EPL is long-game for Optus in NBN broadband market

Arvind Hickman
By Arvind Hickman | 7 April 2016

This article first appeared in AdNews in-print. Click here to subscribe to the AdNews magazine or download the digital version here.

Optus' investment in the English Premier League (EPL) is a “long-term play” that will help the telco gain market share at a time when white label broadband products are set to hit the market.

Since announcing it had secured EPL rights last year, there has been conjecture over how Optus would make a return on rights that cost more than $60 million per season.

This month, the telco announced it would broadcast every single game live on a 24/7 football channel it will house on Fetch

TV while on-selling a game each week to SBS. Gemba research shows that football is among the top four sports drivers of Pay TV subscriptions, behind AFL, rugby league and cricket.

Gemba CEO Rob Mills said telcos are the next big driver of broadcast rights values after freeto- airs and pay TV.

“In an NBN environment where you'll get white label broadband, such as Coles broadband, telcos are going to have to find content bundles to protect their broadband businesses. This is the start of it.”

Media agency bosses who spoke to AdNews believe one telco will struggle to attract advertisers to live games that typically run from midnight Saturday, into the early hours of Sunday morning.

What is more likely is that Optus' business model will combine revenue from advertising and selling bundled subscriptions to existing and new customers.

Maxus CEO Mark McCraith believes Optus will use the EPL as a way of “attracting a fanatical and loyal audience”.

“When people first questioned Optus on why they did it, it comes back to ‘content is king’,” McCraith said.

“I don't know its business model, it could be a loss leader, you don't know. But surely it’s smart enough to work out how it can make money out of it.”

Dentsu Aegis Network Australia CEO Simon Ryan believes Optus could go to market with a low subscription fee to try and build audience scale. Once they hit a critical mass, fees or advertising rates could then escalate.

“It's an investment that will pay off in years to come, it's not an investment that is going to be immediately captured,” he said.

“But the data it is going to get out of this play is certainly going to give it a strong position in the market.”

Optus' decision to invest well above what current rights Fox Sports is willing to pay signals a “statement of intent” and is not a surprise to Mills.

“Telcos are getting more aggressive in content with BT and Singtel ... I'm surprised it took so long to be brutally honest,” he told AdNews.

Behind the news

Optus' plans for the English Premier League and FIFA World Cup are ambitious but are only a sign of things to come as content distributors jostle for a larger slice of the consumer pie.

Pitching for live sports is a proven way of buying audience. All that is changing is more content distributors are muscling in on the action.

Telcos and ISPs have been hoovering up content creators for years to grow customer bases and offer lucrative bundle packages that combine landline, broadband, mobile and TV. In many cases, there's also advertising revenue to be gained.

In the UK, BT has invested close to £2 billion to secure the rights to weekly EPL games, European football, rugby, cricket and Moto GP - taking UK pay TV operator Sky Sports head–on.

BT uses its sports rights as a free incentive for its premium priced broadband package, which has helped it win more new customers each quarter than Sky since it went to market with the offering in 2015. BT's direct T V subscriber base has grown to 1.2 million, rising to 5.2 million when subscriptions through Sky and Virgin are accounted for. But the impact this has had on Sky has been marginal. Sky grew its subscriber base past 12 million for the first time in 2015.

It still offers EPL and premium content aside from football, a sign that should insulate Foxtel against an EPL hangover. Foxtel has coverage of the three largest subscription driving sports – AFL, NRL and cricket – and plenty of other entertainment to keep punters happy.

Whether Optus' EPL play helps it get one over its rival or leads to an own goal remains to be seen. The more important point is that the telco is now firmly in the content game.

Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au

Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.

Read more about these related brands, agencies and people

comments powered by Disqus