How Premium Sports Streaming Licensing Will Shake Out in 2024 and Beyond

As the prices paid for top-tier sports streaming rights continue to reach astronomical levels, and the potential disruption created by the blockbuster ESPN/Fox/Warner Bros. joint venture (popularly termed “Spulu”) teased in February, what sports licensing will look like as 2024 rolls on and who will be able to afford it is anybody’s guess. Will it play out differently in the U.S. and Europe? And as costs are passed on to users, why wouldn’t sports fans just stick with cable?

Evan Shapiro, CEO, ESHAP, discusses this topic with Paul Erickson, Founder and Principal, Erickson Strategy & Insights, Ophelie Boucaud, Senior Analyst, Dataxis, and Alan Wolk, Co-Founder/Lead Analyst, TVREV, in this clip from Streaming Media Connect 2024.

“Which company is best positioned to fully leverage the massively expensive sports rights leagues relationships right now?” Shapiro wonders. “I think Big Tech is the only suite of companies that are going to be able to possibly afford the crazy prices necessary to purchase the best sports rights out there. So, are the NFL, IPL, and Premier League those types of companies? Reliance is the owner of cricket streaming rights in India. Disney now owns a massive set of rights, but if you look at where the puck is going in the US, YouTube and Amazon seem to have a better position than ESPN might. So I'm going to toss this out there to you all, but also on the back end of that, [where does Spulu stand], in the context of all this, [and] who can best take advantage of sports rights?”

Erickson says, “I think it's been a longstanding problem for services where there's been a continual rise in the cost of content, especially the highest value content, which tends to be sports. And we see already, from what Amazon has done with the NFL and what Google has done with YouTube TV. And I think it's only going to accelerate the inflation of prices when it comes to live sports. And in the end, how are they able to afford it? Well, they're able to absorb it in their very diversified businesses. They can absorb that massive cost and make it work.” He further emphasizes that entities like Spulu may be one of the only entertainment industry conglomerates with enough bargaining power to go up against Big Tech.  

However, Wolk thinks that the Big Tech companies will remain dominant in sports streaming because the various leagues know they will still be around in a few years compared to any of the streaming platforms. Platforms such as the Google-owned YouTube TV can offer a larger suite of sports at a lower price than streaming services.

Shapiro notes that this is the biggest issue for broadcasters and streamers regarding sports in the US and Europe. “These rights aren't profitable,” he says. “There's just no way to make them profitable. I don't care how many subscribers you sign up for a day; it's going to be hard to justify a hundred million dollars per game.” However, he says the situation is better for broadcasters in Europe because live sports are essentially a guaranteed public service.

“Yes,” Boucaud says. “But then you also have a lot of premium sports that are very expensive, and that used to be bought by the big pay TV names in Europe, [like] Sky, Canal+…”

“Who’s going to buy those now, do you think?” Shapiro asks.

Boucaud says that it will primarily be DAZN. Shapiro asks her what DAZN’s strategy is since, to him, it feels more like an “exit strategy.”

Boucaud says that DAZN recently published its 2022 annual report, and while it was released oddly late, it showed that it is reducing its debt. Even though it is still $1 billion in debt, she speculates that its situation may have improved in 2023.

“But they’ve invested in many sports rights over that time,” Shapiro says.

“But they have a very interesting strategy because they're an OTT platform,” Boucaud says. “They can afford to do stuff that not many other pay-TV cable codes could do before, which is investing a lot in betting [and in] additional interactive features and merchandising. They can push revenue-driven features way better than the others used to do because they mostly relied on broadcasting to generate revenues. So it might be that they're actually heading for profitability, not so far off from now.”

Shapiro observes that in Europe, traditionally, sports broadcasting has often been bundled with mobile carriers, which may help to offset other losses.

“They used to be,” Boucaud says. “But less and less now. Amazon Prime entered in France and DAZN has the rights in most markets now, except for France. But the tender is still pending for the domestic championship in soccer. And the thing is, outside of soccer, not much costs a lot in Europe.”

Wolk asks Boucaud, “Do they make less money on advertising in soccer? Because in American football and basketball, there are just so many breaks. They can run so many commercials. Soccer is a very different game. Do they make less money that way?”

“Yeah, they make way less money,” Boucaud says. “I don't know how it works exactly for media sales in the US, specifically for the big games, but in Europe, we still have very strong regulations across the different markets regarding advertising sales. So you are limited in how many ad breaks you can put in, and even if the prices go up during big games, it's nowhere comparable to what's going on with the NFL. Nowhere.”

See videos of the full program from Streaming Media Connect February 2024 here.

We'll be back in person for Streaming Media NYC May 20-22, 2024. More details here.

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