Streaming Forum: DAZN's Fan-First Sports Service

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DAZN launched with the aim of being a "Netflix for sport," and sport is today an $87 billion market, said CTO Florian Diederichsen today at Streaming Forum in London.

Diederichsen noted that ESPN has lost a staggering 13 million subscribers in five years in the U.S., going from 99 million subscribers in 2013 to 86 million viewers in 2018.

The DAZN vision since its launch three years ago has been a fan-first over-the-top (OTT) approach. It’s also a subscription approach, meaning that it could be canceled at any time. 

The company started in the German-speaking markets which, according to Diederichsen, had a very established base of sports fans. 

In 2018, DAZN subscribers consumed 265 million hours of live content—equivalent to 30,200 years of continuous streaming.

Besides the fan-first philosophy, DAZN has a device-agnostic approach. Fifty percent of plays, especially sports highlights or clips, are consumed on mobile and tablets as of the end of 2017.

DAZN's parent company, Perform, holds the relationship with rightsholders, including a 15-year relationship with long-term rights to the NFL outside the United States, as well as a number of additional leagues.

Diederichsen pointed out that living room still accounts for about two-thirds of OTT consumption, including viewing sports content. This is especially true in markets like the U.S., where three-quarters of content is consumed in the living room.

Given DAZN’s primary focus on European leagues, countries like Italy have much higher live plays of sports, with upwards of 90% consumption being live. In the U.S., since there’s a time shift for European leagues, the majority of content consumption is video-on-demand (VoD) instead of live.

Italy also presents a harbinger of what's to come, as the vast majority of consumption comes from mobile devices. This is primarily due, to the fact that home connectivity is less reliable and more expensive than mobile connectivity, according to Diederichsen.

"What can possibly go wrong?" said Diederichsen, when discussing their launch three years ago, adding a Mike Tyson quote to emphasize his point.

"Everyone has a plan until they’re punched in the face."

Some of the issues DAZN faced included huge audience spikes, latency issues, and connectivity issues for both broadband and mobile.

Diederichsen noted that audience spikes, even with cloud service providers, continue to present a challenge. Auto-scaling isn’t a panacea, since the additional servers need to be "pre warmed" before being added to the auto-scaling inventory.

Latency currently sits at approximately 25 seconds, which is better than typical OTT streaming, but far slower than cable television at 15 seconds.

"Latency is huge," said Diederichsen, "especially if you are up against second screens—for fantasy leagues—or you can hear your neighbor's radio."

At the moment, according to Diederichsen, DAZN can handle 10 million viewers, which should take them into mid-2020 without any significant scaling issues.

DAZN also does its own end-to-end production, with Diederichsen sharing a model of Bundesliga content being shown in Japan, which includes pushing video to Japan for localization of commentating and graphics, then back to the UK for transcoding to be delivered.

"It's a lot of work,” said Diederichsen, "but less costly than acquiring production services in each location."

Diederichsen finished his keynote by saying that 5G is interesting but not a deal breaker for DAZN. One area it could help would be with its Japanese app, which is sent into the stadiums and might see 40,000 users accessing it via mobile within a single stadium. 

From a product standpoint, Diederichsen says that social integration would move DAZN beyond being the "Netflix of sport" and more towards a personalized Facebook account. That also limits piracy because these personalized accounts aren’t typically shared with multiple friends as a way to bypass paying a service fee.

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