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Can Australia sustain a fragmented media rights market?

What will Chelsea look like this season? (AP Photo/Tim Ireland)
Expert
4th November, 2015
201
3261 Reads

Optus grabbing the English Premier League rights from right under Fox Sports’ nose in a $63 million a year deal represents a watershed moment in Australia’s increasingly murky sports rights market.

What was once a simple divide between free-to-air channels and pay television is now complicated by video-on-demand services and cashed-up telcos eager to move in on a market dominated by Telstra and Foxtel.

But how can a market that failed to take up the dominant pay-television sports provider sustain such a fragmented landscape?

In the 2015-2016 sporting season, Fox Sports and its associated channels have the rights to all AFL premiership matches; the majority of the NRL matches live; all NBL matches live; all Super Rugby and Wallabies matches live, in addition to the Rugby World Cup; overseas Australian international cricket matches; the US Open and PGA golf tours; V8 Supercars, Formula One, MotoGP and other motorsport categories; netball’s World Cup, international matches and ANZ Championship; the whole of the A-League, English Premier League, Socceroos internationals, Asian Cup and other leagues live; major tennis tournaments, including exclusive rights to two of the Opens; American leagues such as the NBA, NFL, MLB and NHL; and so much more.

All this content despite the anti-siphoning protections demanding that some major events must remain on free-to-air channels.

And yet, despite this huge breadth of exclusive sporting content covering all the major codes, Foxtel has struggled to significantly grow its market share to more than approximately 30 per cent of Australian households. And of that one-third of the population paying for Foxtel, roughly 70 per cent add the sporting package.

So the question remains, if Foxtel could not penetrate a significant section of the Australian market with the majority of sporting content, what hope does the likes of Optus have with just a fraction of that content?

Foxtel has received a heavy backlash from fans for the loss of the EPL rights, many threatening to cancel their subscriptions in what would be a devastating blow for the market leader.

But how many of those will be tempted to Optus’ package for the EPL? Optus has yet to reveal how it will broadcast games to Australian customers – its Optus TV with Fetch has barely caused a ripple in the marketplace, while the slow delivery of the national broadband network means most households will be restricted in terms of their ability to stream such a significant amount of live content.

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Unless Optus on-sells some of the EPL package, will there be enough of a market share to justify the $63 million outlay? Again, look at the amount of content Fox Sports needed to acquire of late to bump up to a nine per cent increase in subscribers over the previous year.

Yes, we keep hearing that the landscape is drastically changing with the addition of Apple TV, Netflix, Stan, Optus TV with Fetch, Presto and more challenging the tradition television market. But Foxtel’s weak market penetration confirms that Australians just don’t buy into such paid platforms in big numbers, hence why a free-to-air presence remains so critical for domestic codes.

Unlike movies and television series, sport demands a live experience. And though future generations will be more tech savvy, the average sporting fan just wants to kick back with a television package that caters for all their needs.

Instead, football fans will soon be asked to subscribe to Fox Sports for the A-League and Socceroos qualifies, beIN Sports for European football, and Optus’ as-yet unnamed platform for the English Premier League. That’s a significant investment for just one code.

If other codes are similarly split across other platforms, then a mini fortune will be required to watch what was once a $50 per month cost for all of those sports on Fox Sports. And, as we again stress, even that was a deal that only tempted one-third of Australian households.

The end game for Optus is that the football-mad population will switch their mobile and broadband plans across to the telco to keep watching the EPL. But presented with the need to pick and choose between sports and platforms, economic realities will force many to go without or simply not bother to enter such a confusing market.

Heading down to the pub to watch a match for the cost of a beer will be a more realistic alternative than the string of subscriptions needed in coming years.

As Fox Sports’ dominant market share gets eroded, it remains to be seen if an Optus has what it takes to challenge. Codes such as the AFL, NRL, A-League, NBL, V8 Supercars and more may benefit from the increased number of players looking to acquire premium content, but the number of eyeballs watching their series will significantly decrease as the market fractures into pieces. And with that, the already difficult sponsorship game will become even tougher.

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Fans won’t be the only losers from this confused, new-look landscape.