The arrival of niche sports streamer EDGEsport in Germany alongside Austria and Switzerland is admittedly small beer compared with the launch of Apple TV+. But it underlines the disruption threatening to rip through live sports TV over the next few years just as the SVoD business adjusts to a new order dominated by six major global forces. Of course, the two are connected given that some of the media moguls, such as Comcast and Disney, are major players across live sports, TV and movie production, while Amazon in particular of the tech giants also has a large foot in each camp.
For smaller dedicated players such as EDGESport, the aim is to ride the growth in live sports streaming to become global players and gain scale that way, even though they lack rights to major events or leagues. But, again like some of the others, the operator is not just going it alone but building an audience base through distribution arrangements with established pay TV operators. For Germany, Austria and Switzerland, EDGEsport’s parent company, sports broadcaster Sportdigital, has gained carriage agreements with Sky over its DTH platform and also with OTT provider Waipu.tv. This followed securing of a license from Germany’s Commission for Concentration in the Media (KEK) in October 2019.
EDGEsport in turn operates via a sublicensing agreement with UK-based sports rights distributor IMG, which itself offers the channel in 40 other countries, including the US, along with markets in Asia and Eastern Europe, claiming to reach 300 million households, although in many cases just as part of a long catalogue so that the number of regular viewers will be significantly less.
It is billed as a specialist in action sports, with coverage including The World Snowboard Tour, Bowl-a-Rama Skateboarding, UCI BMX Supercross World Cup, PKRA Kiteboarding World Tour and live ASP World Championship Tour Surfing. In its bid to become a global niche sports player, EDGEsport is entering territory that has been occupied by Eurosport since its emergence as a pan-European sports network in the early 1990s, which still tends to avoid bidding for the most expensive premium rights even after its takeover by Discovery between 2012 and 2015. Eurosport’s model is still to create footage that can be replicated across multiple markets using unseen commentators so that the same visual feed may be rebroadcast in different languages, keeping down production costs.
However, Eurosport does now harbor ambitions beyond the likes of EDGEsport to become a higher tier player, having paid €1.3 billion ($1.5 billion) to broadcast the Olympic Games from 2018 for most of Europe and in 2022 in the UK and France.
We can now identify five categories of player in sports streaming, starting with the established operators or networks that have dominated the major rights almost since the dawn of pay TV, like Comcast’s Sky and CBS Sports. Then there are the sports distribution divisions of major content players, such as Disney’s ESPN and ESPN+ or Discovery’s Eurosport. Thirdly there are the tech giants like Amazon and to an extent Facebook and Google circling around. Fourthly come dedicated channels such as DAZN and Eleven Sports aiming to compete on the global stage with the big players for major rights. Then finally there are the niche players aiming for scale via global coverage, where EDGEsport fits in. As we have seen, there can be some overlap between these categories, as with Eurosport.
Of these, the fourth category is the one where the stakes are highest, because most of the others are either well entrenched, well-endowed financially, or in the case of the fifth category likely to follow a sustainable model where the rights themselves are affordable and often quite inexpensive.
DAZN and Eleven Sports spring to mind in the fourth category with bold ambitions but rather contrasting fortunes. DAZN is the one most likely to succeed in becoming a major player 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.
Eleven Sports, set up in 2015 by Italian sports entrepreneur Andrea Radrizzani, has on the other hand had a far bumpier ride whose destiny is still in the balance. Like DAZN, Eleven Sports sought distribution partners in some markets and succeeded in Portugal with telco Nowo and also Poland, with Polsat. In fact, the latter went on to acquire a share in Eleven Sports Poland for $43 million in May 2018.
But after that, Eleven Sports’ distribution strategy went off course, for various reasons. It had acquired rights to UFC mixed martial arts starting from January 2019, but then after failing to meet distribution targets an exit clause was invoked, and UK rights went instead to BT Sport.
Meanwhile Eleven Sports had got into trouble over European association football rights in the UK. It had acquired UK rights to both Italy’s Serie A and Spain’s La Liga ready to stream the content, while also hoping to negotiate carriage rights with one of the major sports distributors, either Sky or BT Sport probably. But it failed to do so and faced the prospect of having to close down its UK and Ireland operations. It just managed to avert this fate by offloading rights to Italy’s Serie A to pay TV operator Premier Sports while continuing with Spain’s La Liga. But then things got worse as La Liga also re-assigned its broadcast rights to Premier Sports until the end of the 2021/22 season, leaving Eleven without any live content for the UK and Ireland.
The operator did manage to retain La Liga rights in four other European territories, Poland, Belgium, Luxembourg and Portugal, but losing the UK was a major blow. It highlights the problems for emerging players trying to compete at the top table, where rights can be split not just geographically but also between broadcast and streaming, with clauses specifying targets. It shows also that dealing in rights to top sports in second tier markets is a risker proposition perhaps than second tier sports in major markets.