The $200m pact between OTT operator Perform Group and the J.League is the largest deal in the history of Japanese sports. John Duerden looks at how it might help to transform the country’s football infrastructure and help the sport connect with millennials.
It is the best part of two decades since Japan built 10 new stadia for the 2002 World Cup, which was co-hosted by South Korea.
With the sparkle of the venues fading along with the memories, these facilities are set to become smarter over the next 10 years in more ways than one.
In July the J.League signed a 10-year deal with UK-based digital sports-media specialist Perform Group in an agreement worth Y210bn (€1.8bn/$2bn). Over the next decade the league will receive Y21bn every year – an amount that not only dwarfs the Y5bn that was contributed annually by satellite broadcaster Sky Perfect under the previous deal, but is also considerably larger than the league’s total revenue of Y13bn yen that was generated in the whole of 2015.
“This huge deal will help us invest for the future development of the J.League,” the competition’s chairman, Mitsuru Murai, tells SportBusiness International. “It means a lot not only for J.League, but also for the sports industry in Japan. For one, it is the first ever huge investment made in the Japanese sports industry by a foreign company and it is also a main broadcast deal with an OTT operator, not with a TV broadcaster. Also, for the first time we will be able to retain the copyright of all footage.”
Firsts
There are other firsts. It is the first time that a pay-television broadcaster such as Sky Perfect has lost the rights of a top-tier football league to an OTT operator in Japan. It is also the largest commercial deal in the history of Japanese sport and comes at the perfect time for the country’s football scene.
Recent spending by Chinese Super League clubs has led to the J.League losing its status as the Asian league with the highest average attendance. Crowds have dropped, young talent has left for Europe, the quality of foreign imports – both players and coaches – has fallen and results in the Asian Champions League have been disappointing.
Perform Group CEO Simon Denyer believes that the deal offers great value for the company. “We know it will take time to make the money back and that is why it is a 10-year deal and the length is important for both parties,” he says. “We will work closely with the J.League to improve the product at various levels.”
The company moved in to succeed Sky Perfect, which was looking in 2014 to renew its deal at a reduced price. Since then more competition has entered the market through J.Sports and mobile operator SoftBank.
Starting with the 2017 season, every game from the top three tiers of Japanese football – J2 and J3 as well as the top division – will be streamed online for customers in Japan in HD on multiple platforms, including mobile, tablet and consoles. There will also be a drive to make the league more attractive elsewhere around Asia and the world. The new deal does not, however, include international rights – currently held by Sky Perfect – though it is possible that Perform could snap those up too when they are up for grabs in 2019.
Changes
While fans and journalists may focus on the big names that may arrive, there will be other changes too.
It is expected that a considerable amount of money will be made available to clubs to recruit players and coaches. “There will be funds available, but we have not decided how much yet,” Murai says. However, the deal also stipulates that there has to be significant investment in the stadia, infrastructure, broadcasting and internet facilities. In the not-too-distant future fans will be interacting online with their favourite clubs from inside the stadium while ordering food and drinks to their seats.
Time and money will be spent upgrading the six cameras usually utilised by Sky. Perform believe that they can build considerably on the traditional production standards. “Pay-television has a relatively low penetration in Japan,” Denyer said. “We are involved in many sports, but football is our lifeblood. We looked at how the J.League was being distributed on satellite television and thought there was room for improvement. We talked to the J.League about attracting a younger audience and we aim to change the way people consume sport.”
It is this younger audience that the authorities have been chasing for some time. “This allows for a new way to view sports,” Murai said when the deal was announced. “People will be able to watch whenever and wherever, for however many times they like and we want to show the Japanese sports industry the way forward for years to come. We believe this agreement is the first of its kind with a service provider in the rapidly changing world of the internet and mobile phones.”
In recent years the league has become concerned that its reputation across Asia for excitement and high technical quality has been stagnating. In 2015 such concerns prompted a controversial change in the format of the league. The season was divided into two stages and a playoff series to determine the eventual champion was introduced. While it was opposed vigorously by most of the regular fans, Murai believes that it has helped the league become more appealing to the general public. “We tried it in order to gain more interest and attention from casual and new fans. The results were successful in terms of television ratings and more spectators,” he says. We looked at how the J.League was being distributed on satellite television and thought there was room for improvement
Tech-savvy
For the clubs, the deal allows them to offer football as a comfortable, exciting and modern entertainment option for the younger fans and families, most of whom are tech-savvy and demanding.
Japanese clubs have been more successful than most in Asia at becoming valued members of the local communities, but they are operating in a competitive marketplace that has baseball as the No.1 sport and plenty of other entertainment options.
Current internet facilities around the league are not always up to the standard that people would expect from such a technologically advanced country.
J.League club Omiya Ardija, based just north of Tokyo, is looking forward to investing in its stadium to enhance the match-going experience.
“We expect more distribution money from the league and it will increase our revenue,” said Omiya Ardija marketing director Takeshi Kubota.
“We will be able to offer more advanced service to fans inside and outside the stadium by providing instant stats and replay videos to those watching the game and those at home.
“It is very important to offer the fans a more fun and a more comfortable experience at the stadium by providing better basic facilities with high-quality Wi-Fi, to create a so-called ‘smart stadium’.”
Before long, fans in Japan will be enjoying some of the most advanced user experiences of anywhere in the world – as Kubota explains.
“There will be live data services, 360-degree cameras, VR, multicast services and a lot more in the stadium,” Kubota adds. “Customers will be able to order foods and goods while sitting in their seats by using an internet payment system. We will have more one-to-one communication with fans, such as sending individual messages to fans according to their visiting history and their consuming history.”
This, Kubota says, is just the beginning.
Launch
The games themselves will be broadcast on Perform’s DAZN platform, set to launch in Japan in August. Already in Austria, Germany and Switzerland, the live sports streaming service has over 6,000 live events per year.
Perform believes that football broadcasting will follow in the footsteps of the music industry. Given the fact that Warner Music owner Len Blavatnik is the group’s major shareholder, perhaps it is not a surprise.
“Music has seen OTT services become the main revenue stream and we have seen what has happened there. We are his sports company and the time is right in terms of Japan,” Denyer says. “It is a mature market of over 100 million people with good infrastructure that still has potential for a lot of growth in this field. It will take time to make the money back, but we have a long deal in place.”
For the league too, having an experienced international partner investing huge sums in the league with years of experience and knowledge, is seen as a very good thing indeed, although the chairman knows that the deal is just the beginning of what will be a lot of hard work ahead. “We still need to make a great effort to make the J.League more attractive, branding the league for international fans and working with Perform,” Murai says. “It will change the league.”
