THE SECOND COMING OF SPORT(?)
The previous article explored the reality of peak broadcast rights and the implications for sport and the media supporting it.
Since that article, rights have indeed come under pressure in both value and duration. Pricing tension has all but disappeared leaving codes stranded as price takers.
News Corp stated the value of the A-League has fallen from $57m pa to $11m. It has also failed to make the final $12m payment for this year’s season
The NRL extended its 5 agreement with Nine/Foxtel but the value is being averaged down
Seven/Foxtel renegotiated their current AFL deal to 2022, saving $100m in the process [$70m for Seven (ex production costs) and $30m for Foxtel]. Seven also extended their AFL agreement but only by 2 years to 2024. Foxtel has yet to follow. Meanwhile, Seven has cut its AFL-related programing, sidelining Game Day and Talking Footy
Rugby Australia has yet to receive any interest in its $285m 5 year offer to any broadcasters
Rugby Australia, NRL and Cricket Australia have replaced their CEOs
Covid-19 has exposed the handout culture of Australian sport as well as shone light on the over-reliance on the sale of broadcasting rights. Even before Covid-19, profitable sporting clubs were an endangered species. The pandemic has just magnified their dilemma.
As clubs bunker down in survival mode, their fate may rest with their peers. As one Sydney FC executive noted,
"We can survive if our share of broadcast revenues goes to zero. The problem is that many of the other teams can’t. If they fold, we’ll have no-one to play. There would be no competition and no competition means no Sydney FC".
Arguably, the way broadcasting rights are sold is no longer relevant. It no longer meets the needs of the audience nor the tech cycle.
THE ACCELERATING MEDIA TECH CYCLE
Over the last 30 years, rights have broadly been negotiated in 5 year blocks. That worked well when mainstay technologies dominated for decades. The way we consume content today however, is ever-changing and that rate of change is accelerating.
Every new technology feels like the future at first. Every new technology gets superseded by a new new thing.
It’s a brave network that’s prepared to lock itself in for fixed price content and uncertain consumer behaviour for 5 years.
THE BUSINESS OF SPORT IS LITTERED WITH CONFLICT
Sporting codes are the gatekeepers to the greatest dramas, spectacles and protagonists in the entertainment industry. Their administrators build brands, content and audiences…then they sell the lot to the highest bidders - Broadcasting. Digital. Audio. Images. Merchandising. Catering. Ticketing…
With so much money at stake, it’s not surprising to see one stakeholder’s success come at the detriment of another.
But everything hinges on broadcast rights. Perhaps the solution lies in letting go…
OWN THE CONTENT, OWN THE AUDIENCE
The legacy of incumbent media is that it can’t follow the audience. Free-to-air relies on the audience coming to it. For sporting codes, technology has changed the playing field.
Think Netflix, Stan, Twitch, Hulu, NFL Media etc. Over-the-top media services (OTT) are streaming services offered directly to viewers via the internet. Anywhere. Anytime. Any device.
OTT feeds right in to our need for instant gratification. It highlights the fatal flaw in traditional media’s argument that the consumer is no longer prepared to pay for content.
They were half right. Consumers are not prepared to pay for low quality, commoditised click bait content from content aggregators masquerading as media companies.
When you give consumers what they want and how they want it, they will pay. Just ask Netflix’s 182 million subscribers paying US$20.16bn (A$30.1bn) for quality content on demand.
So with vast unique content and the most brand loyal audiences in the world, why would codes continue to rely on a 3rd parties on fading platforms for distribution?
AFL TV is the on-demand AFL network. Live games, chats, replays, behind-the-scenes footage, real-time statistics, Q&A with coach and players, pre-game shows, post game shows, news, reviews, club channels such as Richmond TV, highlights from the rising stars in the Reserves and ESPN 30 For 30-style documentaries. Everything footy. One place. On demand. Incredible value for any sport fan for $15/mth.
Unfortunately, AFL TV doesn’t exist. It’s crazy that it doesn’t. The same is true for NRL TV, Cricket TV, Netball TV, A-League TV…The technology exists. Look at plug and play OTT solutions like Rinqe, the platform behind PropertyTV.io.
Since October 2019, the NBL started experimenting, showcasing its sport to the world via its own NBL Channel on gaming platform Twitch. To survive, codes need to experiment. They need to understand who their audience is, where they are and then find the technology to reach them with the right content.
A BALL IN THE HAND IS WORTH TWO WITH 3RD PARTY RIGHTS HOLDERS
A quick back-of-the-envelope calculation suggests that if the AFL charged $15/mth (vs Kayo @ $25/mth) to 2.5million AFL TV subscribers, it would generate $450m pa in revenue vs the $418m it receives from the current broadcast deal.
At Kayo’s price, AFL TV would only need 1.5m subscribers to match its current contract.
The audience is there. There are 1m AFL members, 4m Facebook followers, 7.5m fans at games and 89.1m viewers watching across Foxtel and Seven networks. This is before you include global audiences (including ex-pats), and the content and followers currently underserved across the VFL, WAFL, SAFL and junior competitions.
Best of all for the AFL, it would still own the rights, the narrative for the fans and a phenomenal amount of data around the football audience.
Own the content. Own the audience
For codes and clubs, status quo is not an option
Use technology to go to where the audience is
Traditional media died the day it gave its content (and its audience) to Facebook. Not everyone is your friend
If all advertisers and sponsors abandon sport, online gaming will fill the void. Then everyone loses.