- Former Sky Sports chief says some OTT platforms failed to provide alternatives to live sports content
- Strong viewing figures and private equity interest shows reasons to be optimistic about industry
- Launching direct-to-consumer product still makes more sense for mid- to low-tier rights-holders
Barney Francis, the former managing director of the UK division of Sky Sports, has suggested the Covid-19 crisis has exposed the business models of some of the OTT streaming services operating in the sports sector.
Francis spent two decades at Sky Sports where he oversaw the broadcaster’s continuing stranglehold over the UK domestic rights to the English Premier League, but in January it was announced he would leave the broadcaster at the end of this year. He was speaking to SportBusiness to coincide with his appointment as a specialist media advisor to data-led marketing agency WePlay – a role he has been cleared to take while he remains on gardening leave with the broadcaster.
One of the most high-profile broadcasters to feel the financial impact of the Covid crisis has been the DAZN Group, with the paucity of live sports coverage prompting customers to terminate their subscriptions, while other operators such as Amazon Prime and Netflix have been buoyed by interest in their non-live sports offerings. In response, DAZN has renegotiated various rights deals and placed an increased focus on its non-live content.
Asked about the company’s problems, Francis said: “If you are a business or the restaurant at the end of the street, what did you do to retain your customers when you were in lockdown? You offered some sort of takeaway service. If you weren’t providing takeaway, then you lost your customers because they were going elsewhere. When you pop up again as a restaurant and say: ‘Hey, we’re open!’ people have moved on. That’s where the OTTs have struggled.”
One of the renegotiations undertaken by DAZN has been the reworking of its long-term agreement with Japan’s J.League – a move which Francis described as ‘fascinating’.
“They extended the deal by two years and reduced the total pay and then did performance-related fees as well. I think that was really interesting,” he said.
Strong viewing figures
But Francis added that the strong viewing figures achieved by major sports during the Covid-19 lockdown showed that there continue to be strong commercial opportunities in the sector.
Referencing sports where Sky retains the lion’s share of the UK domestic live rights, Francis said: “Premier League viewing figures are up, cricket viewing figures are up, Formula One’s viewing figures are up. People’s desire to engage with their sport or with their club or with their team haven’t fallen away at all – it’s actually increased. The challenge is how that can be monetised.”
The former Sky executive said he had also been surprised by the number of private equity firms that have been looking to invest in the industry during the last six months, but added these investors would only back companies that had proven themselves able to adapt to the crisis.
“There’s lots of money hovering around ready to be invested into the right model for the future. The driver for the success of that will not necessarily be private equity; it will be those businesses that can prove their agility and their ability to look forward and prove that they’re the ones that should have the investment. That applies to agencies, it applies to football clubs,” he said.
Serie A’s international rights
Asked if there was untapped value in Italy’s Serie A, which is currently mulling different financing and investment proposals from private equity houses, Francis said:
“Without pivoting back to the Premier League all the time, you just have to look at the ratio split of its broadcast revenues between the domestic market and overseas. It’s around 50:50, and that is to the envy of every sport around the world.
“Serie A will doubtlessly think they are undervalued and under-monetised internationally and that’s why private equity money looks at that and agrees.
“Premium sports are of interest everywhere in the world. Will Serie A double its revenues internationally in the next three-year cycle? Probably not, but that’s why private money comes in. They think: how can we market these rights in a better way? It’s probably a little bit late right now because he’s too long in his career. But how can we use the global impact of Ronaldo to help drive greater interest in Juventus’ domestic games?”
While acknowledging that the Premier Leagues’ overseas revenues have taken a hit with the termination of its lucrative media rights contract with Chinese streaming platform PPTV, Francis said the league should take heart from its continuing popularity in the country.
“The one thing it doesn’t mean is that suddenly there is no interest among China’s billions of population in the Premier League – it’s just that there’s going to have to be a new way for them to watch it.
“Whatever disappointment was felt over at the Premier League, they still know that they have a huge number of fans in China who want to see their content. They just need to find a way through that, and navigation is the challenge that faces everybody.”
Francis said part of his advisory role at WePlay would consist of identifying opportunities to help rights-holders to plug shortfalls in matchday revenues through innovative use of digital media and over-the-top streaming solutions.
However, in spite of a likely softening of the media rights market, he thought the rationale for launching a direct-to-consumer OTT platform still makes more business sense for mid and lower-tier sports properties than major right-holders like the Premier League.
“If you are a sport like gymnastics or squash in the UK where you know you have big fanbases, then the potential to go direct-to-consumer yourself is much easier because they know you don’t have to sustain a huge professional game with loads of participants that are demanding wages.”
He predicted that it was unlikely a relatively new OTT streaming operator would ever be able to bid for top-tier football rights.
“You can go and buy a white-label platform from somebody. But then the challenge is: how much cost do you want to put in that business upfront to secure decent rights without actually having any customers?
“That was the challenge that Eleven [Sports] faced. Eleven was a successful business globally but they came into the UK and they just loaded their cost base too much. It’s much easier than ever before to get the platform tech support to launch your own property. You’ve then got to acquire the rights which instantly puts you in a challenging position of how you recoup that in a short period of time.”