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Archive | A Shot Across the Bow?

A SUCCESSFUL ONLINE-ONLY BROADCAST in the UK of an England v Ukraine World Cup qualifier last October prompted investment bank Credit Suisse to warn of a threat to established sports broadcasters. The pioneering broadcast generated “substantial revenues” and a profit, according to its backers.

Credit Suisse’s investment note warned of the threat to dominant UK sports paybroadcaster BSkyB as barriers to entry to sports broadcasting were collapsing as more households gained access to high-speed internet connections.

The concern is an old one, but the England- Ukraine broadcast sharpened the focus on it once again. Nothing on its scale had been attempted before in the UK, and its organisers – rights-holding agency Kentaro, and online broadcasting specialists Perform – appear to have pulled it off with some success, although exactly how much revenue or profit was generated is unknown.

Oliver Slipper, chief executive at Perform, says there were around 200,000 paying customers. Very roughly, the broadcast generated somewhere between £998,000 and £2.4 million, depending on the ratio of customers who bought early bird tickets for £4.99 to those who bought on the day for £11.99. Slipper says that “substantial revenues” were generated – more than what was offered for the television rights by broadcasters – and that a profit was made.

Credit Suisse said “the traditional broadcasters are no longer gatekeepers”, and predicted that online live broadcasts would explode in the UK when fast internet access (at speeds of at least 2-4Mbps) became mass market and when internet content could be easily viewed on television sets rather than computer terminals. These milestones are thought to be only two to three years away.

However even one of the architects of the England-Ukraine success, Oliver Slipper, admits that the warning about the threat to businesses like BSkyB’s is premature.

“I don’t see it taking out Sky’s business model,” he says of the model that Perform and Kentaro used. “[Sky] generates substantial revenues and will keep the rights that it wants.”

BSkyB didn’t even bid for the England- Ukraine rights – a one-off match of little importance is not much use for a company looking to add long-term subscribers.

The pay-per-view business model that Perform and Kentaro used does not translate directly into a model for exploiting BSkyB’s top properties, like the English Premier League.

But Slipper says that the Perform-Kentaro model does pose a threat to traditional, ad-funded broadcasters, the traditional buyers of properties like the Ukraine-England match.

“TV is no longer the only option, and it is going to have to continue to pay competitive prices [for content],” he says.

“It is becoming increasingly easier for someone like us to go direct to the consumer [with a sports broadcast] and generate substantial revenues that way.”

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