be met but his words were clear, the door is open. Of course, it is in his interest to provoke competition but alongside his words, there are actions which clearly point towards a deliberate strategy to entice new players.
The availability of more matches than ever before and the tweaking of packages creates room for new players on top of the current incumbents, Sky and BT.
And in particular, the opportunity to simultaneously broadcast two full rounds of matches is appealing to platforms such as Amazon, Facebook and Google whose businesses have been built, in part, on tailoring content to their user’s preferences. That said, it also works for broadcaster apps, such as Sky Go.
The 2016-19 rights sold for £5.14bn domestically and a further £3bn internationally. The Premier League has stated that it is seeking an increase to maintain its status as the richest league in the world and satisfy the demands of its member clubs. For the domestic incumbents, this must be getting harder and harder to justify. Indeed, many commentators believe the price has reached a tipping point for the traditional players.
To that end, Sky and BT recently announced a content sharing agreement, suggesting they will no longer force the price up via blind bidding. Additionally, we are seeing falling linear audiences – average viewing for Sky’s live sport TV channels fell 14% over the course of the 2016/17 Premier League season (Nielsen). This doesn’t take into account viewing on other platforms such as its Sky Go app but it is a worrying trend – especially when some, including analysts at Citi, believe Sky may have to pay 45% more to retain its current level of rights. It simply doesn’t add up.
Do OTT and other platforms have the appetite for the rights?
A quick look at recent history and the answer has to be, yes. Twitter, Amazon, Facebook, Google and DAZN (Perform Group) have all bought or began to broadcast major sports in some way of late and this trend is set to continue. Spain's La Liga has a deal with Facebook for live streaming, Amazon has partnered with Manchester City to create a documentary series and Netflix is rumoured to have contacted a number of clubs on the same topic.
With all of these platforms seeking to secure new customers or keep and more personally engage with existing ones, football content is high on the agenda. We certainly believe the time is upon us.
So what if it does happen?
It will create a huge amount of change and opportunity in the market. Here's our top five.
1. It is likely to change the media rights paradigm
We are likely to see many other rights go in this direction. As competition for customers increases so will the competition for the best content. It is unlikely that one platform will be able to buy the rights to major sports globally and the sports bodies themselves will not want this so the opportunities to secure content will be vast. We’ve already started to see it, for example, Amazon purchasing NFL Thursday night rights, replacing the incumbent – Twitter.
2. It should work
We know that fans, particularly young fans, are less and less “willing” to dip into their pockets for pay-TV services (12-24% of 18-24 year olds). The opportunity for more flexibility will undoubtedly appeal to a core group of digital native fans and grow audiences.
3. It will revolutionise the way fans consume football
The current model of one-way communication is likely to completely reverse. Platforms such as Copa90, Ball Street and Football Daily have shown that fan interaction is absolutely crucial to on-going and deeper fan engagement. It is likely therefore that fans will play a much more active role within their consumption of content (e.g. comments, voting, betting, live fantasy).
4. There will be significant opportunities for brands
These platforms come with great one-to-one marketing opportunities. They own a lot of data on their customers which can enable brands to be a lot more efficient in the way they target audiences. If you then tie in their wider eco-systems of profile matching customer and audience data, there are significant e-commerce opportunities to be leveraged.
5. This is a potential threat to traditional sponsorship
With the above in mind, it may be more attractive for a brand to be a “sponsor” of the OTT platform than the sport itself. The exposure, in broadcast integration plus direct sales opportunities is, for certain brands, potentially more compelling than the traditional slate of “official” sponsorship rights on offer. From an event owner’s perspective, protecting their IP and preventing brand ambush will be even more vital in a brand-savvy OTT world.
In 1992 BSkyB shocked the UK media market by snatching the live rights to the Premier League from ITV. In 2012 the market entry of BT Sport turbo-charged Premier League revenues. Could 2017 be the third game-changing moment in the roller-coaster life of English Premier League football?
Stephen Hutchison is deputy managing director at Fuse