If you only follow the big North American sports and only care about your local team, you might not be familiar with DAZN. But if you watch the English Premier League, one of the top leagues of international soccer, you’ve had to become very familiar with them this month.
Though the deal was announced in April, it was only when the season started on Aug. 9 that Canadians started really noticing that their EPL games are no longer available on TV. Instead, they have to shell out $20 a month for DAZN, a two-year-old streaming service. And they have to figure out how to get that streaming service to work on their TVs.
For many people, it was complicated and expensive, so they wrote in to their local newspaper and asked it to write about the problem. And that local newspaper turned to me.
In Saturday’s Gazette, I have a story about DAZN’s new deal for the EPL, and talk to a bar owner and a stay-at-home fan about what it’s meant for them. I also talk to DAZN itself about how they’re keeping their fans satisfied after botching the rollout of NFL games in 2017.
You can read the story for all of that fun stuff. But I also asked Norm Lem, SVP of revenue at DAZN Canada, about what he sees as the future of sports broadcasting in general, as consumers have seen prices go up and the number of services they have to subscribe to increase. I also asked him if we should expect DAZN to bid for something bigger, like rights to Canadian NHL matches, Blue Jays, Raptors or CFL.
Here’s what he had to say.
On the increasing number of sports broadcasting services
Having spent a fair bit of my career in the cable and television distribution business, I think the trend that you’re seeing is a trend that’s not specific to sports, but sports is probably one of the more specific ones because of the costs relatively speaking. But I’d say ultimately this business, like all, is cyclical. The trend that we’re in right now is we’re seeing a lot of fragmentation, no different than we’re hearing in the entertainment space, the movie space.
On the increasing prices of sports broadcasts
Ultimately, there will be pressure on people’s wallets. Once that happens there will be another revectoring of the industry.
We’re here for the fans, and we’re trying to do something for the fans that’s unique and different and trying to improve the viewing experience.
If you look at that on margin, what the impetus for these technologies, these SVOD and OTT services coming out, it’s because consumers have been asking for it.
(They say) we don’t want to pay for this other stuff, we want to be able to choose what we want. And ultimately, DAZN offers that benefit as well. We give people choice and flexibility that people wouldn’t necessarily have in a traditional pay TV environment.
But what may happen over time, there may be a time when consumers say we don’t want all this choice anymore and we don’t want to pay this fragmented pricing anymore and something else will evolve. I can’t read the future, but I would imagine that business models will change to serve those consumers when that time comes, just as we’re doing now.
On whether DAZN’s business model is working.
I can’t share specifics with you as we’re a privately-owned company. But we have a five-year plan here (2017-22) and we’re executing that plan. I’d say we are in the line with that plan.
On whether we can see consolidation in the future
I think from a product perspective it will continue to fragment, but I think from the companies themselves, they continue to consolidate. So it’s no surprise that the likes of Viacom and CBS are combining, and Disney buying large elements of Fox. Consolidation from a large enterprise level is going to continue. I figure we’ll still continue to see fragmentation from a product perspective.
People keep complaining that the cost of sports is going up. And it’s true, it is. But that increase has an upper limit somewhere.
Rogers spent $5.2 billion for 12 years of NHL rights starting in 2014, under the mentality that live sports was PVR-proof and it was worth it to bet the bank on Canada’s most popular sports league. As we enter the sixth year of that deal, it’s having to tighten its belt, as the recent departures of Nick Kypreos and Doug Maclean highlight.
But increasing subscription prices isn’t necessarily the way to go. For sports like NHL hockey, especially popular teams like the Toronto Maple Leafs (make your snide remarks, but they’re still the big draw in English Canada), the real money is still in advertising rather than subscription revenue, at least on Saturday nights and during the playoffs, when audiences are larger.
Both Sportsnet and TSN reduced their monthly prices for streaming, from $25 to $20, and introduced plans for shorter subscription periods. Even as they try to squeeze more from the cable companies, they know that if there’s a magic number where they’re going to drive subscribers away, maybe turning them off of sports entirely as they find other ways to occupy their time, and lose not only the subscription revenue but the ad revenue that goes with them.
Tom Heald, the 84-year-old I talked to for the Gazette story, is an example of what they don’t want. Though it was more for technical reasons than economic ones, he’s decided to just stop trying to watch his Premier League games, and says he’ll find something else to do with his Saturdays instead.
The goal of these companies isn’t necessarily to make you happy. They want to squeeze as much money out of you as they can before you do like Tom did and drop them. Once enough people do that, we’ll start seeing prices come down.
As for fragmentation vs. consolidation, I think Norm Lem is right here. The scene is a bit chaotic right now with the various streaming services, whose success tends to be based more on investor cash than sustainable revenues. But this chaos might lead to a new normal, perhaps a few giant streaming services that will be the new TSN or ESPN, or perhaps every league will have its own system. No one really knows for sure.
But the laws of supply and demand reign here. And so long as there’s that high demand for that limited supply, the pressure on your wallet will remain high.