UEFA denies its OTT service is nail in coffin for pay TV, just yet

UEFA, the body governing European football, has made the latest move towards D2C sports streaming with the launch of its first OTT video platform, with a claim that it is helping rather than competing with existing rights holders by boosting fan engagement. This claim rings hollow when we consider that the new service will host live matches in regions where there are no current rights holders for its Champions League and Europa League club games, as well as next year’s Euro 2020 national tournament. It is true that only a handful of smaller countries are not covered by paid rights, such as Belarus, Moldova, Kazakhstan and the Philippines, but this will allow UEFA to establish itself as a direct live distributor, while gaining mindshare elsewhere with a range of original programming combining football archives, youth events, women’s and futsal competitions.

There will also be behind-the-scenes content and interviews, but significantly in Germany UEFA will be trialing a separate channel showing highlights of the weekend topflight Bundesliga matches, redolent of “Match of the Day” familiar with UK soccer fans since the 1960s. It will in addition archive Bundesliga matches and UEFA Champions League matches involving German teams, resulting from a partnership reached with the German Football League (DFL) for this separate channel on the streaming platform. If successful, we can expect UEFA to seek similar partnerships with other European national leagues, although some of them may have their own ideas of going D2C themselves. UEFA says it is offering all national associations the opportunity to host their own content to expand their reach, including live matches, highlights and interviews.

The UEFA move is significant though because of the popularity and reach of its three events, particularly the Champions League and second tier Europa League, featuring the continent’s best teams in annual combined league and knock out tournaments. Virtually all the world’s best players feature in these competitions because the prestige and remunerations are far higher than for the corresponding South American and Asian tournaments for example. The UEFA Euro championships every four years also draws large global audiences second only to the World Cup among inter-country tournaments, reflecting the recent dominance of European nations on the world football stage.

However, the larger national leagues are likely ultimately to go D2C or deal directly with streaming platforms that offer benefits in terms of quality or synergies with other services, as Amazon can. Indeed, the English Premier League (EPL) has been using Amazon to gauge demand for live streaming and user behavior around two packages of mid-week games featuring all teams, 20 games per season altogether. The deal running for three seasons from 2018/2019 was the first in the UK involving a non-legacy pay TV operator and is also a proving ground for Amazon, which will collect data over the three years of the deal to help determine future strategy.

Significantly, the experience so far has already generated growing momentum towards complete D2C severance from legacy pay TV next time round and possibly bypassing Amazon as well. The growing mood was captured by former Crystal Palace Football Club chairman Simon Jordan, who spoke of the EPL having the opportunity to become the ‘Netflix of football’ controlling its own product. He speculated that given 100 million subscribers on say ‘Premier League TV’ paying around $10 a month as they do on Netflix, that would generate $12 billion a year, far more than the $11 million or so currently earned every three years for rights sold to various broadcasters worldwide, with Comcast’s Sky holding the major package in the UK. Such projections, Jordan argued, would prove compelling.

Of course, soccer is not the only sport moving towards D2C and is if anything lagging the curve, certainly compared with the major US sports of American football, basketball and baseball, as well as the top second tier sports like hockey, while major boxing matches have been PPV (Pay Per View) for a while, albeit not just on streaming platforms. Other sports with near global reach, including tennis and formula 1 motor racing, have also been testing OTT. The ATP (Association of Tennis Professionals), which governs men’s tennis, live streams matches from its ATP Tour website, subject to rights which tends to preclude some major events including grand slams in certain territories.

One of the most notable moves from a major sports rights body was made by Liberty Media, owner of Formula One, in launching its platform F1 TV Pro in 2018 because that is positioned to seize coverage from existing legacy rights holders. Significantly, F1’s head of global sponsorship and commercial Murray Barnett stated, “We see F1 TV as an independent revenue stream outside of the relationship with our TV partners.”

This runs alongside an agreement with ESPN allowing the OTT service to be exploited separately, which F1 is doing in part by making F1 TV Pro subscriptions available within Amazon Prime. Otherwise it is available separately for around $10 a month, offering live streams of qualifying sessions and races free of commercials, with a choice of 20 on-board cameras, plus press conferences and interviews.

Following beta testing in 2018, the service went fully live for the 2019 season in 64 countries. The UK is the main exception because Sky Sports retains exclusive rights there, but the broadcaster has still felt the chill winds of the D2C move. Sky has been forced to reduce the price of its F1 channel on its dedicated OTT platform Now TV to £150 ($200) for nine months, less than half the £305 for the same period of 2018.

Meanwhile there have been interesting ructions within some of the US sports leagues, which so far have been mostly confined to toe in the water exercises like NFL’s Game Pass, which just provides access to non-live matches with associated behind the scenes content. Game Pass appeals mostly to hard core fans, given the not insignificant price tag for such a package of $100 a year.

NFL has been losing faith in AT&T’s DirecTV, its primary partner for its Sunday Ticket aimed at fans unable to see their team on local television because they are away or reside in a different rights area, or sports bars seeking to attract fans of out of town teams. The deal runs until 2023 but NFL has been in discussions around an early termination clause in its agreement for the Sunday Ticket rights package and also been talking to Amazon and Disney. DirecTV is not out of the game but the NFL has made clear coverage will have to switch to the streaming platform DirecTV Now. In fact, AT&T has now acknowledged reality and dropped the NFL Sunday Ticket from both the main DirecTV satellite offering and also U-verse IPTV service.

It is worth emphasizing that events are not all moving the way of the big tech platforms. Facebook registered a coup in 2017 when Major League Baseball (MLB) became the first big league to stream games exclusively via any social media platform. But this year MLB reined back on this agreement by just allowing Facebook to stream six live matches in 2019 on a non-exclusive basis, compared with 25 exclusives in 2018. MLB indicated it is still experimenting to find the best route to its fans and wants to combine a number of channels.

Equally, events are not going against the traditional pay TV players. In the UK, Sky Sports in October 2018 gained broadcast rights there to the National Basketball Association (NBA) in a new four-year broadcast and multi-platform partnership. This could be seen as a coup because the NBA had previously negotiated UK rights on an annual basis but persuaded by Sky’s online strategy to sign a longer deal.

Then on a larger scale, Sinclair Broadcasting has staked out a strong position across a number of sports through its acquisition of the 21st Century Fox regional sports networks from Disney at a valuation of $10.6 billion. This sale was forced on Disney by US regulators to clear the way for purchase of Fox assets for $71.3 billion. Sinclair saw off a joint bid from Liberty Media and MLB, along with investors led by Ice Cube’s Big3 Networks, to acquire a network of regional US sports network. As a result, it is now a major player in local US sports,

Sinclair initially argued that sports was the one content area still propping up legacy cable services but now does not care where its content goes and will be quite happy if consumers prefer to watch its sports and entertainment channels online. In fact, in January 2019, Sinclair announced an online bundle called STIRR, a streaming TV service that will include digital versions of Sinclair’s local stations alongside entertainment offerings and also eSports. The service is free and ad-supported, pitched at less affluent customers unwilling to pay subscriptions, which Sinclair reckons is a significant market in the US.

What we are seeing then is the emergence of many distribution models around live sports jostling for position and the only certainty is that the field will look very different in a few years’ time in the next cycle of rights contracts.