‘Netflix of sports’ - realistic proposition or unworkable pipe dream?

‘Netflix of sports’ - realistic proposition or unworkable pipe dream?

It has become a fashionable phrase, one that has infiltrated the sports industry lexicon quicker than any self-respecting executive can say over-the-top (OTT), direct-to-consumer streaming service. But what exactly is meant by the term ‘Netflix of sports’?

The term itself has been used to describe pretty much any streaming service that delivers an array of live and/or on-demand sports video content direct to consumers over the internet. But looking across the global landscape of sport, a standalone service offering such content on an a la carte basis - and which operates in virtually every market globally as Netflix does - is nowhere to be found.

There are numerous reasons for why that might be. For starters, the term ‘Netflix of sports’ might not be something to be taken literally at all. Instead, it could merely be an easy way of communicating what multi-sports streaming services are vying to be, not what they actually are. 

That particular reading certainly carries weight, not least since the myriad forces that have fuelled the growth of Netflix - from advancements in video streaming technology and the rise of mobile to shifting consumption patterns and ‘cord-cutting’ - are the same ones that are driving the ongoing explosion in OTT sports offerings.

In any case, that emerging video platforms would want to emulate Netflix is understandable. If Netflix redefined the approach to viewing movies and entertainment, spearheading the global subscription video-on-demand (SVOD) revolution and enjoying impressive growth off the back of it, it is fair to say there are many companies looking to have a similarly landscape-altering impact in sport.

Perform-owned OTT service DAZN covers a range of elite competitions and has secured the rights to the Uefa Champions League in Japan

A true ‘Netflix of sports’

Of all the companies to roll out new OTT sports services in recent times, Perform Group, the UK-based digital content and media specialist, has come closer than anybody to creating a true ‘Netflix of sports’. In August 2016, the company launched DAZN, a subscription streaming service that is bankrolled by billionaire music mogul Len Blavatnik’s Access Industries Holdings LLC, which also owns the Warner Music record label and a stake in music streaming service Spotify.

Pronounced ‘da zone’, Perform’s new service is currently available in German-speaking Europe, Japan and Canada, and has steadily amassed an enviable rights portfolio in each of its markets. In July of last year, for example, the company acquired the domestic rights to Japanese soccer’s top-flight J-League for close to US$2 billion, a deal that was said to be the largest in Japanese sports history.

In its various markets DAZN has pocketed rights to such premium properties as Major League Baseball (MLB), the National Football League (NFL), Formula One and elite European soccer including the Uefa Champions League, not to mention an array of additional video and audio programming through sub-licensing deals with local or regional broadcasters.

Available via smart-TV apps, mobile and tablet devices, computers and game consoles, DAZN’s multi-platform service is offered at a relatively inexpensive price point and with no fixed-term contract. Subscriptions can be cancelled at any time and start at US$20 per month or US$150 per year, hence the obvious comparisons with Netflix.

Yet DAZN is by no means the only company to have been described as the ‘Netflix of sports’; other companies and services have been appraised similarly, albeit to a lesser degree.

Take Eleven Sports, another prominent player to have emerged in the global OTT sports space, for example. Established in 2015 by MP & Silva co-founder Andrea Radrizzani, Eleven’s geographical footprint currently spans Belgium, Luxembourg, Poland, Singapore, Taiwan, USA and Italy. Its rights portfolio covers everything from top European soccer, Indian Premier League (IPL) cricket and international basketball, to more niche sports such as ultimate frisbee, snooker, darts and lacrosse.

Like DAZN, Eleven Sports has been likened to Netflix primarily for the way in which it has aggressively and ambitiously entered the market touting a consumer-first, user-friendly ethos. Executives at both companies have, however, stopped short of talking up that comparison themselves, even as their counterparts at other firms have been openly trading on a Netflix connection.

In Mexico, for example, Matías Said, the founder of a proposed offering called Sportflix, has expressly stated his desire to create the ‘Netflix of sports’. Said claimed to have rights to an impressive array of international events and competitions, but after running into regulatory troubles ahead of its planned launch in August the service has yet to materialise.

Right place, difficult time

Whatever their intentions, the restricted nature of these emerging OTT players speaks to the challenges inherent in the global sports rights marketplace, where circumstances vary markedly from country to country, and the cost of the rights to the most popular live programming has generally grown so high as to be prohibitive for all but the wealthiest media companies with established reach and audiences.

Then, of course, there is the regionalised and increasingly fragmented nature of sports media. Historically, sports rights have rarely been sold on a neatly defined, global basis. Instead, they have been split by region or country and across many platforms, sold to local broadcasters or offloaded to other middlemen agencies who might sub-license those rights to distribution outlets for a profit.

Further complicating matters is the fact that a growing number of rights holders around the world have launched their own OTT services in a bid to better serve their audiences, as have many traditional broadcasters and publishers that have sought to use the power of live sport - long deemed the last bastion of appointment-to-view programming - to drive their digital subscriber numbers.

Rights holders worldwide face difficult decisions as to what coverage can be decoupled for digital access from existing packages

At the same time, the types of rights categorised under digital have multiplied to now include live, ‘near-live’, and other auxiliary programming such as archive clips, magazine shows and documentary rights. Many rights holders have taken to carving out and divvying up these various digital rights in ever-more disparate and creative ways, distributing their content across multiple platforms whilst being careful not to cannibalise the mainstream TV audiences delivered by their traditional broadcast partners.

The result is that the OTT picture is becoming ever more pixelated and, in virtually every sport, there is no such thing as a blank slate. Digital rights, like those for traditional TV or radio, are entangled within a complex web of existing contracts, competing entities, geographical blackouts and regulatory restrictions, making the task of establishing a truly global ‘Netflix of sports’ all the more difficult.

Making the connection

Another explanation for why a global sports streaming service has yet to materialise concerns the technological challenge of delivering live streams. For any new player, the ability to provide a high-quality, Netflix-style service ultimately depends on having the required connectivity conditions, from robust broadband infrastructure to a healthy level of connected device penetration and the requisite download speeds.

While delivering any form of video is a back-end challenge, live sport poses its own set of difficulties. Whereas Netflix - and its rivals like Hulu and Amazon Video, both of whom have so far built their streaming businesses around VOD - typically provides locally cached content by way of cloud-based computing technology, streaming live events to disparate audiences simultaneously and at scale is a different ball game.

As DAZN chief executive James Rushton explained in a recent interview with Leaders, “The biggest challenge we have, or for anyone who is trying to do what we’re trying to do and on the scale we’re trying to do it, is that the consumer expects - and rightly so - a Netflix level of quality: HD, 1080p, can be put up on to your 75-inch LED TV via one of our TV partners, and it works perfectly. We can’t always cache live, or it’s much more complicated to cache live content than it is on-demand content. 

“That means you have to have a slightly more intricate, technical stack. You can’t backload the last mile as much as traditional VOD carriers do because it is live, so you have to be more agile in the way you think about end consumer delivery than maybe the likes of the traditional OTT broadcasters.”

An appreciation of those challenges has led DAZN to target markets like German-speaking Europe and Japan - places where connected device penetration is high, and where pay-TV penetration is relatively low or cable services are expensive or outdated. But even some developed countries pose connectivity headaches. 

DAZN itself can attest to that. In Canada, for example, the company has recently come under fire for its patchy service. Having launched in the market this summer with exclusive rights to the NFL’s dedicated Game Pass offering, it soon found itself targeted by football fans frustrated by streaming issues such as constant rebuffering, a lack of HD video, and lengthy lags in audio feeds. Those complaints have forced DAZN to negotiate distribution agreements with existing cable and satellite companies, somewhat undermining the firm’s founding principle of appealing to cord-cutters.

Model behaviour

Market conditions aside, another factor to consider when defining what ‘Netflix of sports’ means is the differing business model employed by each of these new OTT players. Firstly, it is important to note that Netflix has never actually offered live content of any kind, which suggests the term itself may be a misnomer.

As Daniel Cohen, the former MP & Silva executive who now heads up the Media Rights Consulting practice at Octagon, notes, until Netflix gets into live programming - whether that’s live sports programming or otherwise - the very idea of a ‘Netflix of sports’ is perhaps a tad simplistic.

“I always find it funny that everyone calls it the ‘Netflix of sports’ when it’s really not Netflix,” Cohen says, referring specifically to DAZN. “Netflix is only VOD. I’m so impressed with the DAZN group and how aggressively they’ve entered the market, but if Netflix were to enter the live streaming market then yes, they could definitely call it the ‘Netflix of sports’.”

Netflix’s reluctance to get into live sport thus far makes sense for its business model. Live sporting events tend to have a much shorter shelf life than the on-demand TV shows and films that have proved so popular among the binge-watching subscribers fuelling the company’s success. And while speculation persists over the possibility that Netflix might make a foray into live sport, there has been little evidence to suggest its stance will change anytime soon.

“I will never say never, but I would say that where we sit today I don’t think the on-demandness to sports is enough of an addition to the value proposition to change,” Ted Sarandos, Netflix’s chief content officer, said recently.

Interestingly, Netflix has stuck to its guns even as its main rivals have made moves into live sports programming. In fact, it could be that the term ‘Netflix of sports’ more accurately describes not DAZN or Eleven Sports, but the so-called ‘virtual MPVDs’ that are increasingly viewing sport as a driver of audiences and subscription revenue.

Hulu, for example, expanded into live streaming with a range of sports channels earlier this year, while Google’s YouTube TV service, which launched in the spring, also provides sports content. Amazon made headlines in April when it splashed US$50 million on the NFL’s digital Thursday Night Football package, and has since followed that deal by picking up the global rights tennis' new ATP Next Gen Finals and reportedly securing an agreement to show ATP World Tour coverage to its Prime Video customers in the UK.

Between its coverage by Amazon and DAZN and the European expansion of its own Game Pass service, the NFL has been at the centre of some of the biggest digital broadcast stories of the year

Tellingly, when Amazon made its initial NFL play the immediate response from Netflix was to double down on its own VOD philosophy. ‘That is not a strategy that we think is smart for us since we believe we can earn more viewing and satisfaction from spending that money on movies and TV shows,’ the company said in a memo to shareholders at the time.

It is clear, then, that Netflix has confidence in its subscription-based, entertainment-driven model - and understandably so. Its value proposition, combined with a broadening array of original programming and a complete absence of advertising, continues to prove hugely attractive for its 109.3 million subscribers globally and should see the company exceed US$11 billion in revenue this year.

Sports streaming services like DAZN and Eleven Sports, on the other hand, employ slightly differing models. While, at first glance, DAZN appears most like Netflix - subscription-based and ad-free - Eleven feels more like a traditional cable network than a nascent streaming player. It has set up linear offerings in some countries and digital ones in others whilst taking a localised approach to rights acquisitions and production. In Italy and the US, it has acquired and rebranded existing offerings while carriage deals have been signed with various distribution partners in each of its markets and commercial spots are sold to advertisers in the traditional manner.

Eleven’s refusal to deploy a one-size-fits-all approach reflects the aforementioned challenges in the marketplace, but it also begs the question: even if it is theoretically achievable, is a global ‘Netflix of sports’, whatever the criteria used to define such a service, a wholly unrealistic proposition in practice?

“I think you’ll get some global players developing, but I actually don’t think that sport is the same as general entertainment and original programming,” Marc Watson, Eleven Sports’ executive chairman, told SportsPro back in May.

“The growth of Netflix has very much been driven by original programming and original production, and I think that that’s worked very well in that space. Some of that might apply to sport, but I think that sport is a bit different.

“Although there are some very big franchises, it’s still a very locally consumed product and you need a strong local element to be successful. I don’t think you can have a factory in London or California or wherever producing sports content that can be distributed all the way around the world. I think you’ve got to regionalise it, you’ve got to localise it.”