In depth | Why Europe’s top clubs have different video strategies

  • Bayern Munich has launched a club TV channel as part of a deal with Deutsche Telekom
  • Manchester United is charging for its new MUTV app, in contrast to Real Madrid, whose club channel app is free
  • Distributing across multiple video platforms can lead to short-term cannibalisation of value but reflects longer-term thinking

Europe’s top football clubs have the same objectives for the exploitation of their video content on digital and social media platforms: reach, engagement, revenue.

The distribution options are broadly the same: proprietorial platforms, such as official websites and apps; social media platforms; and third-party aggregators. And there are only two business models – pay and free – albeit with some hybrid variations. Yet the way the top clubs go about achieving those objectives can look radically different.

This fact was underlined by two developments in February: Manchester United’s launch of its MUTV app and Bayern Munich’s launch of a club TV channel, FC Bayern.tv live.

On the face of it, it might seem odd that a club as big as Bayern is belatedly rolling out a channel, nearly 20 years after Manchester United launched MUTV, the first ever club channel. And it might seem even more curious that in 2017, as the whole industry is moving towards direct-to-consumer content, the club should choose to distribute its channel via a third-party content aggregator, Deutsche Telekom’s Entertain TV platform, as well as via its own website and app. But this would be to misunderstand what Bayern is doing. It would be to interpret the channel launch as part of the club’s media-rights strategy, rather than being – largely – part of its sponsorship strategy.

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In 2015 the Bundesliga champion renewed its deal with Deutsche Telekom, one of the club’s four main sponsors, as part of a plan to boost sponsorship income to €180m ($191m) per season by 2016-17, three times what it earned a decade ago. Telekom’s deal was due to run until the end of the 2016-17 football season, but was replaced by a new eight-year agreement continuing through to the 2022-23 season.

In the new deal, Telekom is paying €42m per season as main shirt sponsor, up from €30m per season. To secure that 40-per-cent increase the club had to offer an enriched inventory and an important element of that was the provision of content for Entertain TV. The service costs €5.95 per month, but is free for the first 12 months to Entertain subscribers.

As one analyst puts it: “Creating the channel is an obligation which Bayern has to Telekom under its sponsorship contract. Neither party will make serious money from the channel but I don’t think it’s about that. It will build the association between the two parties and help establish Telekom as a content provider ahead of next round of domestic Bundesliga rights.”

Telekom is understood to be footing annual production costs of between €5m and €10m. But the analyst still believes the deal has greater value for the telco than the club.

“Is there real, intrinsic media value to Bayern? I don’t see it,” the analyst adds. “Bayern has given them a lot of rights and has had to forego other opportunities as part of this deal. Telekom is paying a lot for the sponsorship rights. There is value to them; they are buying emotion. They don’t need to build awareness. They are investing heavily in the emotional value around FC Bayern.”

The return of the club channel

Club channels have never been viewed as big money spinners. Running costs of a high-quality, 24-seven operation are high. Churn rates – the number of people cancelling after a year – are high. And clubs invariably don’t have the top content, such as live domestic or European matches, to justify a high subscription price. Clubs know direct revenues will always be a tiny fraction of what they earn through their collective deals. Prior to taking the distribution of MUTV in-house in 2010, for example, United was earning just over $3m per season in a global distribution deal with the IMG agency.

Three to four years ago, it was not hard to find experts prophesying the death of the club TV channel, as the big social media platforms emerged to offer a quick path to global reach. But club channels have adapted and survived.

One reason for this is a cyclical switch, a reappraisal of the relative merits of first-party and third-party platforms. As Carlo De Marchis, chief product and marketing officer of technology company Deltatre, which helps sports bodies develop OTT offerings, explains: “Around 2012, the focus was on first-party platforms and social was seen as a way of driving people to those platforms. Then rights-holders realised that they could expand reach on social and everybody started moving more towards social. Now, they’re coming back. Especially the entities that can really create value, like the big football clubs. But they have realised they have to create an experience that is more compelling than Facebook, while being just as easy to access.”

Pay v free, cash v data

Manchester United and Real Madrid, like Bayern, have put their club channels onto an app for distribution on mobile devices. They have done so, however, with markedly different business models.

In May 2015 Real Madrid launched an app as part of wider partnership with Microsoft. The app includes the club channel, Real Madrid TV. It carries Microsoft branding. Access is free but sign-up requires customers to provide access to the following user information: in-app purchases, identity, contacts, location, photos/media/files, camera, microphone, wi-fi connection information.

The MUTV app, which is available in 160 markets where the channel doesn’t currently have a distribution on a pay-television platform, is a premium product, with the price varying between $3 and $10 per month, according to local market conditions. A limited amount of personal data, such as an email address, is required at sign-up.

William Field, founding partner of the Prospero consultancy, says there may be several reasons why the clubs have opted for different business models for a similar product. “United already have the biggest and most successful portfolio of regional sponsors, so they may be thinking they are already doing pretty well in terms of monetising their international fan base through their commercial programme,” Field says.

“They are looking ahead, at the direct-to-consumer strategy for live premium content. They see the app as a great platform to deliver to the consumer, so they can test the market and see how well it works. They will know who has their app and will be able to communicate with them. You can always build the data later or add depth.”

He adds that even a subscription app, which asks for a limited amount of registration information, is an effective way to gather data. “They can provide a detailed analysis of the content they use and consume – great for A/B testing,” he says. “It’s easy to ask customers to complete quizzes and to conduct opinion polls and surveys to get in-depth information. And it’s an opportunity to push other products and services to them.”

An argument could also be made that MUTV has always been a subscription product, both domestically and internationally, so it would make little sense to switch to a free app in 160 markets. But this overlooks the fact that the club is prepared to give MUTV away for free in a market where it values reach above direct revenues: China. In December, the club struck a deal with streaming operator Sina to distribute MUTV free on the Sina Sports platform.

The interesting question for the next cycle of deals is whether the club gradually replaces its deals with pay-television platforms with the app. In the meantime, it will be able to compare income from carriage deals and income from app sales. Profits on app sales will be reduced by the 30 per cent commission that goes to Google or Apple as a sales platform and the costs of the marketing that is necessary when pushing any direct-to-consumer product.

As with the Bayern channel, the Real Madrid app makes more sense when seen as part of a multifaceted four-year sponsorship deal with Microsoft worth $35m per season. As De Marchis puts it: “Microsoft want the widest possible distribution because they want the data. They want to get into sport. They are supplying all of the technology. That means it has to be free.”

Barcelona’s mixed model

When balancing first-party and third-party content, Barcelona arguably represents a different model again. The club’s TV channel, Barça TV, is a 24/7 operation produced by telco and media group Telefónica. Domestically, it is distributed as premium channel via pay-television platforms such as Telefónica’s Movistar+ and Telecable. In Catalunya, it is available in Catalan free of charge on digital terrestrial platforms.

Outside Spain, however, the full channel is not distributed. Instead, the club sells two blocks of three hours of content on Tuesday and Thursday. Each block contains delayed coverage of the most recent match from LaLiga or the Champions League and other content created specifically for an international audience. The content blocks are distributed by the IMG agency, in a three-year deal which ends at the end of the 2017-18 season. The club does not distribute the full channel internationally because it does not believe that it would generate sufficient margins. 

To make sure its international supporter base is properly served, Barcelona is aggressively exploiting the possibilities of social platforms Facebook, albeit with concerns that it may be driving more value for the platform than it is for itself.

In December, Barcelona and Real Madrid used Facebook live to showcase the Clásico, with impressive results. Barça used a live, video-first strategy aimed at engaging their 152 million Facebook following, boosting visibility for their sponsors and driving followers to watch the match live on television. Coverage started a week before the game and included access to training sessions, press conferences, and player interviews. The coverage drew over 86 million video views during the six-day build-up and on match-day and a 178 per cent increase in Live views compared to the previous meeting of the two clubs.

At the time, Russell Stopford, FC Barcelona’s director of digital, told media: “We wanted to bring our fans from all over the world inside the excitement of El Clásico in a brand new way, with innovative content and new experiences available on Facebook. We look forward to leveraging more of Facebook’s innovative tools in the future.”

Authenticity v sales pitch

On social and digital platforms, many rights-holders favour branded content, as part of sponsor deals, rather than having obtrusive advertising such as pre-rolls. However, at least one industry expert believes that when it comes to the kind of branded content offered free on social media platforms, clubs are mostly getting it wrong.

Russell Glenister, chief executive of digital data tracking company SnapRapid, says: “Clubs have made huge bets on branded content, which they believe allows them to tell great stories and get closer to their fans. The difficulty is, it’s mostly not working. Branding is a set of techniques designed to generate cultural relevance, but what social media has enabled is a whole new crowd culture of active creatives that themselves come from sub-cultures, are highly active, followed and listened to, unlike brands. Branded content is seen as mostly irrelevant marketing to its target audience – a sales pitch.”

He pointed out that ArsenalFanTV, a YouTube channel where an Arsenal supporter, Robbie, interviews other fans, has over 413,000 subscribers, compared to 590,000 for Arsenal’s official YouTube channel.

“Consider that Arsenal are the third most popular club in the world on social media, behind only Man Utd and Barcelona; they have a long history, access to the whole player roster and a team of creatives, producers, editors and a budget that ArsenalFanTV can only ever dream of. So, what makes ArsenalFanTV so popular? It’s real, it’s fan driven, it’s culturally relevant and, above all, it’s of the moment.”

VIDEO: Arsenal Fan TV reflects on Arsenal's Champions League defeat by Bayern Munich

Short-term cannibalisation, long-term value

Most big clubs are simultaneously enhancing their own platforms, enriching the content they make available on social platforms and exploring relationships with emerging third-party platforms.

This raises the question of how they can enrich all three platforms before they start cannibalising each other. If large amounts of attractive content are free on Facebook, why pay $5.99 per month for an app? For now, however, this doesn’t appear to be a concern.

A media executive at one top European club says that clubs will accept short-term cannibalisation as the price to pay for understanding the market. “What are you using your content for? To achieve maximum reach? To convert the maximum number of people to subscription products to drive direct revenues? All these things cut cross each other. But they are only conflicts if looked at in a specific moment in time. If you look at the broader strategy of driving value in the long term, you have to mix, you need to have all of them in your content matrix,” the executive says.

“If you are offering video content free on Facebook will you get fewer subscribers to your premium product? Maybe today. But by growing your database, knowing more about your fans, you can convert more of that fan base to pay products at some point in the future.”

The executive added: “All models are valid, there is no right and wrong. Everyone is looking for the best mix of distribution which matches the value of the content.”

Lewis Wiltshire, a partner at the Seven League digital consultancy, says clubs need to start out with a clear strategy to avoid cannibalising their own audiences. But he argues that being present, experimenting, and testing the market are essential. Seven League was launched in 2012 by former head of digital at Manchester City, Richard Ayers, to advise on building such strategies. Clients include Barcelona, Arsenal and the Premier League.

“The market is maturing. Facebook is so huge and so well established that they will be around for a very long time and Twitter, Instagram and Snapchat are moving into that bracket. There is a danger that you spread yourself too thin [by being everywhere], but not doing digital well is not an option. The starting point has to be a very clear strategy.”

For the moment, polymorphous diversity – all types of content, all platforms, all business models – seems to be the name of the game. There are challenges in finding the perfect matrix that matches the content to an audience in the most efficient manner, but the opportunities are enormous. 

As Wiltshire concludes: “This is without a doubt the most interesting time in the history of the sports industry in terms of the options that clubs have to reach a worldwide fan base.”

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