Industry heavyweights: Big moves by Amazon, Facebook and others ‘two or three years away’
By Martin Ross
A hefty investment in sports rights by the major USA-based technology and social media giants is on the way, but is unlikely to take effect for another two or three years, according to leading figures in the industry.
Recent moves by the likes of Amazon, Twitter and Facebook, coupled with Eurosport chief executive Peter Hutton’s impending switch to spearhead Facebook's sports broadcast activities, have added weight to the notion that some premium rights could soon be snapped up by the online powerhouses.
However, executives speaking at the recent Spobis conference in Düsseldorf predicted that the market will not experience a seismic shift just yet.
Jochen Lösch, former chief executive at the MP & Silva agency, said: “This offensive will definitely come. The question is when.
“My feeling is that it might take until 2021 when the big domestic rights hit the market in the US, and that one of them will go for them.”
Lösch referenced Facebook’s recent $610-million bid for digital rights to cricket’s Indian Premier League and streaming of games from Mexico’s Liga MX and North America’s MLS, along with Amazon’s swoop for ATP tennis rights in the UK and its $50-million agreement for a package of NFL rights, as evidence of the online behemoths’ ambitions.
He noted: “You have to keep in mind how much money they have. You can’t compare it to the normal pay-TV providers. Everyone says in England the [Premier League] domestic rights costs are very high given the battle between Sky and BT. Amazon creates five times as much in revenue and Apple generates more than all of them together.”
Lösch’s view was echoed by Kay Dammholz, managing director of rights and distribution at DAZN, Perform’s OTT service.
Dammholz observed: “I think we’re still in bit of a test phase. Everyone is going wild…
“…[but] Peter Hutton wouldn’t have gone to Facebook if he hadn’t had a concrete plan and budget. Of course there is a fear that these ‘unlimited budgets’ might sometime come into the sports rights sector. These players are still learning.”
He predicted that, following a period of dabbling in the sports rights sector, "in two or three years there will be massive pressure” from the likes of Amazon, Facebook and Twitter.
Amid various forecasts that Amazon could land domestic rights to the Premier League in the ongoing invitation to tender process, Lösch flagged up the possibility of one of the internet giants picking up a “tailored package” to the English top flight, but reiterated his feeling “that the big impact is yet to come and it will take place in the US.”
On a potential shift in the landscape, he said: “It’s going to be a lot slower than people expect it to be. The classic model of rights-holders selling to a TV broadcaster will remain a fact for a long time.
“We have to differentiate here – people talk about pay-TV and streaming but basically it’s the same… the only thing that has changed is the technology, so the format and how people watch TV has changed.”
Commenting on the proliferation of OTT services offering live sports content, Dammholz stated: “I think we’re still in a growth phase. It’s like bodybuilding – you create mass and then the definition will come in the next couple of years. They have different business models. I know they’ve started to buy rights, but you have to differentiate between programming and advertising.”
Premium rights-holders have experimented with their own OTT offerings, although these have often been restricted to (non-exclusive) smaller rights or broadcast coverage outside the home market, with the leagues continuing to “take the big cheque” from broadcasters, as Lösch put it.
He said: “Each rights-holder, including those who possess premium rights, ask themselves whether they start their own OTT platform and go to the customer directly and earn money. But do you want to risk that when you’re a premium rights-holder and you get a lot of money for your rights [anyway]?
“Would Christian Seifert from the DFL tell [Karl-Heinz] Rummenigge [Bayern Munich’s chairman] and [Hans-Joachim] Watzke [Borussia Dortmund’s chief executive] to ‘wait until the end of the year and see how much money I can give you.’ That’s not going to happen as the league and the clubs need a lot of money.”