Eleven goes stream­ing on to the pitch as sport heads over the top

Man who brought Premier League foot­ball to BT is out to shake up sports broad­cast­ing once again, writes Christo­pher Williams

The Sunday Telegraph - Money & Business - - Business -

‘It was great fun do­ing that,” says Marc Wat­son, re­call­ing his time as the head of BT’S tele­vi­sion busi­ness as it mounted a sur­prise raid on the Premier League rights auc­tion and within months had set up a cut­tingedge broad­cast­ing op­er­a­tion. “We re­ally felt like we were chang­ing the mar­ket. And we were.”

Now he is at­tempt­ing an­other high-risk, high-tech­nol­ogy at­tack on the pay-tv mar­ket as chief ex­ec­u­tive of Eleven Sports. Backed by An­drea Radriz­zani, the Ital­ian owner of Leeds United, with fur­ther in­vest­ment and pro­duc­tion sup­port from En­deavor, Wat­son is this time at­tempt­ing to over­haul the sports broad­cast­ing es­tab­lish­ment in sev­eral coun­tries at once.

From its base in a May­fair back­street, Eleven, a ref­er­ence to the num­ber of play­ers in a foot­ball team, has as­sem­bled col­lec­tions of live rights in 11 mar­kets in­clud­ing Italy, Poland and Por­tu­gal, and as far afield as Tai­wan. Well es­tab­lished in some ter­ri­to­ries, Wat­son is now tack­ling the turf he knows best in the UK. Eleven launched its stream­ing sub­scrip­tion ser­vice in Au­gust with live top-flight Ital­ian and Span­ish foot­ball, snatched away from BT Sport and Sky Sports. At the end of last month it sealed a deal with En­deavor for rights to the Ul­ti­mate Fight­ing Cham­pi­onship (UFC), the mixed mar­tial arts com­pe­ti­tion pre­vi­ously broad­cast by BT Sport.

“What we’re al­ways look­ing for is a gap in the mar­ket,” says Wat­son. “Those gaps can be dif­fer­ent from place to place but we’re look­ing for some­thing that con­sumers want and they’re not get­ting.

“In the UK what we see is a gap for an in­de­pen­dent pre­mium sports ser­vice be­cause there isn’t one. “There’s one teth­ered to BT, there’s one teth­ered to Sky and both of them are very pre­mium, mean­ing that FC Barcelona take on SD Huesca at Camp Nou in La Liga, for which Eleven snatched broad­cast­ing rights from Sky they’re quite ex­pen­sive. There’s a gap for an in­de­pen­dent player mak­ing the ser­vice avail­able to every­body at an af­ford­able price.”

Not ev­ery­one agrees about the op­por­tu­nity in the UK. Dazn, an­other Lon­don-based sub­scrip­tion sport stream­ing ser­vice, has com­mit­ted more than £2.6bn to sports rights but has judged its home mar­ket too com­pet­i­tive and ex­pen­sive to en­ter. Eleven’s spend­ing around the world has been more mod­est, in the hun­dreds of mil­lions rather than bil­lions.

Its progress is be­ing mon­i­tored with amused fas­ci­na­tion by BT and Sky. Se­nior ex­ec­u­tives at both es­tab­lished broad­cast­ers are highly scep­ti­cal that it can build a big enough sub­scriber base at £5.99 per month to jus­tify its in­vest­ments in what are niche sports. When BT owned Serie A rights even the big­gest matches at­tracted au­di­ences be­low 10,000. No­body has ever tried to sell sport sub­scrip­tions di­rect to con­sumers with­out the main draw of live Premier League foot­ball.

Wat­son thinks Eleven will con­found the scep­tics by bring­ing in young au­di­ences. They are watch­ing less live sport on tra­di­tional pay-tv, prompt­ing ner­vous­ness among rights hold­ers about par­tic­i­pa­tion and the long-term value of their as­sets.

“We think that young peo­ple to­day are just as in­ter­ested in sport as pre­vi­ous gen­er­a­tions,” says Wat­son. “Some peo­ple will tell you young peo­ple are not in­ter­ested in sport, they’re just in­ter­ested in watch­ing short videos on Youtube and that’s it. You’ve lost that gen­er­a­tion. We think that’s non­sense.”

“It’s just that it’s very, very ex­pen­sive to ac­cess. And frankly, as the mu­sic in­dus­try showed, if young peo­ple can’t ac­cess some­thing at a price they think is rea­son­able they will just pi­rate it from an il­le­gal stream­ing site, which are very easy to ac­cess. It’s a real prob­lem for the sports in­dus­try.”

His pitch was sim­i­lar at the launch of BT Sport in 2013. BT be­gan by bundling its chan­nels for free with a broad­band sub­scrip­tion, say­ing it was bring­ing live foot­ball back to fans who had been priced out by Sky. The heavy cost of sports rights has since forced BT to charge, how­ever.

“We were go­ing to democra­tise sport,” re­calls Wat­son. “To some ex­tent we suc­ceeded but I don’t think it re­ally hap­pened and it’s cer­tainly not hap­pen­ing now. By the time you add up all the bills you need to pay it is re­ally ex­pen­sive.”

To some ex­tent Eleven has ben­e­fited from just how ex­pen­sive sports rights be­came as a re­sult of the head-to-head bat­tle be­tween BT and Sky. Their di­rect con­flict has now been re­solved by a deal al­low­ing each to sup­ply the other’s sports chan­nels to cus­tomers, which led to a £500m pay cut for the Premier League in the lat­est rights auc­tion. How­ever, pres­sure on the fi­nances of both sides has made them more con­ser­va­tive in bid­ding for rights to less pop­u­lar sports, and more will­ing to test how much their sub­scribers value them.

Eleven cur­rently has no whole­sale deals in place. Even the mighty Net­flix, with its vast li­brary and ex­clu­sive pro­gram­ming, has judged that dis­tri­bu­tion via tra­di­tional pay-tv op­er­a­tors BT, Vir­gin Me­dia and Sky is re­quired to cash in on its in­vest­ments. Eleven’s only way to re­coup its in­vest­ment is by sell­ing stream­ing sub­scrip­tions di­rect to con­sumers, and its ri­vals at BT and Sky are, for now, happy to keep it that way.

“We can just make them sweat,” says one pay-tv op­er­a­tor. “If we’re not los­ing many cus­tomers be­cause we don’t have that con­tent then they will need to come to us with a good price. If they don’t we can just pick up rights when they go bust.”

Wat­son dis­agrees. “We don’t need to do those deals but we would like to be­cause we think it makes sense for cus­tomers and at the end of the day it is the cus­tomer that is the boss.”

A boost may be im­mi­nent. It is un­der­stood Vir­gin Me­dia is close to agree­ing terms to of­fer Eleven as part of its pay-tv pack­ages.

Ioris Francini, the co-pres­i­dent of mi­nor­ity share­holder En­deavor, says di­rect-to-con­sumer sales have pro­gressed “bet­ter than ex­pected” and that En­deavor in­tends to in­crease its stake. Own­er­ship of sub­scrip­tion stream­ing ser­vices is one way in which En­deavor aims to use its strength as a tal­ent agent, rep­re­sent­ing top sports stars, to take a big­ger share of in­come. He be­lieves that UFC’S lu­cra­tive pay-per-view fights could be the key to dis­tri­bu­tion deals with BT and Sky.

“We are not with­out lever­age,” says Wat­son. “We are not some lit­tle guy fight­ing to suc­ceed.”

‘In the UK what we see is a gap for an in­de­pen­dent pre­mium sports ser­vice be­cause there isn’t one’

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