Trials of a new 'Over The Top' (OTT) service that cuts out traditional broadcasters could start as early as 2022, in select test markets overseas. If successful, it could revolutionise the way football is consumed.
@TifoFootball_: If 200m people sign up to a £10 a month deal, that £3bn a year in TV broadcasting income for the Premier League becomes £24bn.@sportingintel & Craig Silcock on why the Premier League should start its own OTT streaming service:https://youtu.be/u5jqCh3Eiq0 #WhiteboardFootball
According to Richard Masters, who is the new chief executive said that Premier League will eventually sell matches on a Netflix-style channel.
Masters confirmed that the Premier League had considered launching its own digital service – streaming live games and other content directly – in some countries during the TV bidding process for the 2019-22 seasons.
He confirmed such an option – which would allow the Premier League to charge directly for a “Premflix”channel rather than sell the rights to TV companies – was on the table for the 2022-25 seasons.
According to him, “during the last process we spent quite a lot of time and invested a lot of recourse in building out our expertise and capacity in ‘direct consumer,”
“We considered whether it would be the right time to test a few markets and decided not to. But we are going to continue for the planning phase in the next commercial term to build out those capabilities.” He added: “We were ready last time and we will be ready next time should the opportunity arise.”
The Premier League makes £3.1bn a year from TV rights, of which £1.4bn comes from foreign buyers. However, launching its own streaming service in some territories could lead to substantial rises in revenue. In Singapore, Singtel pays £70m a season to the Premier League, yet it makes £175m a year from subscribers who pay around £35 a month for live games. If the Premier League kept these TV rights for itself it could potentially make another £100m in Singapore alone.
The chances of a “Premflix” channel happening in England, where Sky Sports has around six million subscribers and BT Sport close to two million, are slim. But Masters suggested a two-tiered system – with some countries watching games shown by existing TV broadcasters and others streamed directly by the Premier League – was inevitable. “I’m not saying it will happen in the next cycle or when it will happen but eventually the Premier League will move to a mix of direct consumer and media rights sales,” he said. “It is impossible to say when that will be.”
Masters was also bullish about the Premier League maintaining its global popularity despite a recent fall in the value of domestic TV rights. On Thursday, the Premier League announced a massive £2bn deal with NENT for the rights for Norway, Denmark, Sweden and Finland from 2022-28 – an increase of more than 20% a year – and Masters insisted the Premier League was in robust health. “We have every reason to be optimistic about the future of sports rights. I don’t think the bubble has burst because our business is effectively hedged between domestic performance and international performance.”
Another problem facing Masters is how many foreigners Premier League clubs will be allowed in their 25-man squads after Brexit. Clubs are permitted to have 17 non-homegrown players but the Football Association wants this reduced to 13. Masters believes that anything less than 16 foreigners could damage the league’s standing, as well as the competitiveness of English clubs in Europe.
“If you did have a quota system that was vastly different from Europe, you would put our top clubs at a big disadvantage,” he said. “I think the average number of foreign players that the most likely winners of the Champions League have is 16. So, if our clubs were lower than that, it would be a disadvantage to them.”
Masters struck a conciliatory note, too, saying he felt the FA’s aim to have 35% England qualified players as starters was a “defensible objective”‚ before adding: “We’re not far away from it.” However, he insisted that the view of the Premier League and its clubs was that the existing system was working. “It is delivering a good cohort of talented young England players. And England are fourth in the world.
“I’m old enough to remember when England struggled to qualify for World Cups and European Championships and now they barely lose a game. We don’t want to take any risks with the Premier League because it is phenomenally successful.”
Masters also warned the Carabao Cup would suffer if Uefa and the European Clubs’ Association agree a deal to expand the Champions League by four games. “There isn’t enough space,” he said. “It’s not an absolute that if somehow the shape of the European competitions changes the Carabao Cup is terminally damaged. There are some clever fixture people out there that may be able to slot the thing together. But it would fundamentally alter its trajectory.”
More watch free-to-air. And the League earns just over £3bn per year from all broadcast rights, with £1.665bn from domestic rights (Sky, BT, Amazon, the BBC for MOTD) and £1.4bn from all foreign rights.
Purely for illustrative purposes, imagine all the 200 million global households paid £10 a month for PremFlix instead of generally much larger fees they are paying now to whoever their 'legacy' broadcaster is. The League's current £3bn per year earnings become £24bn a year.
It goes without saying there are caveats, lots of them. The price point would differ in different markets. It might be a few pounds in places and considerably more than £10 in others.
A truly global and successful PremFlix would need to be not just one channel but dozens, in different languages and catering to local, familiar tastes in presenters, pundits and commentators.
Arguably the biggest hurdle is the League would need to transform from being merely the organiser of 380 football matches per season into a global broadcasting Goliath.
It would need to build and maintain a complex tech platform that can smoothly serve a whole planet without glitches. It would need to deal directly with hundreds of millions of customers in hugely diverse continents, languages and cultures.
This will not happen swiftly and not at all without the League taking some big risks.
The League's current way of selling rights is simple and easy: broadcasters pay large sums for rights and take on all the hard work of marketing them, selling them and making sure they work for their viewers. The League banks the money and this is known as a 'secure funding' model.
A PremFlix set-up by contrast is a direct-to-consumer model (or D2C), with no guarantees — once you have built your infrastructure and customer services department and sales team and so on — that you will attract enough customers to break even, let alone make vast profits.
'There is risk associated with it,' Masters says of PremFlix. 'The Premier League has been successful by seeking partnerships with established broadcasters and having secure funding as its model, as opposed to direct consumer revenue, which is an entirely different strategy. The transition from one to the other if and when it ever happens would be a big moment.'
So what next? Possible OTT trials in locations still being considered.
Masters speaks of working with 'internal and external expertise and investment' as the League plots a course.
The PremFlix story is only just beginning. In this rapidly evolving era, everything is up for grabs.
(With the Guardian and Daily Mail)
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