PremFlix: the Premier League’s plans to introduce a ‘Netflix-style’ OTT service
Few football fans suspected that Simon Jordan, the outspoken former chairman of Crystal Palace FC, would be vindicated when he proclaimed on talkSPORT that the Premier League should liberate itself from traditional broadcasting rights deals and become the “Netflix of football” i.e. be its own broadcaster. Yet Jordan’s prophecy appears close to (partially) coming true, as last week it was reported that English football’s top flight is developing plans to offer its own bespoke over-the-top (“OTT”) streaming service in some territories, which would see matches in these territories made available directly to fans, possibly as soon as 2022.
What is OTT?
OTT refers to the practice of streaming/making available content provided via an “over-the-top” internet connection, such as Netflix, as opposed to a telecom broadcaster. OTT is now synonymous with video-on-demand services that offer access to film and television content. More recently, broadcasters such as DAZN and Amazon have provided OTT service in a sporting context.
What is the Premier League’s current broadcasting model?
The Premier League currently sells broadcast rights to traditional broadcasters, such as Sky Sports, NBC and Canal+, and third-party streaming services, such as DAZN and Amazon Prime. The Premier League is extremely good at negotiating these traditional broadcast rights deals; the value of domestic and international rights for the 2019-2022 rights cycle reached £9.2 billion and last week, the Premier League sold its 2022-2028 pan-Nordic broadcast rights to NENT Group for £2 billion. Given this success, the old adage “if it ain’t broke, don’t fix it” comes to mind - so why might want the Premier League want to launch its own OTT service to operate in certain territories?
The rationale for a move to OTT in some territories
Fundamentally, it comes down to generating revenue. Media reports suggest that the Premier League’s reasoning is that this means of broadcasting matches could generate more revenue if a direct-to-consumer OTT service is launched in certain territories. For example only, Singtel reportedly pays the Premier League £70 million a year for the 2019-2022 broadcast rights in Singapore, yet receives approximately £175 million a year as income from subscribers to its services. It does not take long to see that there is, theoretically, a lucrative opportunity here for the Premier League; if no other broadcast rights were granted in Singapore, it could stream directly to Singaporean fans and everything being equal, it could generate substantial additional revenue. Indeed, the Premier League reportedly came very close to trialling its own OTT service in some countries, including Singapore, for the 2019-2022 rights cycle. An OTT service might also be viable in territories where broadcast rights are under-exploited i.e. territories where the Premier League is not currently broadcast or territories where there is minimal broadcasting, such as one game per week, provided that the infrastructure is there to support it.
What could the consequences of a partial move to OTT be?
1. Revenue: the Premier League and its clubs value the safety of traditional media rights deals as they receive guaranteed, predictable and sizeable broadcast payments from the Premier League. Because of this, broadcast revenue is a key component of the relative financial advantage that Premier League clubs have over their competitors in La Liga, Serie A and the Bundesliga. If the Premier League were to introduce its own OTT service in some territories, it would become partially reliant on consumers for subscriptions, which puts more risk on the Premier League and, by extension, its clubs as some of its broadcast revenue would not be guaranteed or predictable. Therefore, the Premier League would need to be convinced of the long-term commercial advantages.
2. Compliance with the AVMS Directive: any OTT service made available within the EU would have to comply with the EU’s new Audiovisual Media Services (“AVMS”) Directive, which creates a new regulatory framework for broadcasters and providers of audiovisual content in the EU. Amongst other things, the AVMS Directive will introduce measures to better protect minors against harmful online content and inappropriate advertising (alcohol and HFSS foods are specifically mentioned). Following a consultation in May 2019, the Government has announced that it plans to implement the AVMS Directive into UK law by September 2020. Other territories also have their own specific regulations so if the Premier League assumed the role of the local provider, it may have to comply with different regulations across the selected territories.
3. Resources: the Premier League would be taking on potentially large production costs such as studio presentation, preview and review programming, distribution and international programming (assuming the status quo is maintained in this country and licensees continue to produce match coverage). It would also have to market the OTT service in the territories that it selects to generate subscribers.
4. “Off-season” content: the Premier League season runs from mid-August to mid-May so it would be a challenge for the Premier League to create content in the “off-season” period so that subscribers retain their subscriptions. If not, subscribers will be likely to cancel their subscriptions and would need to be persuaded to re-subscribe. In contrast, streaming services such as Netflix can offer almost unlimited content at all times which would likely place a future OTT service at a competitive disadvantage.
This week, the Premier League’s executive director Bill Bush said that the Premier League will continue to favour broadcast rights deals for the foreseeable future. Perhaps this shows that the Premier League is mindful, at least in the short-term, of the risks attached to partially moving away from what has been a successful broadcasting model. Yet, as the popularity of the Premier League continues to grow among international audiences, the temptation for it to break the tried and tested status quo and implement an OTT service in some targeted territories will surely increase.