A Match Made Online

2019 is set to be a ground-breaking year for sports broadcasting. Amazon Prime, the streaming division of the US commerce giant, have recently confirmed themselves as serious players by becoming the first online streaming service to secure a UK football broadcast deal. In the wake of producing acclaimed sports documentaries starring the likes of Manchester City, the All Blacks and the Arizona Cardinals, the June 2018 deal between the Premier League and the world’s second most valuable company indicates a potential end to the monopoly that Sky and BT Sport have established.

While the fee Amazon paid for their three-year, 20 games-a-season deal has not been disclosed, this initial move from a streaming service to enter UK sports broadcasting is one to be excited about. In the eleven years that have passed since Netflix released its on-demand streaming service the way in which consumers view and engage with content has been revolutionised. Both Amazon and Netflix now stand at the forefront of this industry and adding live sport to their repertoire was simply a matter of time.

Whether the move will have the same success as producing their own original content only time will tell. Whilst Netflix’s own foray into producing their own content was labelled as “the biggest gamble in its 14-year history,” back in 2011, it has since proved revolutionary. Now with the ability to spend in excess of £100 million on Netflix Originals such as The Crown, serious competitors to the established order in broadcasting have finally emerged.

What does this mean for the fans?

While competition amongst different platforms would typically suggest a price decline in order to establish a greater audience share, as witnessed in the past decade and beyond, this has not been always been the case. The ongoing battle between BT Sport and Sky for Premier League broadcast rights in the UK led to a 70% price inflation 2010 and 2013, culminating in a staggering £5.13 billion for the rights between 2013-18.

Despite the latest auction prices for the 2019-2022 broadcast packages falling to £4.46 billion (with the PL reportedly accepting “lowball bids” to encourage new competition), Sky still announced an increase to their sports subscription price in September. It is, however, not all bad news. Early 2019 will see the introduction of a landmark deal between BT Sport and Sky in which the two platforms have agreed to share each other’s respective sports offerings. Marc Allera, Chief Executive of BT Consumer, hinted that the presence of streaming services was a factor in this decision:

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“You look at the Facebooks, the Amazons, the Netflixs, the Googles, the Apples, they are putting bigger budgets into content. How you position yourself is very important.”

While Amazon has pledged that the games streamed on Prime will be available to all members at no additional cost (currently standing at £7.99 a month in the UK), it seems unlikely that this state of affairs will last as demonstrated by Sky and BT Sport choosing to reinvest profits into new projects rather than reducing prices.

Other examples:

While a first for football in the UK, this is not the streaming industry’s first move into live sports broadcasting. This year alone Amazon outbid Sky to win the rights for the US Open Tennis Championship in a deal worth a reported $40 million and paid a further $130 million in a deal with the NFL to screen matches on Thursday nights for the next two seasons.

Sky have, however, opted to test new waters in the form of the NBA. This year they secured the first multi-year deal (four years) to broadcast basketball’s premier league in the UK after BT Sport declined to bid. With London’s eight NBA games at the O2 Arena selling out in a matter of minutes and basketball being the third most played team sport amongst the 14 – 25 age group in England (behind just football and rugby) this could prove to be an astute move.

Facebook meanwhile won the rights to stream La Liga football on the Indian subcontinent in August this year, adding to a growing portfolio that includes both Major League Baseball and the World Surfing League. Traditional broadcasters breathed a sigh of relief when Peter Hutton, Facebook’s Head of Live Programming opened his key note speech at Leaders Week 2018 by announcing: “Facebook does not have an unlimited budget for sports rights.” However, even if this is the case Facebook retains an incredibly advantageous position over potential rivals due to their ability to gain far greater insight into their user’s data.

What’s next?

With JP Morgan predicting that Amazon will spend $4.5 billion this year on video content alone, the stage is set for an all-encompassing battle between streaming services and traditional broadcasters.

Alex Green, managing director for Amazon Channel Europe, astutely described the process as an “evolution of our service” … “TV behaviour is changing, and Amazon has been part of that change.”

While more stable (at least for the time being) in the UK, ‘cord cutting’ is rising at an unprecedented rate in the US, where cable and satellite providers lost 849,000 customers in Q2 of 2018, a 3.3% decrease. Surprisingly this figure is not as bad as analysts predicted and coupled with plummeting advertising revenue on traditional media platforms it’s hard to look past a digitally-dominated future. Many analysts argue that “sport is the missing ingredient”to online streaming services’ offering.

With the average UK consumer spending 24 hours a week online, being able to access the world’s most popular sports leagues via such means would appear to be a necessity as supposed to a preference. Although Sky have responded to this with an added emphasis on their Now TV service, whether it’s 40% growth last year to reach an estimated 1.5 million UK households is enough to compete with Netflix’s presence in 8.2 million could prove decisive.

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