Sep 17, 2018

By Tara Weiss
How streaming services are challenging the traditional model of sports broadcasting.

The sports streaming market is getting more competitive this month with the stateside debut of DAZN.

The live and on-demand service (pronounced da-zone) launched in the U.S. on Sept. 10, with Matchroom Boxing and Bellator MMA, Viacom’s global mixed martial arts league. The two companies announced a nine-figure deal earlier this year for DAZN to exclusively stream seven Bellator fight cards. Another 15 events will air on Bellator’s linear television home, Paramount Network, and will simulcast on DAZN.

The first DAZN event will feature Gegard Mousasi defending his middleweight title against welterweight champion Rory MacDonald, who is moving up in weight class, on Sept. 29. The event also includes the fourth fight in the epic rivalry between Quinton “Rampage” Jackson and Wanderlei Silva and the opening round of the Welterweight World Grand Prix.

The deal is another indicator of a step change in the world of sports viewership. Until recently, fans were able to watch primetime sports exclusively on linear TV networks. Major sports have been tied up in years-long exclusive rights deals with broadcast and cable companies, many of which will expire in coming years. Meanwhile, there’s been an explosion of digital platforms with deep pockets eager to buy rights as they become available. They’re interested in streaming everything from arm wrestling (on Turner-owned B/R Live) to the NBA’s minor league (on Amazon’s Twitch). ESPN launched its own streaming service, ESPN+, earlier this year (which bought the rights to Bellator’s competitor, UFC).

Bigger Than Broadcast

“We think that at least over the next two to three years there is a very clear runway to being able to establish an OTT service not necessarily carrying the big four—NBA, MLB, NHL, and NFL—but a wider array of sports,” says Juan Delgado, CEO of Perform Media, the parent company of DAZN and the Sporting News. “It’s still a big enough market where us and ESPN and Turner can build a supporting structure to a much wider content offering.”

Bellator and DAZN are well-matched. DAZN needed a sports league not tied up in exclusive broadcast rights to launch its U.S. streaming service. Viacom-owned Bellator needed a partner with a global live platform whose investment would help the league to continue to attract top-rate fighters.

"“The DAZN platform will help us deepen our connection to our audience here in the U.S. as well expand our reach to new fans in MMA hotbeds such as Japan, Italy, and Germany.”"

Scott Coker joined Bellator as President four years ago, and has helped transform the league into a worldwide combat sports leader with an ever-growing international footprint.

“The DAZN partnership speaks to our mission to deliver distinctive action-packed events to audiences live around the world,” says Coker. “The DAZN platform will help us deepen our connection to our audience here in the U.S. as well expand our reach to new fans in MMA hotbeds such as Japan, Italy, and Germany.”

With these fight sports, DAZN is trying to prove they’ve got the infrastructure, reach and cash to bid for the broadcast rights to other leagues as they become available. They also hired John Skipper, former president of ESPN, to serve as executive chairman of Perform Group. DAZN has spent several years steadily building itself into an online destination for sports fans in Canada, Germany, Austria, Switzerland, and Japan, and Italy.

“DAZN sees there’s an entire legacy model under pressure,” says Richard Greenfield, managing director and media and technology analyst at BTIG. “There’s a ton of capital behind DAZN. They could be a bidder for bigger sports. They didn’t hire John Skipper to run the business without having bigger ambitions.”

An Underserved Audience

“We started with fight sports because we found the biggest underserved opportunity is around them,” says Delgado. “None of the mainstream sports broadcasters have been focused on it that much.  In MMA you need to build a sequence of fights and Bellator was able to accommodate that more than UFC would’ve been able to do. We’re creating a service where if you’re a fight sports fan you’ll get a very compelling MMA story every week of the year.”

Leading up to those fights, DAZN and Paramount Network will air behind-the-scenes countdown shows that tell the fighters’ personal stories, highlighting the struggles they’ve been through and what has brought them to this place.  If they can get casual fans to invest in the fighters’ lives, they figure they’re more likely to become longtime viewers.

“It’s like any other story about a human being that draws you in,” says Doug Rosen, vice president, strategy and business development, Viacom. “We want them to start rooting for a fighter because they have this special connection.”

The OTT ‘Wild West’

While the exclusive broadcast rights for the big four national sports league are locked up for years, platforms like Amazon, Facebook and Twitter have been buying up other rights as they become available. Amazon will live stream 10 Thursday night football games this year and will start streaming English Premier League Soccer in the UK next year. Facebook started live streaming national and college games last year, while Twitter signed a three-year deal to show Major League Soccer games. (Variety has a good cheat sheet of Silicon Valley’s streaming rights here)

“We’ve described it as the Wild West,” Adam Gajo, a sports business analyst for Kagan, a media research group within S&P Global Market Intelligence, says of the fight to secure rights. “At the end of the day, it’s not about having one-off sports rights but a complete package… they have to build an audience and understand where the competition is going to be in five years.”

DAZN started its streaming business in Japan in 2016, but its parent company Perform Group began as a service that provided data for sports betting. Despite its growth into streaming and rights distribution, DAZN remains committed to the value of data. It’s been billed as the “Netflix of sports” because once viewers start using the service, they’re able to create a profile to suggest other programs they’ll like. All of that user data has served them well when deciding when to break into new markets.

DAZN has established relationships with several of the major American sports leagues from broadcasting them internationally. They stream NHL games in Canada, MLB games in Japan and NBA games in Germany.

“We’re trying to build a supporting structure to convince these rights holders the next time around that we are a service with enough subscribers that we can cater to their other needs,” says Delgado.