The key to growth from 2022 is to find a way to tap into the extra platform value both BT and Sky attribute to the EPL from their ability to gain or protect their pay-TV, broadband and telephony (and perhaps mobile) subscriber base
Mark OliverMark Oliver is the chairman and founder of Oliver & Ohlbaum Associates, leading the firm’s advice on media, entertainment and sports investments to both investors and target companies/organisations, covering over £20 billion of deals since 1995.
The reduction in the most recent UK media rights payment to the EPL for the period 2019 to 2022 has probably contributed towards the difficulties the EPL has had in appointing a new chief executive, and the push by the Big Six clubs to get a higher share of the international media rights income.
For some the reduction in UK rights due to the tacit truce between BT and Sky and embodied in their channel mutual carriage agreement is likely to be more than offset by continued growth overseas. The key to ensuring that may be to improve the appeal of the EPL product and not to co-operate with plans to enhance UEFA competitions so much that they eclipse the appeal of the EPL in the Asia-Pacific, African, Middle East and Americas markets.
I set out what this might entail in my article of 4 February, 2019.
But for others thoughts have turned to how to get the UK price to increase again. There tend to be three ideas proposed.
First, “get the web platforms interested”, they are the future and are likely to make aggressive moves into sports rights over the next five to 10 years. This was the thinking behind the extra simultaneous match packages offered by the EPL last time and the eventual successful courting of Amazon even if it was with a very small cheque and after six more months of negotiations.
Second, “exploit all 380 matches”. The EPL is the only major league not to exploit all its matches in its home market choosing to both preserve the 3pm to 5pm Saturday ban on televised football and keep a large number of fixtures in that slot.
Third, “go OTT and cut out the middle man”. Direct access to fans with an OTT service would not only raise lots of revenue, but also cut our any profit margins made by third parties and establish a direct link with fans which could be used to enhance sponsorship, ticket and merchandising revenue streams.
However, none of these answers either individually or taken together will provide the EPL with the silver bullet in the UK it is seeking.
Google/YouTube, Twitter and Facebook are mostly advertiser funded and without significant pay element they cannot justify paying the kinds of prices the EPL currently gets for exclusive live rights in the UK
The web players do want to grow in the UK and they do have formidable fire power, but Google/YouTube, Twitter and Facebook are mostly advertiser funded and without significant pay element they cannot justify paying the kinds of prices the EPL currently gets for exclusive live rights in the UK.
Amazon and Apple are more likely contenders, perhaps joined by the new Disney planned web bundle of B2C services, but each would have to see the EPL as a major source of new demand for their e-commerce, devices and other entertainment service offerings to even come close to the EPL’s current income in the UK.
Both Amazon and Apple already enjoy high penetration of their core services in the UK, the EPL would help them grow further, but unlike in parts of Asia where they are less developed and where they face the growth ambitions of the Chinese triumvirate of Tencent, Alibaba and Baidu, it’s unlikely to be transformative. More promising might be the interest of the Chinese platforms themselves seeking to expand into Europe and the English speaking world – but this would be a bold and high risk strategy from organisations that are still growing rapidly in Asia.
O&O’s own research suggests showing the remaining EPL matches live in the UK only represents a 10 to 15 per cent increase in potential consumer value at most with almost all the top team clashes already televised live. Once potential compensation payments to the Football League and SPFL are taken into account this may not all accrue to the EPL, and even then there is no guarantee extra value will convert into a higher price if the BT and Sky truce persists.
An OTT TV service akin to an own-branded Netflix or DAZN could establish a direct consumer relationship and cut out the middleman. But O&O research suggests the maximum revenue the EPL could gain from directly charging fans for live coverage either on a match by match basis or an aggregate channel basis or even on club TV season ticket basis would be £1.2 billion ($1.56 billion) a year. Factoring in production and marketing costs and the risks involved this represents a good base line for the EPL but not growth.
The key to growth from 2022 is to find a way to tap into the extra platform value both BT and Sky attribute to the EPL from their ability to gain or protect their pay-TV, broadband and telephony (and perhaps mobile) subscriber base – the very value their current truce may be denying the EPL and which a stand alone OTT service cannot access directly.
The best way to do this is to develop an OTT service but then to seek to do platform carriage deals with each of BT, Sky and Virgin – and any internet platform interested – on an exclusive or partly-exclusive basis, threatening to shut out one or more of the platforms.
While BT and Sky are allowed by competition authorities to agree mutual carriage of each of their own-branded channels, they are very unlikely to be allowed to agree mutual carriage of all third party channels – including an EPL Premier League Plus TV service.
Even better, Premier League Plus TV might be able to agree high-value platform carriage deals but also retain some matches on their own B2C OTT service only, thus also building that direct link to fans but without any sacrifice of value.
Premier League Plus TV might be able to agree high-value platform carriage deals but also retain some matches on their own B2C OTT service only, thus also building that direct link to fans but without any sacrifice of value
Of course Premier League TV will take a lot of planning, and the EPL may need to find or attract investment capital to help launch the service without requiring the clubs to forego any short-term revenue, but this is the way the EPL can take its future in its own hands and ensure their UK media revenue from 2022 onwards continues to grow.
If it adopts this strategy and ensures the product is still head and shoulders above any reformed Uefa competitions, then growth could still be substantial in the UK and overseas.
Best of all, just setting up Premier League Plus TV with a launch plan and financing in the next two years could be enough to break the BT and Sky truce, thus opening up a route to growth without the need to execute the plan. But even then, it still may be worth setting up Premier League Plus TV in the UK for the long-term and to begin establishing a direct TV relationship with the fans.