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Under the radar to over the top | Simon Denyer on the rise of DAZN

DAZN chief executive Simon Denyer (Photo by DAZN)

Ask DAZN chief executive Simon Denyer what gives him the biggest buzz in running the ground-breaking sports streaming service and his answer in unequivocal.

“Consumers,” he says. “We’re a consumer product working in the sports fan market. That means we get to focus on the consumer and the technology and that is invigorating for everybody.”

Before the launch of DAZN in 2016, Denyer’s focus was on business-to-business service provision, delivering data and streaming services to rights-holders through Perform Group. Now, with DAZN having emerged from the Perform chrysalis to deliver a broad range of content to fans in nine countries, he reflects that its growth is likely to have been far slower had he and his colleagues not put in the hard yards and built trust at Perform.

“Can you imagine if we had been going into meetings with the heads of major rights-holders four years ago as an unknown start-up asking them to put their content on OTT?”, he laughs.

Anthony Joshua punches Andy Ruiz Jr during their heavyweight title clash in Saudi Arabia last year. The fight was broadcast by DAZN in the US. (Richard Heathcote/Getty Images)

As it is, relationships built in the Perform years proved invaluable. Doors were opened to them and there was an attentive ear rather than scepticism about what must have appeared radical proposals. The financial backing of Access Industries, with its experience of disruption and change in the music industry, was undoubtedly another factor.

“The fact is, we didn’t come from nowhere. If we had just turned up out of the blue and said ‘we want to buy your rights’ they would have thought that we were crazy and it was too risky. But we’ve been dealing with them for many years and getting the Premier League and LaLiga to come onto OTT were huge milestones.”

With Uefa believed to be about to announce the next Champions League rights cycle in Germany will be available exclusively on OTT platforms, it’s clear any uncertainties among major rights-holders have been blown away.

Strategy

DAZN’s strategy has been clear from the outset: identify markets where there may be an obvious leader in sports broadcasting, but the secondary market is fuzzy and the rights ‘soft’. Acquire key rights which resonate in the market and support them with a breadth of other content, made available on any device, both live and on demand. Then make the offering available at a relatively modest monthly subscription.

And while the strategy has been adapted and finessed to meet different circumstances, it’s one that continues to underpin the operation.

Looking back over the first years of DAZN, Denyer remains convinced that it was time for the sports media market to change.

“Not a lot had really changed over the previous 30 years except for the advent of sports channels. But even the concept of linear sports channels doesn’t really make sense today,” he says. “You know that there is not a whole lot of sport on live most days of the week, then on the weekends there are hundreds of events of which linear can usually show just one or two. OTT increases the volume and choice hugely.”

And while live events are naturally the biggest draw, Video On Demand accounts for some 25 per cent of all streams.

“When we started, we saw DAZN primarily as a live streaming service, so we are pleasantly surprised by the level of VOD use, which largely consists of time-shifted highlights. Fans tend to watch their favourite teams live but then go to highlights to watch either other teams they like or games they know are worth watching because they’ve been talked about on social media.”

Philippe Coutinho of Bayern Munich in action during the Uefa Champions League group B match between Bayern Munich and Tottenham Hotspur on December 11, 2019 in Munich, Germany. (Photo by Michael Regan/Getty Images)

DAZN viewing patterns underscore the logic of the rights investment strategy. In Italy, Serie A is consistently the most popular content; in Germany it’s the Bundesliga and the Champions League games; in Spain, MotoGP; the J. League and Nippon Professional Baseball in Japan; the Copa Sudamericana in Brazil; and in the United States, boxing is blazing a trail.

“We have spikes in engagement around this content where around 90 per cent of subscribers in each territory are watching,” Denyer explains. “But in markets like Germany and, in particular, Japan, the engagement is much more even and the spikes less pronounced because we have a broader range of content and a lot of people are consuming a lot of things. That smooths out the patterns.”

And while sign-up to DAZN may often be through mobile devices, Denyer says that 57 per cent of consumption is on ‘living room devices’ – in short, anything that plugs into a television.

“The rest is pretty evenly split between the web and mobile devices, but it quickly becomes a TV experience, which is what we expect from long-form live content. When the users have DAZN in their living rooms we find the level of consumption goes up and the churn goes down. They quickly become more engaged.”

That, he says, also extends to a new trend in consumption: ‘DAZN time’, a sports fan’s equivalent of ‘Netflix and chill’. “That’s not about appointment viewing for a particular game. It’s about people getting together for a night in and just choosing from the menu of what’s available,” he says.

Breaking America

Eyebrows were raised when in 2018, DAZN made its move into the United States on the back of two major rights deals in boxing – one with Matchroom Sports, promoter of Anthony Joshua, and one with Oscar de la Hoya’s Golden Boy Promotions, which handles Saúl ‘Canelo’ Álvarez.

The appetite for this content is underscored by figures for last year’s most streamed events on DAZN worldwide, which show Joshua’s rematch with Andy Ruiz Jr at the head of a list that also features Canelo’s fights with Sergey Kovalev in fourth and Daniel Jacobs in tenth.

But there was another key signing seen as central to the prospect of success in the US – John Skipper, the powerhouse executive formerly behind ESPN.

“The USA is the biggest sports market in the world, but rights are carved up in different ways. We just didn’t have the experience and history in the US market and John is the best person in the world to help us understand and navigate it,” Denyer says.

Even before Skipper came on board as executive chairman, DAZN had its eyes on the US market, where ESPN holds about 50 per cent of sports rights. Boxing was identified as the play maker.

John Skipper, executive chairman of DAZN (Photo by DAZN)

“Boxing is one of a few sports that resonates absolutely everywhere in the world,” says Denyer. “Everyone has seen it and knows how it works, and it has been huge. But with pay per view it has fragmented and eaten itself alive. That led to a decline and a situation where there were no real long-term deals or structure for the sport.

“John joining the business has accelerated our fight sports and boxing strategy and the impact has been felt all around the world. Boxing has been reinvigorated. The big change is that we have got promoters organised because we don’t want a random collection of fights but a series of events with a clear narrative that builds throughout the year.”

In an industry where perennial scepticism about the size and validity of other people’s deals is the norm, it was inevitable that questions would be asked about the sledgehammer boxing deals.

Eddie Hearn heralded Matchroom’s eight-year agreement with DAZN as boxing’s first $1bn deal, while the 11-fight agreement with Golden Boy and Canelo Álvarez was reported at $365m. Can such significant sums pay off?

“It is early days in the United States,” notes Denyer, “and at the moment we are still focusing on getting the schedule right. The real test will be this year and next when we need to get the penetration right. It needs to be paying off when we get to the fourth and fifth years of these deals.”

But he notes that “to succeed in the United States, we know that boxing alone won’t be enough and that we have to navigate our way into the Big Four mainstream sports.”

Canelo Álvarez punches Rocky Fielding during their WBA super middleweight title fight at Madison Square Garden on December 15, 2018 in New York City. This was Álvarez’s first bout after signing a lucrative deal with DAZN, reportedly worth $365m. (Photo by Al Bello/Getty Images)

Looking back, looking ahead

Denyer makes the case that “not many mistakes have been made” in the rollout, despite DAZN’s radical business plan.

“Germany and Japan have been rock solid and gone almost exactly to plan and that is a highlight for us. When we did the first rights deals all we had was some research on which we built a model. When you think that this was a completely new business and that nobody had done anything like it before, it has been quite remarkable.

“OTT means we know our audience and we can tell precisely what content works and what doesn’t against what we paid for it. We know what rights we need to pay less for in future and those that offer a good return.”

While DAZN has made no secret of its desire to expand into new territories, Denyer believes big returns are likely to be made by adding more rights in territories where they already have a presence.

“There’s a reason we launched in those places in the first place,” he says. “There are some interesting processes about to come up in Germany, Italy and Spain, while in we have most of the rights under long term contract.

“At the same time, we are looking at new territories but we’re never going to talk about them until deals are done. We never confirm until rights have been acquired and only a handful of people in the company know about it.”

What of market developments that could harm the DAZN business model? For years now, the monster tech companies have seemed about to come over the hill and plough the contents of their massive war chests into sport, while major rights-holders have either launched or openly discussed the potential of launching their own OTT operations.

Denyer is not simply sanguine: “We certainly think about the tech companies and, of course, the agencies have been hoping that the market would be revitalised by their spending power. After all, we know pay-television companies aren’t growing at more than five per cent, which means there is not much more money to come out of them.

“The reality is that the only meaningful new money coming into the market is from us. We are spending billions of dollars each year while no other tech companies are spending more than a couple of hundred million.

“Where they are spending it tends to be very tactical. Google bought some sport to encourage rights owners to put content on to their channels, while Amazon, in the UK, bought rights to stimulate Prime adoption and organised it around the biggest shopping weekends. That’s been clever; they have approached the market in a sensible and logical way.

“So far as the Premier League and other major rights owners operating OTT platforms is concerned, we think that’s something that would be very difficult for a stand-alone rights owner to pull off. I don’t think the leagues are looking at this as an alternative to the current model, but as a back-up if [a] market goes bad and they’re not getting the rights fee they feel is fair. Over the next five or six years a lot of territories might prove disappointing, so it’s prudent to have another plan in place.”

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