Could the Premier League launch a streaming service?

Rumours have been circling for some time now that the English Premier League, the biggest football league in the world, is planning to launch its own streaming service. Is there any credence to this, or is it just fantasy?

TV Rights and the Birth of the Premier League

In 1992, 22 clubs broke away from the English Football League to create the Premier League. They did so because they wanted to negotiate their own TV rights deals, with Rupert Murdoch’s Sky offering significantly more than was being paid by the BBC.

The deal saw the Premier League clubs receive £304 million from Sky Sports to cover the 1992/93 to 1996/97 seasons. Murdoch assumed that football fans in England would be willing to pay a monthly subscription so that they could watch their favourite team play. He was right and Sky more than made back the £304 million they spent.

English football was enjoying a revival after a move away from the turbulent 1980s, with improved safety and a more inclusive environment within grounds. The 1996 UEFA European Championship, which was hosted in England, also helped to boost interest in the sport.

So when the rights deal was up for renewal in 1996, Sky more than doubled its original fee. For the 1997/98 to 2000/01 seasons, the broadcaster paid the Premier League £670 million.

Competition Pushing Up the Cost of Broadcast Rights

Competition for the rights then continued to increase as each package was sold. For the 2001/02 to 2003/04 seasons, a bidding war between Sky Sports and NTL pushed the cost for three seasons up to £1.1 billion.

This meant Premier League clubs received more per year than they did for the entire 5 year period of its first contract. A 500% increase in revenue from TV companies in 10 years.

Another bidding war for the 2007/08 to 2010/11 seasons between Sky Sports and Setanta Sports sees the companies pay £1.706 billion. This increased again in 2010/11 to 2012/13 when the two companies went head to head again, paying slightly more at £1.782 billion.

Setanta got into financial difficulty though and it fell into administration in June 2009. Its rights deal was picked up by ESPN.

The American company planned to bid for more rights when they went back up for renewal, but they were outbid by the telecoms company BT who wanted to build a sports offering to help it compete with Sky for combined consumer phone, internet, and TV packages. The two companies paid £3.018 billion for the rights.to the 2013/14 to 2015/16 seasons.

Spending increased again for the 2016/17 to 2018/19 seasons, with the two companies paying £5.136 billion. For the 2019/20 to 2021/22 seasons, they were joined by Amazon, who bought a package of 20 matches which it broadcasts on its Amazon Prime Video service. Despite this, it is believed spending dropped slightly, with the total revenue believed to be around £4.5 billion.

Could the Premier League launch a streaming service? [unsplash]

The Case for “Premflix”

With the Premier League making so much money from TV rights deals, why would they want to upset the status quo and set up their own streaming service?

The current format sees fans pay broadcasters hundreds and sometimes thousands of pounds each year to watch their favourite team. In return for this, they receive hundreds of channels, often many that they will never watch.

Only a small portion of the fee that fans pay actually goes to cover the cost of the Premier League rights. The rest covers other sports rights, movies, TV rights, original content creation, servicing the satellites that broadcast the channels, a box to receive the satellite signal, administration and overhead costs, and profit.

In the UK, Sky has more than 23 million customers which help it to generate £13.5 billion in revenue and £1.5 billion in profit.

By launching a Premier League streaming service, it could cut out the middleman and get access to a bigger slice of the pie.

If those 23 million customers opted for a “Premflix” package that cost £20 per month, the customers could cut their spending and the Premier League would receive £5.5 billion.

Other Revenue Streams

Of course, not all of Sky’s customers are interested in football, but these would be more than offset by the international audience. Currently, the Premier League receives around £3 billion from international broadcasts, in addition to the money it raises from Sky, BT, and Amazon.

It is believed that 1 billion people watch Premier League games worldwide. So it wouldn’t be unreasonable to assume that 50 or 100 million would be willing to subscribe to a “Premflix” service. This could net the clubs in the league between £12 and £24 billion each year.

Additionally, the Premier League could sell ads on its platform similar to the ads shown during traditional TV coverage. Energy drink companies, sportswear brands, and financial institutions are already big spenders on football sponsorship.

Bookmakers would be another big source of ad revenue, as companies scramble for new customers in an incredibly competitive market. This can be seen by the existing sponsorship deals with clubs and the free bet offers run by companies like BetFred.

Precedent

The prospect of the Premier League launching its own streaming service is not without precedent. The English Football League, which runs some of the leagues below the Premier League launched its iFollow service in 2017. It charges £10 per game, with the profits going directly to the fan’s club.

Users of iFollow have mostly been positive, with an additional 18,000 fans getting access to content during the 2018/19 season. There had been concerns that the service would reduce match attendance, but this has been found not to be the case.

Other sports offer a similar service too. Formula 1 offers a subscription service to fans that are in countries where live coverage is not already offered and the NFL offers its Game Pass service which costs around $100 per year.

Will Premflix Happen?

It seems likely that a Premflix service will eventually launch, although it is not yet clear what it will look like and whether it will sit in direct competition to Sky and BT, or whether it will complement their services.

If it is to be in direct competition, it’s likely we’ll see legal challenges as the existing broadcasters try to protect their business models.

This is a featured post.