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14 November 2019

DAZN disrupts Cable Congress, seeking solidarity not war

Disruptive sports streaming start-up DAZN was a refreshing face at a tired looking Cable Congress, which soon shook people awake by presenting its contentious operator partnership program already securing signatures from Sky, Swisscom, J:Com and even Comcast.

DAZN’s Ben King, SVP, Global Distribution and Business Development, delivered up a tasty proposition to operators. “You partnered with Netflix so why not partner with us – the Netflix of sports,” was essentially the message. But with live sports being the glue holding the pay TV bundle together, why would operators relinquish control to an OTT video platform bidding for the same sports rights as them?

DAZN is trying to promote itself as complementary to the cable TV package, currently aggressively priced at around €11.99 a month across the 9 countries where the service is currently available. Although this European price is certain to rise as with its US price point, which was recently hiked steeply from $9.99 a month to $19.99 a month.

But there is more to DAZN than content. The three-year-old firm is buttering up operators by offering its esteemed engineering to work in partnership with operator engineering teams, providing access to DAZN’s CDN technology. DAZN also scaled up its advertising platform earlier this year with DAZN Dynamics, which exploits its real-time sports data to inject additional context into targeting decisions.

“As well as an app, we can appear on your set top EPG like any other channel to look more familiar and so pay TV subscribers can get accustomed to consuming sports in a new way,” said King, adding that DAZN can feed into an operator’s existing recommendation engine.

Naturally though, getting DAZN deployed on pay TV set tops has hardly been a breeze. “Set top variants have made life difficult. Sometimes you have to create 10 different versions of an app to support an operator’s set top footprint – supporting different manufacturers using different chipsets and different DRMs,” King noted.

He cited that 32% of sports fans would cut the cord if sports went direct to consumer. Not a startling statistic but certainly a warning shot designed to scare pay TV service providers into partnering DAZN rather than fighting it and using the futile Netflix resistance as its backing.

Disney+ was the name on everybody’s lips this week and so how does DAZN compete with the company’s ESPN+ service? “This may shock some people from the US but outside of North America, ESPN has a poor brand and hardly any sports rights, even though it’s owned by a global brand,” said King.

It isn’t just operators being lured in. DAZN and Mediaset last week joined forces to bid for domestic Spanish rights to show Copa del Rey soccer matches, according to local paper El Espanol. Rival Spanish media group Mediapro reportedly offered €18 million for the rights but this was rejected by the Spanish Football Federation, which is apparently after €45 million per season.

Of the OTT sports streamers trying to compete against the big boys, we see DAZN being most likely to succeed, on the back of a canny strategy both in rights acquisition and content distribution. The risks of trying to reach the top table were soon exposed as DAZN quickly amassed net debts of $726 million after its launch in August 2016 by London-based Access Industries, with the bold claim of being the new Netflix of sport. But its strategy of acquiring largely rights to major sports but for more minor territories, at least to begin with, paid off, as debts were cut to $50 million by the end of 2018, according to another London-based sports media company SportsPro.

DAZN analyzed audience data to identify promising countries for premium sports rights away from their primary domestic market but where there was proven demand for the product, such as EPL (English Premier League Football) in Japan and the UEFA Champions League in Canada. Although still involving significant outlays for an emerging player, generating those debts, the costs of such rights are more manageable and conducive to acquiring an attractive international portfolio.

DAZN has also profited from not sticking religiously to streaming but also seeking carriage via established platforms, for example on Sky’s platforms in Germany and Italy. While this gives up a proportion of its subs it gains profile, expands its audience reach and benefits from the operator’s own promotion.

DAZN’s presentation at Cable Congress this week was a brave move from event organizers and the company’s inclusion on the billing is reflective of the evolution of the industry and the show itself – which we expect to be rebranded in the not too distant future.