You’d be hard pressed to find someone willing to question the scale of DAZN’s ambition. When the streaming platform arrived on the scene six years ago, its mission was to disrupt the established business model of sport on pay-TV by breaking free of the constraints of linear broadcasting and by offering more flexible, lower cost subscriptions.
DAZN challenged incumbents in key markets, made headline-grabbing rights acquisitions, and even promised to end the pay-per-view (PPV) model in combat sports with its global platform. The journey might have started with people struggling to pronounce its name but the brand is now firmly established.
It’s fair to say there have been a few hiccups along the way, not least a global pandemic that shut down live sport across the world. The strategy has shifted slightly, and the management team has been refreshed. But with a recapitalisation, DAZN’s backers have gone all in on the belief that the sports broadcasting market is still ripe for disruption.
A single sports platform
In its early years, DAZN has often been described as the ‘Netflix of sport’ by casual observers seeking for an easy comparison. Netflix’s success had convinced many within entertainment – and indeed sport – that aggressive pricing and global scale was the recipe for success for anyone willing to take a risk.
But Netflix’s slowing growth, cost-cutting measures and new tiered subscription strategy show that this model is not sustainable – especially not for sport. The soaring costs of broadcast rights make it a challenge for a pure-play streamer to compete, hence why many rights buyers bundle sport with other entertainment and telecoms services to make the sums work. Compounding this challenge is that most rights are sold locally rather than on a global basis.
DAZN wants to be more than just the sporting equivalent of Spotify or Netflix – it wants to become the platform for sports fans, offering original content, ecommerce, Web 3.0 capabilities and betting alongside live events. Meanwhile, it is building out its global platform so it has greater scale, brand awareness, and can expand more easily.
It now considers itself to be a ‘hybrid’ broadcaster that marries these new ideas while working with established players to increase reach. More diverse revenue streams and greater agility are the new recipes for success.
Most consumers are not consuming sport the same way they were 20 years ago. Within five or ten years, digital sports platforms will be how people consume their sport experiences.Shay Segev, Chief Executive, DAZN
Former Entain boss Shay Segev joined DAZN in 2021 as part of this overhaul. He became sole chief executive earlier this year, with the company hoping his experience in scaling Entain, which owns Ladbrokes and Coral, would be ‘indispensable’ as it seeks to embrace changing consumer habits.
“Broadcasters have been doing the same things they’ve been doing for the past 20 to 30 years and not adapting quick enough,” Segev (pictured above, left) tells SportsPro. “Sports fans now consume different apps for different experiences. [But] with this friction there is an opportunity to consolidate everything and make it more convenient.
“We are digitising sport. Most consumers are not consuming sport the same way they were 20 years ago. Within five or ten years, [digital sports platforms] will be how people consume their sport experiences.
“We are decoupling sport from the traditional broadcasters, similar to what happened in movies and general entertainment. You don’t watch a movie like you did ten years ago, when the film was on a certain channel at 10pm. Today you have the capability to open a Netflix-style app and watch sport live or on-demand on any device.”
DAZN is now a major player in many European markets, with top-flight soccer rights in Germany, Italy and Spain
Placing its bets
As the appointment of Segev suggests, betting is a significant part of DAZN’s vision. By offering the ability to bet in-play using the same application, the company hopes to increase the amount of time users spend on its platform and add value to a subscription.
Betting will also unlock a new source of revenue, although Segev is adamant that the company wants to encourage small bets that add to the viewing experience rather than large wagers.
“I don’t see DAZN becoming a betting company, I see DAZN offering betting to remove friction between different experiences,” he says. “Betting is complementary and it’s a natural move for DAZN. Many people will watch a live event and bet using an app at the same time.
“The uniqueness of DAZN is that we’re at the top of the funnel. Unlike the betting firms who need to bring the customer to their platform, the customers are already with us.
“What I want to see is that when customers come to DAZN, they don’t come because they want to bet – they come because they love sport so they can watch a live event, gamify something, watch on-demand, highlights, or purchase some merchandising, or they can bet. It’s just another experience on the platform.
“We do not want to become just another betting company. We want [betting on DAZN] to be much more recreational, fun, and integrated in an engaging, fun way into the experience.
“This [betting] journey is a natural thing and we’re not going to push it, which is why we’ve launched a beta product which will take us time to refine and get to a place where we’re happy with it. We’ll make it much more integrated.”
But DAZN isn’t the only streaming service to identify betting as a new revenue stream. FuboTV is another streaming business that can’t be accused of lacking confidence and it had grand ambitions for its sportsbook in the US. However, earlier this week the company confirmed it was closing down its gaming operations due to challenging economic conditions.
DAZN hopes Segev’s experience in the betting world will aid its transformation (Image credit: DAZN)
The US market is considered an untapped land of opportunity but Segev says his firm is taking things slow. He points out that the company chose to launch DAZN Bet in the UK because the more mature market and predictable regulatory environment would provide a greater platform for scalable success.
“I have quite vast experience in the betting industry and the US is probably the most complex market in terms of cost when you think about licences and regulation,” he explains.
“We started in the UK because it’s convenient for us as a UK-based company, we know the regulation quite well, and we have a presence. We can experiment before taking [DAZN Bet] to new markets.
“We’re not building something for the next two years, we’re building something which will be really exciting for the long term and betting will be a part of it.”
This acquisition goes up to Eleven
Of course, to sell subscriptions and encourage people to spend time on the platform, DAZN still needs content and it needs reach.
The pending acquisition of rival Eleven will allow DAZN to offer premium localised services in new markets, most notably Belgium, Portugal and parts of Asia. The company will also gain a vast amount of global content by absorbing Eleven’s own international service, which now comprises a huge array of live events, including 40,000 soccer games a year.
Eleven also has considerable technology capabilities thanks to the 2020 acquisition of MyCujoo that will boost DAZN’s own technological foundation.
“The acquisition accelerates our vision to be into more markets,” Segev says. “We are buying rights and entering new markets, but we are also investing in building out our platform. The platform is getting better every year but to maximise the returns, we need [greater reach].
“We’re still working on [rebranding Eleven as DAZN] but it’s very likely we want to launch our global service in additional markets.”
As part of the proposed takeover, DAZN will also gain access to social media firm Team Whistle, whose expertise will help the company reach audiences and monetise content on third-party platforms and social media.
“[Team Whistle] gives us a way to reach a wider audience, especially younger audiences, in a non-traditional broadcasting way,” Segev explains. “You can take an influencer and create a daily show that promotes DAZN or you can monetise the content we are already renting.
“Clearly one way we monetise content is to get people to pay a subscription to access it on the DAZN platform. We can also take clips and put it on YouTube and social platforms and monetise it through Team Whistle as well.”
DAZN’s international platform launched two years ago with a focus on boxing. DAZN hoped to challenge the dominance of PPV by offering all of its bouts for a single monthly subscription. However, the company has since been forced to offer some fights on a PPV basis, something Segev says is an “economic reality”.
Since then, the international service has expanded to include the Uefa Women’s Champions League (UWCL), mixed martial arts (MMA), extreme sports and esports. Global content helps address the issue of a localised, fragmented sports rights landscape while also helping establish DAZN’s brand as a destination for sports fans in any country – making it easier to expand quickly if it can acquire premium rights in a specific market.
“If you look at our business, we have two strategies,” says Segev. “One [applies to] Germany, Italy and Spain, where we acquire rights that are really important in those markets, like Bundesliga, Serie A or LaLiga, and DAZN becomes the leading sport platform in the country.
“Then you have markets like the US where we have some domestic rights like boxing, or the NFL in Canada, and then we have our global platform.
“We launched our global platform two years ago – it was mostly a technical launch – and in the past few months we’ve added 40 to 50 different [competitions]. It’s accelerating.
“We are a technology business which gives us the ability to deploy in each country quite quickly. DAZN can partner with any rights holder and overnight this content is available in more than 200 countries.
“It’s a basic marketing thing. You need to reach a tipping point where the brand becomes so big that people know all about it. Before Netflix enters a market, everyone already know who it is. I think we are getting there.”
The path to profitability
DAZN is a UK-based company but it still lacks a local service in its homeland. It was of course heavily linked with a takeover of BT Sport, but ultimately a deal was viewed to be uneconomical, and the pay-TV broadcaster eventually opted for a joint venture with Warner Bros Discovery.
Despite major rights, most notably the Premier League, being sewn up for several years and no immediate acquisition target in sight, Segev still believes DAZN will have a major presence in the UK in the future.
“We’re interested in every country if it’s economical for us to expand [because it will boost revenue],” he says. “The UK specifically is really important for us because it’s our home. There was a [failed] attempt to enter the UK and we will continue to find a way. I believe DAZN will be big in the UK at some point.”
Elsewhere, DAZN’s doubling down on key properties in key markets has led to price increases for monthly subscriptions in Germany, Italy and Spain. In Germany, the cost doubled to €29.99, but the combination of an expanded range of content and greater revenue means DAZN believes its DACH service could be profitable within 18 months.
The UK is really important for us because it’s our home. I believe DAZN will be big in the UK at some point.Shay Segev, DAZN chief executive
More broadly, Segev is even more optimistic than that.
“I am super happy with the progress we’re making with DAZN, not just from what we do with customers, partners and from a broadcasting [perspective], but also financially,” he says. “We’re growing the business, driving revenues, and we’re aiming for 2024 to be a profitable year for DAZN, based on the markets we currently operate in. Obviously, if we invest [and expand further], this might change.
“Saying we want to be profitable in 2024 might not sound punchy, but it is when you consider that we are far from optimised as a business and we are not reaching every possible fan.
“We have the capabilities to do more things, and we’re adding new capabilities all the time, whether its advertising, personalisation, betting or ecommerce, and we’re not realising these revenues yet.
“This makes me feel happy about [our] business model in the future.”