Facebook deal with the English Premier League concerns traditional broadcasters

Facebook, the latest tech major to get involved with sports streaming, last week agreed its first ever rights deal with the English Premier league (EPL). This deal signified another step towards the transition away from traditional broadcasters and to digital streaming services.

These moves from new digital entrants are concerning for the traditional networks, which have seen viewing figures on TV for live sports decline. Coupled with less households retaining pay-TV subscriptions than ever before, decreasing from 46% in Q4 2017 to 43.9% in Q1 2018 (MIDiA Research Brand Tracker), broadcasters are rightfully anxious.

Facebook, last week outbid international networks BeIN Sports and Fox Sports Asia to secure coverage of the EPL in Thailand, Vietnam, Cambodia and Laos for the three seasons spanning 2019 to 2022. The deal, worth around $265 million, gives Facebook exclusive rights to stream all 380 EPL matches in the Asian territories, adding to the 25 Major League Baseball (MLB) games it agreed to stream on Facebook Watch. This deal serves as further evidence that the EPL is keen to appeal to streaming services as well as traditional broadcasters, as it acknowledges that the world has migrated online.

The recent interest from two of the FANGS (Facebook, Amazon, Netflix and Google) for entering the sports market has worried traditional networks, which until recently had an oligopolistic control for broadcasting premium rights.

Jeremy Darroch, the chief executive of Sky, has requested for the introduction of a regulatory presence in order to maintain a fair and level playing field between traditional broadcasters amid the entrance of digital tech giants into the domestic sports market. Sky, which saw Amazon acquire rights to one of the domestic packages (F) for EPL rights, has seen its share of the EPL games shrink from 83.3% in 2010 down to 61% in the 2019 deal.

This statement is a deflection from the real issues that Sky is facing, namely that its offering is becoming less and less attractive for consumers as streaming services increasingly build compelling content, priced significantly below what Sky charges its customers. The most basic Sky package with sports included costs over six times as much per month as an Amazon Prime membership (price). This price point is not viable if Sky does not improve its rights portfolio in the long term. Add to this the contract-free billing relationships for Netflix and Facebook, and a legacy business-like Sky is increasingly out of step with the evolving consumer demand.

World Cup streaming figures are further proof that the game has changed 

England’s victory against Sweden during the quarter-finals saw the BBC iPlayer app receive 3.8 million live-streaming requests, making it the BBC’s highest viewed live programme ever online. To put this figure into perspective, the previous streaming record from a major championship for BBC iPlayer was 2.2 million in 2016 (for England versus Wales Euro 2016 group game). In two years, the BBC iPlayer has seen streaming requests increase 73% for a single game, underlining just how far streaming has come.

Streaming services increasingly cater to the consumer demand for on-demand   premium content. Traditional networks have relied on legacy models and retaining loyal customers, without addressing a deteriorating rights portfolio and an unattractive price point. Unless they address these issues, the decline in TV viewership for live sports and therefore reduction in pay-TV subscriptions will accelerate as streaming services improve their much more affordable, convenient offerings.