The market value of sports media rights is set to reach US$5.0 billion in Asia Pacific ex-China this year, according to Asia Pacific Sports in the Age of Streaming, a new report published by Media Partners Asia (MPA). The value represents a 22% increase from 2017, lifted by rising demand for digital rights and market growth in India and Australia as well as this year’s Fifa World Cup. While sports remains the last bastion for pay-TV operators combating subscriber churn, OTT delivery is becoming the main driver of rights inflation, opening up fresh opportunities for rights-holders while adding new layers of complexity to negotiations and deals.
“In our view, the value of sports media rights across TV has probably peaked in Asia Pacific with the notable exception of India, where the market for linear channels remains robust and scalable,” said MPA Senior Analyst Srivathsan AR, the report’s main author. “The proliferation of broadband is fueling the growth of online video platforms, with a number of players investing aggressively in sports rights.”
Recent sports rights auctions suggest that online platforms currently contribute between 10-25% of the media rights value for a sports franchise, MPA analysis concluded. The value of bundled broadcast and online rights today is typically anchored to a land-grab by media companies, telcos and digital platforms vying for pole position in a green-field segment with an attractive consumer proposition. Debates over the value of digital monetization relative to TV will only get more involved and complex over time.
Broadcasters, Telcos and Pure-Play Digital Platforms
The market for digital sports in Asia Pacific is broadly divided between: 1) Broadcasters with scalable distribution that are investing in digital rights for new and emerging platforms; and 2) Telcos and pure-play digital platforms that are monetizing tentpole rights through subscription, advertising and commerce.
The first group notably includes Star India, which has established new benchmarks for digital-based sports consumption with Hotstar, its direct-to-consumer entertainment and sports platform that reached more than 200 million people during this year’s Indian Premier League (IPL) cricket tournament. BeIn Media Group, meanwhile, operates Asia Pacific’s largest pan-regional OTT sports platform, BeIn Connect, with a footprint covering Australia, Hong Kong, Malaysia, New Zealand, Indonesia, the Philippines, Singapore and Thailand.
Digital platforms are also becoming more active. Notable examples in Asia include sports streaming specialist Dazn, which is close to breakeven in Japan after launching in August 2016, and global digital powerhouse Facebook, which is in the running to acquire exclusive English Premier League (EPL) football rights in Thailand and Vietnam following an agenda-setting but unsuccessful US$600 million bid for IPL cricket in 2017. Australian telco Optus, meanwhile, has invested close to US$300 million for two cycles of EPL football in Australia to drive customer acquisition and market share across its broadband services. Globally, Amazon has highlighted its own sporting ambitions, securing ATP tennis and a tranche of EPL football in the UK. “We expect bidding for live rights to escalate across the region over the next two years as sports-based digital platforms rive viewership, especially in large ad-dominated growth economies such as India and Indonesia as well as big mature markets such as Australia and Japan,” Srivathsan said.
Leagues and Federations Consider Direct-to-Consumer Services
Sports franchises are also experimenting with direct-to-consumer services, pioneered by the NBA with its own OTT offering NBA League Pass. Formula 1, the Liberty Media-owned motor sports series, has entered the fray with F1 TV, a live Grand Prix OTT subscription service that went live in certain European and American markets earlier this year ahead of future global expansion. In Asia Pacific meanwhile, Australia’s National Rugby League and Cricket Australia run their own services for fans outside the country. One Championship, the mixed martial arts property, has also launched a free ad-based digital service.
“Many franchises share free highlights and archive content, although others are looking at more direct monetization, pioneered by the NBA League Pass,” Srivathsan said. “These services offer one-to-one and customized fan relationships that can drive engagement and merchandize sales. At the same time, small markets which are currently grouped alongside major markets in media deals may see better representation and consistency in delivery. NBA has also shown that a readymade service can help distribution partners augment their own packages rather than disrupt existing deals, although some leagues and federations may bypass traditional TV partners with their own direct-to-consumer plays.”-Media Partners Asia Limited