The Premier League is working on plans to launch a Netflix-style digital streaming channel, selling live games direct to fans, new CEO Richard Masters has revealed.
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.
‘During the last [rights bidding] process [for the 2019-22 seasons] we spent quite a lot of time and invested a lot of resources in building our expertise and capacity in ‘direct-to-consumer’,’ said Masters.
‘We considered whether strategically it would be the right time to test a few markets then and decided not to. We were ready last time and we will be ready next time should the opportunity arise. Eventually the Premier League will move to a mix of direct-to-consumer and [traditional] media rights sales.’
Masters’ confirmation that the League will pursue OTT as part of its strategy via ‘PremFlix’ or whatever it is branded, should benefit the top-flight clubs through increased broadcasting revenue and fans, possibly, via lower prices.
Currently any viewer in the UK who wants to watch every Premier League game legally needs to subscribe to Sky, BT Sport and Amazon Prime. Paying for all three typically costs about £912 a year, or £76 a month. PremFlix is probably still a long way off in the UK but would be much cheaper than that.
The enduring value of Premier League content to ‘legacy’ broadcasters was underlined in stunning fashion on Thursday when it was announced that a Stockholm-based media group, NENT, has bought Nordic rights for 2022-28 inclusive for £2billion.
NENT will have exclusive rights for six years to show Premier League games in Denmark, Finland, Norway and Sweden. The £2bn is equivalent to paying £74 for each of the 27 million men, women and children living in those four countries combined.
But looked at another way, fans in those countries typically pay £40-£45 per month for access to channels currently showing live Premier League football. And if three million households across the Nordic nations combined did so at those prices in 2022-28, revenues would be £8bn-£9bn. The rights are highly likely to pay for themselves several times over.
Therein lies the allure, theoretically at least, of a PremFlix where the Premier League keeps all the revenue. As things stand, games are shown live in 188 countries, with about 200 million households globally using pay-TV for access.
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 will make no comment on where they might be but it is believed the League came close to a trial in Singapore for 2019-22 before deciding not to risk it.
The maths in Singapore shows the potential for PremFlix reward. Current rights holder Singtel pays about £70m a year for those rights and sells games via channels costing £34 a month to more than 425,000 people, earning about £175m in revenues.
The OTT opportunity lies in the £105m difference between the £70m and the £175m. The risk is many fewer people sign up and with costly expenses, the League ends up worse off, not better off.
Whether the Premier League takes the Singapore gamble from 2022 remains to be seen but it opened its first international office there last year. Masters will not comment but joint venture trials are one possibility, with established tech platforms taking some of the risk (costs) and sharing some of the profits.
Masters speaks of working with ‘internal and external expertise and investment’ as the League plots a course.
It might be that another territory is deemed a better testing ground, perhaps a nation fanatical about football with a huge population and one that does not earn the Premier League huge sums. Indonesia, with 270 million people but where the rights are currently worth 10s of millions of pounds per year now, not hundreds, ticks all boxes.
A million customers paying £10 a month PremFlix Indonesia would see revenues of £120m a year. Ten million would net £1.2bn. The potential is as clear as the dangers. The PremFlix story is only just beginning. In this rapidly evolving era, everything is up for grabs.
Source: Daily Mail