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Linear TV to ‘remain critical for sport’ amid Asia-Pac online video boom

Football fans who are not able to get into My Dinh Stadium watch the game on mobile phone as Vietnam win the ASEAN Football Federation Suzuki Cup 2018. (Photo by Linh Pham/Getty Images)

Linear pay- and free-to-air television will remain critically important for sports audiences and media rights revenues in the next five years in many Asia-Pacific markets, even as online video grows rapidly across the region, industry analysts Media Partners Asia say.

MPA is predicting 24-per-cent growth in online video advertising and subscription revenues in Asia-Pacific as a whole between 2018 and 2019, bringing the sector to $27bn in revenue.

But there is a sharp division between developed markets, such as Australia, New Zealand, China, Japan, Korea and Singapore, and less-developed markets in the Indian subcontinent and Southeast Asia, in terms of overall online video revenues and, more specifically, the significance of the sector for sport.

In the developed markets, Srivathsan A R, senior analyst at MPA, told SportBusiness Media, “where people have propensity to spend, good broadband access – mobile or fixed – they’re willing to consume sports online, they’re not waiting for it on pay-television or on free-to-air”. In the next five years, he said, online video was probably “going to become the primary driver of consumption of sports.”

In Australia, for example, MPA research shows that currently 15 to 20 per cent of both time and money spent by households on online video goes on sports content. 

In India and less-developed parts of Southeast Asia, online sports video services will in the next few years remain incremental add-ons to linear services, accounting for a relatively small share of viewing and revenues.

In India, Srivathsan said, “we see that about 80 per cent of monetisation of sports content still rests on pay-television. The rest will come through online video, and consumption will be similar.”

In Southeast Asia, he said, “Pay-television platforms still control key rights including the Premier League, and you have two big regional players: beIN Sports and Disney, with Fox Sports. How Disney develops its sports business may be key… The branding, bidding for properties across TV and online – are they going to make bets or just drive efficiencies?

“The promise of Facebook and DAZN coming into Southeast Asia and disrupting the marketplace has not been realised. The well-backed Mola TV and Emtek/Vidio in Indonesia are, however, investing in premium sports properties to scale online through subscription and advertising models, and that’s going to be interesting to see play out. 

“In Malaysia and Singapore, it’s Astro and Singtel trying to protect the pay-TV window and enhance the consumer experience online with their authenticated OTT services. The same applies to True in Thailand and K+ in Vietnam.”

For now, Srivathsan said, “Without distributing sports rights on a free-to-air or pay-television channel, you’re not going to sustainably monetise them in Indonesia, or Thailand or anywhere in Southeast Asia… We see that for the next two or three years, unless somebody comes in and disrupts the market in a big way.”

A deal by Facebook for Premier League rights in Thailand fell through earlier this year. DAZN has postponed a planned launch in several Southeast Asian markets due to coincide with the start of 2019-20 European football season.

Another big factor affecting sports media rights values in the region currently is piracy, which Srivathsan said is “impacting hugely” on the market: “Pay-television is in decline, maybe thanks to piracy, maybe thanks to cord-cutting, maybe thanks to other services that are coming up. But because of piracy…people are not buying sports channels on pay-television. And, given there is no digital player willing to come in for the long term and that can do a sustainable distribution of sports content, we are having an issue of federations having to revise their rights value targets.”

Facebook changes tack

None of the major US online video players has yet made a serious move in sport in Asia-Pacific, Srivathsan noted, including Facebook which looks to have switched strategy away from acquiring live sports rights:

“We’ve not seen the likes of Amazon, Facebook and Twitter doing anything big. These are the big aggregators but they’ve not done anything big in this region.

“Twitter and Facebook are currently focusing on partners, getting short-form clips and content from federations and rights owners in each market, so they’re kind of happy with that.

“Facebook wanted to do something big but due to other issues they faced, they’re going to step back from acquiring live rights – I don’t think it’s any longer a focus for them.”

Facebook still has live rights for LaLiga in India. It sublicensed the rights to pay-television platform Sony Pictures Networks last season, but has not agreed any such deal so far this season.

Local content opportunity

There are still opportunities for sports media rights revenue growth in Southeast Asia, Srivathsan said, particularly with under-developed local properties. He pointed out that free-to-air audiences for some local properties, such as national team or club football and badminton, were often significantly higher than audiences for top-rated international content like European football or the Fifa World Cup. If an enterprising and skilled investor was to follow examples set in other markets, such as the Pro Kabaddi League in India, there is potential to build the value of some local properties, he said.

“Sports are a driver of the top 10 or 20 events each year for free-to-air television in these markets. And that’s all local content…so there is always scope for a local league to do well. One, it needs investment, two it needs a committed player who is trying to market it and trying to distribute the content.”

Revenue boom

MPA predicts that online video revenues across Asia-Pacific will have a compound annual growth rate of 13 per cent between 2019 and 2024, reaching $50bn annually. Growth is being encouraged by “rising investment and competition, widening broadband access and ongoing development of local content, payment infrastructure and IP protection”.

China’s currently contributes 59 per cent of industry revenues, benefitting from the presence of its “digital majors” Alibaba, Baidu and Tencent. More recently, Bytedance, owner of the trending short video app TikTok, had joined them as a fourth “formidable force” in the market. MPA noted that the three are “absorbing sustained losses in video thanks to profitability in other parts of the business…This allows them to buy and create local premium content in volume, as well as exclusive sports rights, while developing innovative technologies and large talent pools.”

Commenting on MPA’s projections, the company’s executive director Vivek Couto said: “The online video industry is evolving and growing rapidly across Asia Pacific. This is especially true in countries with a significant addressable broadband market, developed payment infrastructure and a dynamic local content ecosystem, as entertainment and, in some cases, sports rights move online. Government-enforced IP protection has also been relatively effective in some markets, helping drive the market forward.

“At the same time, deep investments in content and technology have helped a handful of homegrown and global players to scale and dominate market share. Some of these players have access to abundant capital, with content and video distribution forming part of larger ecosystems in some cases, subsidizing costs and investment. Standalone OTT video remains loss-making in Asia Pacific on the whole, although some operators should start to see profits over the next three to five years, either in large domestic markets or as part of an expanding global and regional footprint.”