The Strategist

English Premier League to quit TV broadcasting

02/12/2020 - 05:52

The English Premier League (EPL) is considering introducing a new scheme for selling media rights. The idea is to phase out contracts with television companies and switch to signal distribution through its own streaming service. According to estimates of the EPL, whose global audience is around 200 million households, the project will allow significantly increasing revenue from the implementation of media rights - from the current £ 4.2 billion a year to £ 24 billion a year. In turn, this will allow the English league to become the world’s largest tournament in terms of revenue.

The EPL’s intention to review the monetization scheme for media rights was announced by its CEO Richard Masters, quoted by the Daily Mail. According to the publication, already in 2022, when existing contracts for the sale of broadcasting rights expire, the league may move to the Over the Top (OTT) sales scheme in certain markets. The essence of the latter is that the signal is transmitted to the consumer without the mediation of a television company or other seller of media content. In short, this is the model of Netflix with appropriate adaptation, the Daily Mail writes. Implementation of the project can significantly transform the sports broadcasting market.

Richard Masters noted that the Premier League is pondering gradually moving away from the traditional scheme of implementing media rights, even during negotiations on the sale of broadcasting rights for the period from 2019–2022. In the domestic market, they brought the Premier League £ 4.5 billion. Moreover, the contracts for the previous cycle, also designed for three seasons, allowed the Premier League to earn £ 5.1 billion in the domestic market. The losses were offset by an increase in the proceeds from the sale of rights to show matches abroad. They increased from £ 3.2 billion in the previous reporting period to £ 4.2 billion in the current. Nevertheless, the EPL came to the conclusion that the growth potential of revenues from the realization of the rights to broadcast, if the company follows the traditional scheme, is close to exhaustion.

This prompted the Premier League to look for ways to increase sales. Creating its own streaming service is considered as a key condition for adapting the EPL to new conditions. According to Richard Masters, the league was ready to change the scheme of supply of services even during negotiations on existing contracts with television companies. But then the company did not dare to take drastic steps. “As a result, the Premier League will shift at least to a mixed system. It will include direct signal delivery to the user and its distribution through traditional channels,” said Richard Masters.

The prospects for the Premier League’s project to create its own channel for monetizing broadcast rights are serious. There are two important factors. First, the EPL’s permanent global audience, which, as was said, is estimated at 200 million people. Secondly, the opportunity to save, which will appear for viewers when switching to a new format for consuming content.

Note that the Premier League is not the first sports structure that has thought about refusing to mediate TV channels. The most striking example is the boxing matches broadcast market. At the moment, the key player on it is the DAZN streaming service, which supplanted paid TV channels like HBO.