Broadcast sports rights: premium plus
Sport as a contest has had a passionate following for millennia. Television’s role has been to show this to a global audience with each viewer having the best seat in the house. The price paid for broadcast sports rights may surprise, but the symbiosis between television and sports is potent, and may become more so. Sports’ mix of elite contest, success and disappointment makes compelling television.
Along with substantial growth in rights fee spend, there continues to be increased investment in the quality of broadcast production for sports. Premium rights owners face a continuing challenge to ensure cutting-edge broadcast quality, for example by evaluating the viability of ultra‑high definition (UHD, also known as 4K) coverage, while broadcasters are required to consider their investment in terms of both rights fees and production spend319.
It is important for broadcasters and production teams to review continuously the technologies available to them to enhance the value that their viewers and customers derive from being able to watch sport. For the television experience, this includes UHD, super‑slow motion and a choice of live matches. On‑demand services for viewers include a choice of live matches, camera angles, player tracking and instant replays, statistics and commentary. Making all this available not just via the television but also via any other device that the fan may want to use should increase perceived value, even if these additional viewing options are seldom exercised.
Sports rights owners and new technology companies continue to develop their relationship, and to consider how sports content can be both broadcast and appropriately monetized. A number of rights owners are experimenting with YouTube or other online video platforms, in order to stream live content in territories where broadcast rights have not been sold or to provide additional content. We see this trend continuing.
Owners of non‑premium rights should not despair: rights fees for non‑premium sports have in many cases increased, but at a fraction of the rate or scale achieved by premium properties. For these competitions and events, the challenge is to secure distribution through a suitable media platform, to obtain exposure. While rights fees themselves may be comparatively low, they may typically be a relatively important source of revenue that can also have benefits for other revenue streams.
There is also room for innovation to create new sports and formats for a global TV audience. Consider for example the case of the Ultimate Fighting Championship (UFC), whose growth has been driven significantly by pay‑TV television exposure. UFC was purchased by its current owners for $2 million in 2001; it now turns over $500 million annually, is broadcast in 148 countries, and pay‑per‑view fees are up to $50 per transaction.
Middle East perspective
With very limited room for Middle East broadcasters to profitably exploit the broadcast rights of top international leagues, we are approaching an important turning point in the region’s sports rights market.
Region-specific sports properties are now growing faster but compared to their European and American league counterparts are still significantly undervalued. Previous studies showed that broadcast rights of top local leagues in 2011 were at least 8.2 times less valuable than the EPL and UEFA Champions Leagues. Now with higher growth prospects, we expect local leagues to bridge part of this gap, keeping in mind that there is still a long way to go before local leagues become valued at their true potential.
While the growth story is positive, regional broadcasters should be careful in balancing their investment in sports rights against the monetization value they expect to gain from an increased subscription base. Although Middle East pay-TV subscription levels are finally rising at a faster pace, with beIN Sports’ 26 percent subscription growth last year, the growth primarily stems from more affordable pay TV propositions, driving down Average Revenue Per User (ARPU) levels in the region.
In such a competitive market and with TV piracy still a prevalent issue, broadcasters need to work hard to retain and grow their pay-TV subscription base. With the introduction of HD channels, video on demand (VOD) and 3D TV, pay-TV operators are now offering enhanced viewership experiences for sports. Leading regional advancements in this space include Al Jazeera’s new sports contribution network for beIN Sports, implemented by and in partnership with Ooredoo. The new network enables the broadcaster to offer significantly improved high definition picture quality to all its MENA viewers directly from its Paris and Doha studios, through improved signal continuity and loss-less signal transmissions across geographies.
Another potential development could also see the region’s telecoms operators entering the local sports rights space, as BT has done with the EPL in the UK. This is a plausible scenario as telecoms operators in the Middle East are already playing an increasing role in pay-TV and sports across the region. By bundling pay-TV with their fixed and broadband services, operators are making it easier and more enticing for the vast number of viewers in the region to buy into pay-TV services. In addition to pay-TV, telecom operators also provide cable TV services in several Middle East countries such as STC in Saudi Arabia (Invision), Ooredoo in Qatar (Mosaic TV) and Etisalat (eVision) among others.
Telecom operators are prolific supporters of sports in the region, even more so than in many other parts of the world. For example, STC and Mobily sponsor major SPL clubs in Saudi Arabia, where Zain had been official SPL sponsors up until 2013. Recently, Etisalat became the official UAE national team and President’s Cup competition sponsor, and in 2011 du was the shirt sponsor for UAE club Al Ain during the AFC Champions League competition. Now from the 2013/14 season, VIVA is the official exclusive sponsor of the Kuwaiti Soccer League (KSL) and all of Kuwait’s national soccer teams for the next five seasons. The Bahrain Formula 1 Grand Prix has been and still is sponsored by Batelco and elsewhere, Ooredoo is also active in football sponsorship, albeit in Europe and Myanmar.
Apart from the airlines, telecommunications is the most active and highly featured sector in local sports. Of all the millions that is spent by the region’s telecom operators on local sports sponsorship deals, entering the compelling broadcast sports rights arena could also present a lucrative opportunity for them to offer great sports programing to the region’s Arab viewers.