Dan Parr | Why Premflix could offer an alternative financial future for the Premier League

Dan Parr, commercial director at InSport Education, talks about the Premier League's proposed OTT service 'Premflix', and the financial impact it could have on the league.

Dan Parr

‘Premflix’ – the proposed Netflix-style OTT service for the Premier League – would arguably be the biggest shake-up to the finances of top-flight football in England since broadcasters’ chequebooks first tempted the top clubs to found the league in 1992.

But despite Bill Bush confirming that the Premier League will retain a preference for rights deals over DTC, Premflix may still offer an alternative financial future for the Premier League.

The decline of TV rights bidding wars

There was a time when broadcasters engaged in “all-out bidding wars” to win Premier League TV rights – but those days have arguably passed.

In February 2018, when two of the seven domestic broadcast packages for 2019-2022 Premier League fixtures initially failed to sell, BBC sports editor Dan Roan concluded that “the boom years appear to be over when it comes to the Premier League’s domestic TV rights”.

To make matters worse, the amount raised from the rights deals that did sell decreased 11.8 per cent, from £5.1bn in 2016-2019 to £4.5bn in 2019-2022. As the wells of cash that traditional broadcasters pumped into the Premier League dried up for the first time, OTT platform Amazon Prime swooped in, snapping up a package reportedly for as little as £90m.

The decline of domestic TV rights bids has profound implications for the financial future of the Premier League as traditional broadcasters and OTT providers alike step out of the arms race to outbid competitors for the Premier League’s domestic 2022-2025 packages. Indeed, rights-holders now know that sitting back on the sidelines – à la Amazon – may enable them to get a better deal on domestic rights packages, ultimately at the expense of the Premier League.

But Premflix could provide an alternative to the spiralling decline of TV rights bids. DAZN chief executive Simon Denyer agrees, arguing that football leagues do not see OTT “as an alternative to the current model, but as a back-up…[for] if the market goes bad and they’re not getting the rights fee they feel is fair”.

The Bundesliga has led the way on this front. Ahead of the 2020-21 season, the German Football League (DFL) prepared the ground for its own OTT platform, Bundesliga Pass. The DFL says that if it does not secure satisfactory bids from international broadcasters, they will simply air Bundesliga games on their OTT platform instead. A similar approach with Premflix could see competition return to domestic TV rights bids, giving the Premier League the financial safety net to turn down second-tier bids.

Capturing and monetising the next generation of fans

Capturing the next generation of commercially-engaged fans has been one of the Premier League’s central missions for several years, and with good reason.

Current younger generations watch less traditional broadcast TV than previous generations. A Nielsen study found a 40-per-cent drop in cable TV viewing figures among 18-24-year olds in the last five years. This presents a two-fold problem for the Premier League: even if the league could capture the illusive next generation of fans, monetising this new audience with traditional premium broadcast subscriptions would be an equally difficult task.

But Premflix could enable the Premier League to unlock and monetise this younger generation. A Leaders report found that 38 per cent of 18-39 year olds would ‘definitely’ or ‘probably’ subscribe to a premium live sports OTT platform. Market data backs this up, too – Amazon Prime subscriptions increased 35 per cent in the fourth quarter of 2019 off the back of their Premier League coverage, demonstrating how OTT platforms can capture and monetise new audiences.

The Premflix platform and its audience would also be more ad-friendly for marketers and sponsors than traditional broadcast. A FreeWheel investigation found that OTT viewers “complete 98 per cent of all premium video ads.” Likewise, the increased access to audience data that comes along with shifting to an OTT platform would also be valuable to advertisers and sponsors.

In traditional TV advertising, advertisers only have access to a comparatively limited amount of crude data such as average viewer age and gender. But an OTT platform could allow advertisers to target their adverts to incredibly specific groups of viewers, ensuring that their adverts are only viewed by the audiences with which they will resonate most. Indeed, it is no coincidence that access to Amazon’s viewer data so that advertisers can leverage “more granular targeting” was one of the requests made by advert buyers following the first round of Premier League fixtures on Amazon Prime. By providing a better ROI for advertisers and sponsors, Premflix could become a more attractive destination for marketing budgets than traditional TV broadcasts, helping to ensure the financial future of the Premier League.

OTT platforms may never be the first choice for top-tier rights-holders. However, as the TV rights bubble slowly deflates, alternative models such as Premflix may well begin to offer an increasingly reliable financial future.