As DAZN resumes its UK launch can it avoid Eleven Sports’ mistakes?

As DAZN resumes its push into the UK market with its boxing-centric global OTT service, Alistair Taylor, sports video and data analyst at Midia Research, looks ahead to assess the dangers of taking on the pay-TV incumbents.

DAZN, the anointed ‘Netflix of Sport’, has announced plans to resume launching its services globally via a beta service covering boxing bouts in July and August free of charge for users who have registered their interest. This comes ahead of the platform’s revamped imminent global rollout.

Back in March, Access Industries-owned DAZN announced plans to launch worldwide and the indications were that Canelo Alvarez’s world title fight in May was going to serve as the big draw. With that fight ultimately postponed, beta testing will now begin with live coverage from a welterweight clash between Vergil Ortiz Jr and Samuel Vargas, due to go ahead on 24th July. However, Canelo’s next fight earmarked for 12th September is the expected focus for DAZN’s official worldwide rollout.

Global rollout: DAZN’s anticipated UK launch revealed
DAZN is inviting sports fans outside its current nine live markets to join a beta test to trial the service before official expansion later this year.

The global digital sports media company would do well to learn from the lessons of Eleven Sports. Andrea Radrizzani, Eleven's chairman and founder, recently described the company's UK launch as a "mistake" following its failure and subsequent closure. Radrizzani's insurgent sports media company entered the UK market in August 2018 with lofty ambitions for its over-the-top (OTT) platform becoming the go-to destination for soccer fans. It acquired rights to major European leagues - La Liga from Spain and Italy's top-flight Serie A - aiming to disrupt the sports broadcast landscape by nabbing live content from pay-TV incumbents Sky Sports and BT Sport.

Eleven put its demise down to its inability to secure carriage partnerships with the linear pay-TV broadcasters, which resulted in previous backer Endeavor ending their relationship and taking Serie A, Chinese Super League and Eredivisie content off the platform. Eleven never realised the subscription driver catalyst that ESPN+ experienced in the US with its exclusive Ultimate Fighting Championship (UFC) rights ownership, because the Endeavor-owned mixed martial arts (MMA) promotion triggered an exit clause, with the deal dependent on signing carriage partnerships.

Eleven struggled to entice a large enough subscriber base to justify the costs for acquiring these expensive rights. Outside of their domestic markets, premium rights are predominantly niche propositions, and this is the case in the UK, where the majority of soccer audiences care solely about the Premier League and Uefa Champions League, given recent success of English teams. The La Liga deal, in particular, was terminated due to Eleven failing to attract a sufficiently large subscriber base. Eleven’s inability to deliver audiences for its premium rights portfolio is the biggest pitfall for DAZN to avoid.

Go big or go home: Without domestic rights, streaming insurgents can expect to fail
DAZN was reportedly interested in entering the UK, with a particular appetite for the Champions League rights currently held by BT Sport. With Midia Research finding that 25 per cent of UK consumers watched Champions League matches in Q1 2020, DAZN knows that acquiring these rights could set the foundations for a complimentary subscription service in the highly-competitive UK market. Considering that Serie A, Bundesliga and La Liga all receive viewership of under seven per cent in the UK respectively, it is no wonder that Eleven’s proposition failed with its core offering simply failing to appease a mass audience.

DAZN should look to follow its strategy in Germany, which included initially acquiring a package of Champions League matches and then sub-licensing Bundesliga rights from Eurosport before pursuing an expanded deal with the German Football League (DFL) that saw it agree a groundbreaking broadcast partnership back in July.

DAZN’s fight-centric proposition in the US, which had amassed ten per cent of DAZN’s eight million global subscribers back in November, doubled its price point to US$19.99 and incorporated advertising behind its paywall, while struggling to scale its subscriber base to the same level as its direct streaming competitors in ESPN+ and FuboTV. DAZN recognises that going after the crown jewel of US sports in the National Football League (NFL) would transcend its current content offering, with Midia Research revealing that 47 per cent of US consumers watched the US football property in Q1.

Owning premium domestic rights in its operating markets will present the best opportunity to become a partial successor to existing pay-TV sports distributors and to future-proof its offering. This is essential after the Covid-19 cessation of live sports exposed sport-centric services as primary churn candidates, due to the indefinite postponement of their core content. With J-League rights in Japan, Serie A in Italy and a burgeoning German proposition, DAZN is now positioning itself as a viable alternative for sports fans as we approach ‘D-day’ for sporting rights in 2021.

DAZN is keenly aware of the pitfalls to avoid when entering new markets, with Eleven’s example of entering the UK with only foreign rights failing to resonate with a sufficient audience. DAZN’s Bundesliga investment highlights its intent, with parent company Access Industries in a stronger financial position following its recent US$1.75 billion Warner Music IPO windfall. DAZN is now poised to significantly disrupt the traditional oligopoly that Sky and BT have established in the UK.

 

My guess is that they’re working on a deal with BT for some Champions League rights.

BT have the rights over here until 2024, but earlier this year it was reported that ITV were looking to buy a portion of the rights from BT (who paid over what they were hoping to) so that looks like the move.