SportsPro
Kevin Mayer has much to reflect on and, if speculation is to be believed, plenty still ahead of him in the media industry.
Having stepped down as DAZN chairman in March, Mayer says his immediate focus is on his various advisory roles and investments, including the Blackstone-backed Candle Media entertainment startup. It represents a new chapter of sorts for the American, whose career to date includes a combined 25-year stint at Disney, where he became its top streaming executive, overseeing the launch of ESPN+, as well as a short-lived spell as the chief executive of TikTok.
What Mayer has said about life after DAZN, though, hasn’t prevented him being linked with the chief executive position at Disney once Bob Iger leaves. It would mark his second return to the media conglomerate after he initially departed in 2000 before rejoining in 2005.
Regardless of what Mayer’s future holds, his time at Disney, TikTok and DAZN means he is better placed than most to offer an informed view on what’s next for sports broadcasting. Speaking at the SportsPro OTT Summit USA in New York last month, Mayer was on hand to discuss everything from streaming and sports rights spend to his experiences at some of the world’s most influential media businesses.
DAZN inked a ten-year global distribution deal for NFL Game Pass International in February
Mayer on… the threat to the bundle
Consumers paying for a broad TV package that comes with live sports and other entertainment has long been standard practice in the US. However, that model has been under the microscope in recent years as viewers seek better value from offerings that give them more of what they want to watch.
With the media landscape becoming increasingly fragmented, Mayer believes the bundle is under threat, with sports being one of the primary contributors to that.
“I think probably the main reason the bundle is in trouble is because of sports, and many people are not sports fans,” he says. “If you ask everyone to pay a huge amount of money for sports, and they’re not watching it, I think that causes churn. That’s what you’ve seen in the US.
“Europe has been entirely different. Sports fans have paid separately for sports and entertainment. I think that business model has worked very well and it’s pretty stable.
“It’s much different [in the US] and I think forcing people in a hard bundle to buy sports that they don’t watch, as expensive as that is, has already proven to be a huge mistake. It’s not a good idea now to force people that are buying entertainment services to also pay for sports. It’s just too expensive.”
Mayer on… the streaming wars
Mayer believes that streaming is now very much “the norm”, with the likes of DAZN, Amazon and Apple securing major rights deals across multiple markets in recent times. Reflecting on his time setting up Disney+, Mayer says the initial subscription cost of US$6.99 per month was a way of ensuring a “democratised experience” and giving consumers a “great deal”.
Initially, Mayer doesn’t expect Disney+ to surpass Netflix, describing the latter as “unassailable” at present. That is despite the platform’s subscriber dip last year, its reluctance to acquire premium live sports rights and a lack of new markets to expand into.
“No one’s going to beat Netflix at the number of subscribers [they] have around the world and the revenue and, ultimately, the profitability that they can pull in,” says Mayer.
He adds that Disney+ was aimed at those who enjoy tentpole brands such as Marvel, Star Wars and Pixar, as well as the Disney brand itself.
“I think Disney+ was always intended to be just for the fans of those brands,” Mayer continues. “So it was not going to be quite as well penetrated as Netflix.
“When you get to Amazon Prime and Apple TV+, the degree of financial wherewithal, the companies that are backing those streaming services, they’re going to be around for a long time.
“When you get to the lesser streaming services, I think you’ll see some consolidation happen. But [streaming is] really taking over the world.”
While chairman of DTC at Disney, Mayer was responsible for launching Disney+, ESPN+ and Hulu+
Mayer on… Apple’s MLS deal
“It’s a bit surprising,” says Mayer, when asked for his thoughts on Apple’s ten-year global rights pact with Major League Soccer (MLS), which is reportedly worth US$2.5 billion.
The deal marked the tech giant’s biggest sports rights investment to date and has seen the company prioritise higher production values, consistency in presentation, and innovation that leverages the full suite of Apple’s technological platform.
Even so, Mayer believes Apple’s agreement with North America’s elite men’s soccer league is primarily a brand-building exercise.
“I see that the whole streaming service for Apple, both entertainment and sports, is really about improving the Apple brand,” he says.
“I think they’ll make moves at a very premium level because there’s a very premium nature to the Apple brand. A lot of that is a marketing expense for them.
“I don’t think they plan to have a huge contribution directly from the economics of the streaming service, especially in the context of Apple – which is a US$2.4 trillion company.
“But I do think sports is a good brand builder for them. I don’t think they’ll go crazy and buy all sorts of sports.”
MLS and Apple are in the first season of their ten-year global rights tie-up
Mayer on… his time at DAZN
In an effort to cement itself in multiple markets, sports streaming subscription business DAZN has spent heavily on acquiring the rights to various premium sports properties, including the top-flight soccer leagues in Italy, Spain and Germany. More recently, DAZN penned a ten-year global distribution deal for the National Football League’s (NFL) Game Pass International service.
However, major losses have been incurred as a result of all the investment. DAZN’s rights costs alone reached US$1.9 billion in 2021, primarily due to its Bundesliga and Serie A deals. Broadcasts of the latter have also been marred by several technical issues, though Mayer insists “those days are over”. Losses, meanwhile, have increased to US$1.35 billion, causing DAZN to shelve plans for an initial public offering (IPO).
Mayer, who replaced John Skipper at DAZN in March 2021, remains upbeat about the company’s prospects. Yet he feels it needs to focus its approach on certain territories, specifically Europe and Asia, and shift away from a global strategy.
“The centre of gravity of DAZN is better served by being in Europe and in some parts of Asia – Japan’s a pretty big market for them,” he says.
“There was a global nature to the DAZN business when I first came on board, which I thought was a bit of a misdirection because, as we know, there aren’t that many global sports. I think the NBA is a global sport, I think [Premier League] football is a truly global sport.
“DAZN just did an NFL deal to take the NFL Sunday Ticket package outside the US. It’s not really a global sport.
“But I felt that to be a real premium service to get high ARPU, the revenue per user on a subscription basis, you really had to have the sports that matter in the local markets.
“Trying to come to the US and compete against ESPN and TNT, and Apple and Amazon and all those guys, that seemed like a very difficult thing to do.”
As for DAZN’s financial outlook in the coming years, Mayer is optimistic about the company achieving profitability, describing 2021 as “the peak loss year”. He says price increases in Europe didn’t lead to a mass subscriber exodus and expects the company’s focus on targeted advertising and betting will be vital revenue components.
Former DAZN chairman @KevinMayer reflects on the company's expansion during his tenure and why its "centre of gravity" lies in Europe #OTTUSA23 #SportsBiz pic.twitter.com/Fsur4jbT4U
— SportsPro (@SportsPro) March 14, 2023
Mayer on… sports properties creating their own DTC service
The NFL’s aforementioned deal with DAZN saw it go down a similar route to WWE when the wrestling property moved its over-the-top (OTT) offering onto NBC’s Peacock streaming service.
Mayer believes those moves speak to the challenges for sports properties in going to direct-to-consumer (DTC).
“I think it’s difficult for any single sport to create its own direct-to-consumer service,” he asserts. “There is in sports, for sports fans, big value in aggregation. You want to go to one place, you want to see all the favourite sports that you have.
“[It’s really hard] for the WWE. It’s not really a sport but call it a sport, to have its own direct-to-consumer service. The critical mass isn’t there. Even the NFL outside the US having its own direct-to-consumer service, again, I think is subscale.
“You have to find those NFL fans, you have to market to them and you have to bring in subscribers just to an NFL offering, [which is] really difficult outside the US.”
In the case of DAZN with NFL Game Pass, Mayer predicts it will be “an easier sell” for the company than the league going it alone, citing DAZN’s ability to cross-market to soccer fans and other customers at the top of the funnel.
Mayer on… the value of PPV
One of DAZN’s big hooks when it entered boxing was what it described as the imminent demise of PPV, with the company promising top fights for subscribers at no extra cost.
DAZN has since changed its tune, with cards headlined by Mexican superstar Saul ‘Canelo’ Alvarez and British heavyweight Anthony Joshua among those being offered for an additional one-off fee on the platform. Select bouts from Misfits Boxing, the promotion backed by social media influencer JJ ‘KSI’ Olatunji, are even getting the same treatment from DAZN.
Mayer maintains that the rethink was necessary and says that the previous offering constituted a “giveaway”, resulting in the PPV switch.
“People would come in, buy a month and leave,” he explains. “So even though the subscription price was relatively pricey, like US$20 a month, you get people for a month and they get basically a pay-per-view for US$20. It’s worth more than that.
“What we decided to do is update our platform’s capabilities, focus on pay-per-view and still have subscriptions. But if you have a pay-per-view quality fight, you’ve got to pay [a] pay-per-view quality price.”
Mayer could be in the frame to replace Bob Iger as Disney chief executive
Mayer on… the rise of TikTok
Mayer left Disney for a second time in 2020 to become TikTok chief executive, only to resign months into his tenure when the short-form video platform’s parent company ByteDance came under increasing pressure from the Trump administration over its links to China. The White House may have a different administration today, but there is now bipartisan support for new legislation to ban TikTok over national security concerns.
Despite his short stay and continued uncertainty over the platform’s future in the US, Mayer still champions TikTok as “one of the most dynamic platforms I’ve ever been involved with”, crediting its hyper personalisation capabilities for engaging users.
“TikTok’s algorithm for delivering the exact video from a choice of all user-generated content – it’s not the most high-quality content, some of it’s great some of it’s not – is delivered in such a fashion through their AI engine that is highly interesting to those who watch it,” he says. “My feed would be much different than yours within a few minutes of using the app.”
Indeed, Mayer says TikTok’s “incredibly dynamic” experience contrasts sharply with Western social media, where feeds are largely determined by who or what someone decides to follow. The TikTok algorithm, he explains, is different.
“It depends on these very weak signals, these usage paradigms that you have to give you this incredible personalised feed,” Mayer continues. “I think it’s unique in that capability. I don’t think anyone else around the world has AI that is that capable. And also, the form factor was different; full vertical screen video, very immersive, [it] obviously pulls people in. I think it’s the future of social entertainment.
“I don’t [think] there’s any reason you couldn’t put a stream of a game, at least part of it, onto TikTok. Then maybe put it behind a paywall after fans have seen a bit of it. It’s a way to draw the younger people in, it’s a way to increase the top of the funnel massively.”
DAZN has switched to a pay-per-view model for select boxing fights
Mayer on… returning to Disney
Mayer’s name is among those linked with becoming chief executive at Disney, with National Basketball Association (NBA) commissioner Adam Silver and ESPN chairman Jimmy Pitaro also reported to be in the running. Iger returned to Disney on a two-year deal last November and is handling the hunt for his replacement.
Mayer’s long stint at Disney and prior role in its streaming division, where the company is trying to reduce losses that have nearly doubled to US$1.5 billion, make him a logical candidate. His experience with ESPN+ and Disney’s wider sports operation would also count in his favour, particularly as the media conglomerate gears up for the NBA’s next domestic rights auction and, as Iger put it, being “more selective” with its live sport offering.
Unsurprisingly, Mayer doesn’t give much away but is not distancing himself from the speculation.
“The future’s bright, I’m doing the things I love to do,” he says. “I have a new studio that we’ve created. I love the future of Candle Media, I love consumer tech investing.
“As for Disney, we’ll see what happens.”
