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Hot-Take #2: DAZN in the US - Takeaways from John Skipper’s Media Push for OTT Service

After the unexpected opportunity to hire the former ESPN President has already greatly benefitted the DAZN Group during private rights negotiations as recently evidenced by the company's deal with Golden Boy Promotion, it has now started to leverage John Skipper's name to raise the brand awareness of the new sports streaming service in the U.S. by increasingly more public appearances. Interestingly, the 62-year old media executive quickly changed his viewpoints on a lot of issues including rights acquisitions and the customer proposition of the traditional cable/satellite TV bundle, having moved from a legacy media company to a digital-only disruptor in the sports broadcasting market. After looking at these overarching developments, I tackled some specific statements of DAZN Group's Chairman that potentially provided a glimpse into the future of the OTT service in the United States - the world's largest, but also most competitive sports media market: production of live events, need for exclusivity, unavailability of sports rights, the impact of declining viewership on DAZN's revenue model, and the difference between DAZN and other players in the new media space such as Facebook and Amazon. DAZN's current offering in the United States looks pretty different compared to the company's other markets. Having had the benefit of launched a few month earlier, competitors such as ESPN+ and B/R Live have already scooped up a lot of the available long-tail content that has traditionally been a hallmark of DAZN. This raises the question of how the digital-only player will complement its high-priced boxing events going forward: The MLB and MLS seem to be in running.


After his sudden and still somewhat mysterious exit from "The Worldwide Leader in Sports" almost a year ago, former ESPN president John Skipper has recently provided more media access in an obvious attempt to raise the public's awareness of sports-dedicated live streaming service DAZN after the platform's launch in the United States about two months ago. After granting an insight-look to SportsBusinessDaily’s John Ourand at how the five-year partnership valued at +/- $365m with Golden Boy Promotion, most importantly including Canelo Alvarez’s next eleven fights on an exclusive basis, materialized over just three days, an almost 60-minute in-depth conversation on Peter Kafka’s Recode Media Podcast has been the latest appearance by the new chairman of the DAZN Group. Although the media executive remained tight-lipped regarding its past at ESPN, the 62-year-old provided some interesting insights into the self-proclaimed “Netflix of Sports.” Before, I recommend reading my column on DAZN’s market entry in the US from two months ago. It certainly provides some context and draws comparisons to the company’s other markets, where the market entry strategy looked pretty different for several reasons: Blog #26 Kommentar zum Markteintritt von DAZN in den größten Sportmedienmarkt der Welt. (German-only)

One of the most glaring takeaways from his recent public remarks has been how quickly his viewpoints on a variety of issues have developed once he moved the incumbent market leader in sports media to a little-known digital-only players, including advertising, rights acquisitions, and the customer proposition of the traditional cable/satellite TV bundle. Both during the Recode Media Podcast as well as another on-stage appearance at The Web Summit in Lisbon moderated by former ESPN employee Jemele Hill earlier last week, the media executive did not hold back and took some blatant shots at the traditional pay-TV model. Let’s have a closer look, focusing on the conversation with Peter Kafka!

Customer Proposition: DAZN vs. ESPN

Live sports content from outlets such as ESPN’s flagship channel, by far the most expensive pay-TV channel at a monthly carriage (or affiliate) fee of +/- $7.86 per subscriber as of last year according to SNL Kagan (2017), has probably been among the most important factors that have hold the ballooned cable bundle, costing on average $106 per month, together. For reference, due to the enormous acquisition costs for media rights, sports-heavy pay-TV channels are usually able to demand the highest compensation ( = carriage fee) from traditional multi-channel video programming distributors (MVPDs) like Verizon/Xfinitiy, AT&T/DirecTV, Altice/Optimum and Dish Network/Dish or their digital-only equivalents (e.g. Alphabet/YouTube TV, AT&T/DirecTV Now, Dish Network/Sling TV). Excluding regional sports networks, the second-most expensive national pay-TV channel is TNT (+/- $2.09 per month). Despite the public desire of MVPDs to cut costs amidst declining subscriber bases (think: cord-cutting), live sports channels such as ESPN seemingly remain indispensable for aforementioned MVPDs to drive subscriptions and can even continue to further increase carriage rates as observed most recently with the Altice/ESPN carriage agreement in October 2017 and evidenced by The Walt Disney Company’s most recent earnings release: Despite ongoing subscriber losses (-1%) and lower average viewership, affiliate revenue continued to grow (+5%) in the fourth quarter of 2018 compared to the previous years's quarter, according to The Walt Disney Company (2018).

Traditional Pay-TV Companies in US Media Market

The initial fears that media company could not demand a comparable compensation from vMVPDs, which have positioned themselves as less expensive, but also “skinnier” alternatives, don’t seem to have materialized either. A potential reason could be that vMVPDs, actually earn higher revenue per offered channel from its customers (+/- $0.59) compared to traditional MVPDs (+/- $0.23), according to Ampere Analysis (2017). Despite recent price hikes, linear OTT services such as YouTube TV (starting at $40/month) and Sling TV (starting at $25/month) are still priced aggressively in pursuit of new customers and continue to be loss-making operations. Nonetheless, slowing growth for stand-alone service like DirecTV Now and Sling TV in the most recent quarter could suggest that consumers’ price sensitivity for broadband-delivered TV services actually might turn out to be greater than expected.

Now, Skipper promotes a stand-alone, digital-only offering that is cancelled with one mouse-click, costs below $10 per months, and even offers a month-long free trial to expose even skeptical customers to this new experience of live sport broadcasting. Not surprisingly, selling ballooned bundles around a few must-have (sports-heavy) channels is suddenly not what today’s consumer wants anymore according to Skipper. (see: Twitterpost)

In addition to the month-long free trial and an aggressive pricing in general, in order to expose customers to this new way of sports broadcasting, live streaming platforms such as DAZN have an enormous interest to make the initial customer experience as enjoyable and seamless as possible. While already facing the risk of technological issues inherent to linear streaming platforms disrupting the consumer's experience, DAZN currently uses an ad-free approach that can rather be observed at sports-free on-demand streaming services such as Netflix than its direct competitors. Against the backdrop of skyrocketing acquisition costs for premium sports rights, relying on a singular revenue stream (i.e. subscription fee) is probably going to be a short-term initiative to maximize the renewal rate of trial customers. In fact, the need for at least a dual revenue stream (i.e. subscription fee plus advertising revenue) is the key driver for the ongoing move of (premium) live sports content from freely available channels behind the paywall in Europe as free-to-air channels (e.g. public broadcasting services, advertising-supported free-TV) are increasingly uncompetitive when bidding for sports media rights. Economist coined this phenomenon of staggering dominance of the live sports landscape by pay-TV operators in Europe (think: Sky PLC, Telefónica, BT Sport, Canal+) the so-called “siphoning effect.” The U.S. media market, which has a lot of FTA-channels with major live sports programming (e.g. NFL, NBA, MLB) such as NBC, CBS, FOX, and ABC to show for, however, is fundamentally different to the country-based media markets in Europe: First, North America has both quantitatively (= size of audience) and qualitatively (= more revenue per viewer) a much more potent domestic advertising market compared to the fragmented, country-based media markets in Europe to refinance any acquisition costs. Second, the so-called “retransmission fee,” essentially being a carriage fee paid by (virtual) MVPDs for FTA-channels, makes the economics of NBC, FOX & Co. much more similar to the pay-TV business model while benefitting from a higher distribution and, therefore, larger potential audience, compared traditional pay-TV. The fact that direct competitors such as ESPN+ and B/R Live already rely on advertising revenue to support the refinancing of live sports content is no coincidence and DAZN already admitted that ads are firmly in the future plans for their streaming platform. Having the benefit of first-data access about its audience at his new employer, Skipper even compared DAZN’s advertising capabilities more to the likes of Google and Facebook, who dominate the digital ad sales market with a U.S. market share of 37% and 21%, respectively, than the unfocused mass media advertising used at ESPN or any other linear television network. Although the future of advertising in sports will certainly not be dominated by direct-to-consumer marketing only, but rather a mix of mass media and highly targeted digital advertising, DAZN’s consumer insights should be interesting for the advertising industry once it opens up any ad inventory during its OTT-delivered live broadcasts – something will be inevitable on the way to make DAZN a profitable investment case: Operating an ad-free streaming platform might work for scripted entertainment content given lower acquisition costs once a platform has reached a certain scale (think: Netflix), but is highly unlikely to break-even anytime soon when having ambitions to carry premium live sports content. However, increased marketing expenses (think: free trials, ambassadors, advertising, make-goods for outages) to raise brand awareness among potential customers for DAZN, B/R Live, and ESPN+ essentially mean that it is already going to be an even tougher challenge for new market entrants in the sports media market to profitably refinance the exploding rights fees compared to established market participants.

What differentiates DAZN from B/R Live and ESPN, though? While it is backed by Soviet-born billionaire Len Blavatnik’s Access Industries, an industrial holding group with investments across the four sectors natural resources and chemicals, media and telecommunications, venture capital/technology, and real estate, having AT&T (market cap: +/- $223bn) or The Walt Disney Company (market cap: +/- $175bn) as financial backers with other highly profitable business segments is probably still the preferred alternative when it comes to sustaining financial losses over a prolonged period of time. After having looked at some overarching aspects of moving from a position at a legacy to a new media company, I want to tackle some specific statements made by Skipper during his conversation with Peter Kafka:


“I’m not taking notes on the production of live events and passing them along to anybody. I’ve been trying to avoid that.”

The digitization has greatly decreased the entry barriers for new players in the sports broadcasting market, which is actually split into the upstream sports rights market (think: rights acquisition) and the downstream sports programming market (think: monetization of acquired content).​


Interested in the in & outs of the entire value of the sports broadcasting market? An in-depth look into the economics, underlying mechanics, and relevant players can be found in my book:

"Auswirkungen der Digitalisierung auf den Sportrechtemarkt in Deutschland"


The book can be purchased as E-Book (PDF) directly on my blog or as Paperback and Kindle-Edition over on Amazon.


However, one major competitive advantage of legacy media companies that is often overlooked and could be a serious roadblock for digital-only players on their way to exclusive premium live sports content is that many leagues (e.g. NFL, NBA, MLB, English Premier League) still rely greatly on its broadcasting partners to actually produce the events. In fact, innovations in production technologies have recently been a hot topic at companies such as NBC (e.g. Sky Cam, Green Zone, TrackMan Radar's Field Goal Tracer) or Turner Sports (360-Degrees Camera) as everybody seems to look for the “future of the sports watching experience.” Admittedly, many original rights holders started to either employ independent production companies (e.g. Spanish LaLiga/MediaPro Group) or have invested in in-house capabilities (e.g. German Bundesliga/Sportcast Gmbh) in order to minimize the dependence on their rights holders, who can suddenly change from one rights cycle to another. Furthermore, fighting organizations, which have coincidentally been an initial focus of digital-only players (think: DAZN/Matchroom Boxing & Golden Boy Promotion, ESPN+/Top Rank & UFC) when pursuing exclusive broadcasting deals, have traditionally had internal production units. Intentionally or not, building up internal production capabilities has broadened the field of potential bidders, that would only have to focus on distribution (and shoulder-programming) going forward. Skipper seemingly does not want to worry about production of live events at this point in time, but decade-long broadcasting experience on the one side and complete lack thereof on the other side is certainly somewhat to keep an eye on going forward when exclusive deals are on the line. Since the issue, or importance, of exclusivity has already come up, let us have a closer look.


“We are only interested if Canelo will fight on DAZN, and DAZN exclusively.”

In the unforgiving and fiercely competitive sports rights market in North America, the unexpected opportunity to hire the former ESPN president has been nothing short of a steal for the DAZN Group. Especially in its role as door opener for the completely unknown OTT player, Skipper has been invaluable for DAZN, as clearly seen by the reporting by SBJ/SBD’s John Ourand on the deal with Golden Boy Promotion. The 62-year old media executive joining the London-based group essentially legitimized their entire US operations within seconds. Although money ultimately matters most and DAZN certainly has to outspend its competition in order to overcome other shortcomings (e.g. limited distribution, access, brand awareness, technological challenges), original rights holders definitely care about who distributes, and thereby, presents their product to the public audience – especially if it is on an exclusive basis. But as I said, such non-monetary factors only matter to a certain extent. In other words, they matter until the monetary premium offered compared to competing bidders is sufficiently large. One of the most glaring examples has been the move of exclusive NFL games from broadcast (i.e. free-to-air) to cable (i.e. pay) television in 1987: ESPN Sunday Night NFL. Even more than 30 years later, ESPN continues to pay a sizable premium to carry NFL games as the only pay-TV channel with, by implication, lower distribution (TV households: +/- 86.0m) – currently paying more than +/- $100m on a per-game basis for “Monday Night Football” (= 18 games) and not even being part of the playoffs beyond the “Wild Card Round” or the “Super Bowl” – rotation.

Annual Deal Value for NFL Broadcasting Rights (2015-2022)

Paying for this exclusivity, however, will be without alternatives for DAZN given the revenue model of a purely (or mainly) subscription-financed operation. As leagues and organizations could become increasingly interested in further segmenting their live rights packages based on the distribution system (e.g. cable / satellite TV, mobile devices, digital / online platforms) to reach a more complete audience in an ever-more fragmented media landscape, DAZN will continue to demand exclusivity given its underlying revenue model. At the same time, the OTT platform is probably aware that there will be a premium to be paid for any big-time live content (read: subscription driver) moving from broadcast television (or even pay-TV) to a digital-only distribution on an exclusive basis.


“It [DAZN] intends to aggregate content so it’s not a single-sport proposition for the most part.”

During the conversation, it repeatedly seemed that Peter Kafka perceived DAZN as single-sports platform given its heavy focus on boxing since having launched in September. This perception hints at a broader challenge for any new market entry into the upper-tier sports rights market in the United States at the moment: the general unavailability of premium rights. In fact, DAZN followed a blueprint that is totally different from being a single-sports, top-heavy platform in its other markets such as Germany, Japan, Canada, or Italy. In these territories, DAZN build an exhaustive library of niche sports around a few high-priced core rights that generate strong mainstream interest by the respective domestic audience. I suggested a similar approach for the U.S. market back in May. When DAZN finally launched in September, much of the earmarked long-tail content was already scooped up by B/R Live (launched in April) and ESPN+ (launched in May 2018). (see: Twitterpost)

The rights portfolio in the United States that currently complements the boxing events from Matchroom Boxing and Golden Boy Promotion, however, is rather scarce. But the United States are by far the world’s largest sports media rights market (+/- $20.1bn or 42.8%) and with other digital-only competitors such as ESPN+, B/R Live, or NBC Sports Gold having already launched their OTT platforms, DAZN simply could not wait any longer if it had serious ambitions in the United States. As a result, the venture capital-backed company had to diverge from its established blueprint in order to build a relevant product offering at a time when broadcasting rights to premium properties were still locked-up by legacy media companies for many years to come: The NFL (2021 & 2022), NHL (2021/22), MLB (2022), and NBA (2025/26) all signed deals for at least seven years during their current rights cycle. The idea of disrupting the deeply-entrenched “Pay-per-View” - model in boxing and other fighting sports, however, did the trick for DAZN: Although the new market entrants (think: DAZN & ESPN+) certainly raised costs for carrying boxing fights, driven by the current unavailability of other sports rights, market pioneer HBO leaving the boxing landscape after 45 years and more than 1,000 fights entirely has to be considered as an early success for the new digital-only challengers. (see: Twitterpost)

Although DAZN has clearly ambitions to position itself for the major leagues starting with the NFL in 2021 when ESPN’s “Monday Night Football” – package becomes available, the immediate challenge will be to complement those rather sporadic boxing events with more frequently scheduled content: First, more long-tail content should be expected soon. Niche sports often do not have the bargaining power to demand any material rights fees and are essentially paid for with increased exposure and distribution by platforms such as DAZN. The investment rational from DAZN’s perspective, though, is obvious since even generating 5,000 more subscribers, who passionately follow certain niche sports, with virtually no acquisition cost makes economic sense and is probably the reason why DAZN in Germany/Austria/Switzerland (= DACH-Region), for example, carries sports fishing, horse racing, and field hockey – targeting frenetic, but previously underserved fan bases absolutely willing to pay +/- $10 per month. Second, DAZN will probably continue to act creatively and opportunistically to acquire content as Skipper is reportedly already negotiating an agreement (+/- $300m over three years) with the MLB for in-game cut-ins. Carving out additional rights packages during rights cycles is a delicate undertaking by leagues as other broadcasting partners will most likely voice their opposition, but the MLB owners seem at least open-minded towards DAZN’s idea. (It is very unlikely that the MLB initiated aforementioned negotiations, but are rather the result of DAZN’s immediate need for content.) The next question would be to which extent such “in-game cut-ins” could even serve as subscription driver, but the OTT streaming service, for example, also acquired rights to post-game highlights for the Bundesliga in the DACH-Region for +/- €20m per season. Even if such content’s ability to drive subscriptions in the short-term is questionable, DAZN would at least have established a business relationship and built trust with a premium property (i.e. Bundesliga in Germany or MLB in the United States) before any negotiations for the next rights cycle started. The general unavailability of sports rights in the short- to medium-term, however, is largely a US-specific challenge for new market entrants as lengthy media rights deals (>7 years) effectively cemented the incumbency of legacy sports media companies in North America.


“We paid a lot of money for the NBA. It was worth every penny, and any suggestion that that was an overpayment is naïve, lacks an understanding of the business.”

Domestic rights to premium properties in Europe (think: European soccer) are usually tendered for three years as antitrust regulations prohibit longer rights cycles in the interest of competition. As a result, digital-only newcomers got a much earlier (and less expensive) shot at sought-after domestic sports broadcasting rights in Europe compared to the U.S.: Amazon in the U.K. (English Premier League, U.S. Open), DAZN in Germany (UEFA Champions League), and Eleven Sports in the U.K. (Spanish La Liga, PGA Championship) all acquired rights of mainstream interest. (see: Twitterpost)

Not surprisingly, John Skipper is aware of the uphill-battle that DAZN or any other new market entrant faces as the 62-year old actually negotiated many of these long-term multi-billion commitments on behalf of a legacy media company before. Although the announcements of such lengthy contracts are usually welcomed with great skepticism by media reporters and stock analysts in the immediate aftermath (Example: “ESPN’s Deal with the NBA is killing Disney Stock”), they almost always develop into unbelievable bargains during the second half of the contract’s life time. Over in Europe, incumbents such as Sky PLC have to face new and existing competition, and usually a subsequent hefty increase in programming acquisition costs, every three years for their most valuable rights - around which they often built their entire business model.

Non-Televised Regular-Season Games in NBA (2017-18)

In fact, this has not been the first time that Skipper emphasized how great of a bargain ESPN’s deal with the NBA, paying +/- $1.4bn per season for 104 games through the 2024/25 season, is (or at least is going to be down the road): During his last public appearance as ESPN President at The SVG Summit in New York in December 2017, he seemed equally ecstatic about the nine-year contract. (see: Twitterpost)

At the moment, it seemed suspicious that Skipper would resign just one week later from the “Worldwide Leaders in Sports” given his energized appearance. Even though everybody would still like more information about his sudden exit, it is obvious that Skipper does not want to revisit his past during the conversation with Peter Kafka and stubbornly referred to his sit-down with renowned ESPN insider Jim Miller in March. Nonetheless, it was still good on Kafka for continually challenging him on the incomplete story surrounding his shocking departure from ESPN.


“It’s really only barely about viewership, right? It’s really about what you can build or what you can generate in revenue based upon that viewership.”

According to the newest annual “Sports Outlook” by PwC (2018), the North American sports market, including the four segments media rights, sponsorships, gate revenue, and merchandise, is forecasted to continue to grow at a low single-digit rate for the foreseeable future (CAGR until 2022: +3.1%), primarily driven by the continuing increase in media rights fees (CAGR until 2022: +4.3%). Given declining viewership in an ever-more fragmented media landscape, the narrative of the burst of the “media rights bubble” has become a popular narrative after a decade-long, unprecedented growth in the premium sport’s most important revenue stream since 2005 in North America (CAGR: +14,7%) and across the globe in general.

John Skipper does not seem to be overly worried about the ability to monetize live sports content going forward either. Some thoughts come to mind: First, despite declining viewerships, with the NFL being the most publicized example given almost double-digit percentage year-over-year declines during the past two seasons (2016: +/- 9.7%, 2017: +/- 8.0%), live sports still perform much better than non-live content across linear television in the United States. At time of a rather unexpected rebound of the NFL during the current season, with all but one national broadcast partner experiencing year-over-year increases on Sundays (CBS: +1.2%, FOX: -0.7%, NBC: +7.7%) or Mondays (ESPN: +2.5%) through the first nine weeks, ratings returning broadcast TV series suffer accelerating (!) declines of +/- 16% year-over-year through first seven weeks of the current TV season among the relevant target group (adults 18-49 years), according to BTIG’s Rich Greenfield (2018). This relative strength of premium live sports on linear television should make this genre even more valuable to the advertising industry going forward. Besides the news-genre, live sports is going to be the only content that will draw significant audiences at predetermined times in front of the TV, essentially being the only appointment television remaining. Although eMarketer (2018) estimates the first year-over-year decline in U.S. TV ad spending for two consecutive years in its history, a dramatic decline should not be expected as a marketing mix of mass media (think: consumer brands) and more targeted digital advertising should be the ad industry’s game plan for the future. In other words, a significantly larger share of a same or slightly declining ad market should be a welcomed proposition for the future of live sports on linear television. As an overarching trend, I expect an increased differentiation between one market for „on-demand“ – content and one market for „live“ – content. Thereby, the latter will continue to remain on linear TV (think: appointment television), whereas the former is going to live primarily on (advertising-light / ad-free) SVOD services with little or no commercials such as Netflix, Amazon, Disney+ as well as soon-to-come D2C-offerings from players like WarnerMedia. (see: Twitterpost)

Second, in the specific case of DAZN, the exact number of eyeballs is not going to matter that much given the currently non-existing advertising revenue for the platform. DAZN monetizes its content primarily through subscriptions. Therefore, how much specific content is actually watched by its customers is important for decisions regarding future rights acquisitions or renewals (think: identification of content with disproportionate share of interest, passion, and viewership) to avoid emotion-based deals (think: sports fandom of decision-making executives). However, those metrics have no impact on the company’s revenue now and will have only a small impact in the grand scheme once DAZN starts to offer inventory to the advertising industry in the future. Since retransmission fees for free-to-air channels are much lower than carriage fees for pay-TV channels, broadcast networks such as CBS, FOX, and NBC rely heavily on advertising, and by implication on high viewership numbers, as primary revenue source. But even ESPN, already banking the highest carriage fee per subscriber as mentioned above, has approximately a 40/60 – split between advertising and subscription revenue leaving its business much more exposed to declining viewership figures than DAZN. After all, it is important how rights buyers monetize their content and looking at the revenue model of DAZN, it is all about driving subscriptions: It does not matter how much the customer uses the platform, but how many sports fans there are. Increased competition by sports and entertainment alternatives (think: Netflix & Spotify) for the customers’ attention and, as a result, for their discretionary income (think: wallet share) is a challenge, but that does not mean that there are less sports fans in general, which is ultimately DAZN’s target group.

In this regard, subscription-based OTT platforms also differ from other potential digital-only bidders for live sports rights such as Facebook and Twitter. As their revenue model relies, at least at this point in time, almost exclusively on advertising revenue. Fewer eyeballs for live sports content would create a similar challenge for them as for linear free-to-air channels. That is one reason why I would certainly expect the introduction of some form of a paywall if, not when, Facebook (think: “Facebook Watch Premium”) or Twitter (think: “Twitter Premium”) should ever consider sports rights as a stand-alone business as compared to mere marketing expenses to drive customer acquisition and engagement. However, they already acknowledged that they are still in a period of experimentation without knowing what the end-game of their ambitions in sports is supposed to look like, making it a priority to position themselves as a "partner" of existing rights holders instead of direct competition.

Third, DAZN has no interest in serving as partner (think: complementary distribution), but considers itself as direct competition for incumbent legacy media companies once 2021 arrives. Everything what DAZN is currently doing in the US is aimed at positioning itself the best way possible once the NFL (2021/22), MLB (2025), NBA (2025), NHL (2021) becomes available. The aforementioned negotiations between the MLB and the OTT service are a glaring example for DAZN’s intentions. It should not be expected that DAZN agrees with the slicing and dicing of rights packages as currently observed by the NFL (e.g. Thursday Night Football: different non-exclusive rights holders across several distribution systems). This is an understandable approach for the NFL to reach a more complete audience in an ever-more fragmented media landscape, but DAZN wants (and needs) exclusivity and won't pay the big bucks while serving as merely one of several distributions channels given its underlying subscription-based revenue model.

Speaking of positioning for future rights acquisitions, I would not underestimate the potential for DAZN going hard after Major League Soccer either – with John Skipper, a known and vivid soccer fan, at the helm. The current deal with its national broadcasting partners ESPN, FOX, and Univision fetches +/- $90m per season through 2022. Despite the upcoming World Cup in 2026 on domestic ground and a rumored merger with the Mexican Liga MX, the financial commitment on an annual basis needed to secure an exclusive rights package should be much more in the price range of DAZN’s other deals across its markets as the NFL or NBA would probably demand for any exclusivity.

Going hard after the MLS would probably be the first time that Skipper would really go head-to-head with its former employer as the ties between MLS and ESPN has recently deepened through the integration of the "MLS Pass" into the ESPN+ platform at the beginning of this season. This collaboration was most likely also driven by the fact that the MLS’s digital offering was already powered by Disney-owned BAMTech and resulted in greater distribution/exposure for the league, something very important for a league in "growth mode."


“Every time I hear that they’re [Amazon, Facebook & Co.] inevitably coming, I believe that I hear some commissioner of some big league in the United States whispering into a reporter’s ear that they’re coming. It’s good for the leagues, I would be doing the same thing in their position. To have more bidders is always good.”

With the supply side of sports media rights facing practical limitations as cannibalization of content becomes inevitably an issue amidst more aggressive segmentation of packages (in addition to having a fixed amount of games to market anyways), pushing new bidders on the demand side is of inherent interest of originals rights holders. Whereas the interest of other new media companies, Facebook and Amazon in particular, is repeatedly emphasized in public remarks by leagues with - in my opinion - the sole reason being that they can serve as catalyst for driving up prices and sustaining the impressive growth in rights fees over the last decade, DAZN should be considered a viable contender going forward. (see: Twitterpost)

Anything other than boosting digital-only players, despite having almost no track-record of broadcasting premium live sports content, would needlessly shrink the pool of potential bidders years ahead of current rights deals are set to expire. Nonetheless, making it a priority to subtly emphasize their supposed interest during public appearances is something different. DAZN, however, should be considered as a direct “competitor” as opposed to a “partner” from legacy media's point of view going forward. I would suggest to La Liga’s president Javier Tebas or Bundesliga’s Klaus Filbry to replace “Amazon, Facebook, and Netflix” with “DAZN” the next time they try to stir up competition for their media rights.


“No, [I’m not surprised that ESPN+ has over one million subscribers] and we have more than that. Not in the United States.”

Asked about ESPN exceeding the one million subscriber mark for its new streaming platform ESPN+ just five months after launch, Skipper wasn't surprised. Given the very aggressive pricing ($4.99 per month or $49.99 annually) and huge marketing push across ESPN’s linear and digital channels, I would certainly agree with this assessment.

At the moment, the platform is inevitably a loss-making operation (+/- $250m in 2018) given the expensive content commitments (e.g $150m/5years - deal with UFC, >$100/7years - deal with Top Rank Boxing) as well as ongoing R&D investments in the technological infrastructure of the costly-acquired BAMTech platform on the way to launching Disney+ in late 2019. From a outsider’s perspective, although both ESPN+ and DAZN follow a similar strategy with a few exclusive core rights that are supplemented by long-tail content aimed at the passionate, but underserved sports fan, who is willing to shell out a few more bucks per month, ESPN+ seems much further along: Having launched five months earlier, the OTT service of the “Worldwide Leader in Sports” already carries a vast portfolio of niche sports on an exclusive basis such as European Basketball (FIBA), Chinese Football League (CFL), English Football League (EFL), FA Cup, Dutch Eredivisie, United Soccer League, NBA G-League, or Rugby World Cup Sevens. Thereby, ESPN+ has quickly establish itself as an essential service for American fans who want year-round soccer coverage, a sports that has been a hallmark for DAZN in its other markets. Their respective premium content on both platforms could be considered on par with each other: Matchroom Boxing / Golden Boy Promotion for DAZN vs. UFC / Top Rank / MLS / Serie A for ESPN+. In his role of marketing the OTT service, Skipper was quick to point out that DAZN has more than one million subscribers in Japan (population of +/- 126.8m) when confronted with the ESPN+ numbers. Based on my information, there are also some positive news out of the DACH-Region: I was told that the current subscriber count hovers around the 2-million-mark for DAZN, which seems a lot at first glance considering that the OTT service had subscribers in the "six-figures" back in 2017. However, I’m convinced that there was a strong acceleration in subscription growth last year, in 2018, and would consider +/- 2.0 million subscribers as reasonable at this point in time. In the medium term, let's say by 2021 and in wake of acquiring a mid-sized domestic rights package (+/- €100m per season) to the Bundesliga, closing in on +/- 4.0 million subs would be my projection. By implication, DAZN would come closer and closer to the number of customers from market-leading pay-TV operator Sky Germany (5.2m total subscribers as of June 2018) who subscribe to the company's sports package by 2021 (4.0 - 4.5 million) when we assume a continuation of current growth rates in the low single digits for Sky's division in the DACH-Region (population of +/- 98.0m).


“We believe we can do 10 million, and of course we’re busy preparing to do 15 and 20 million.”

By being a digital-only competitor in today's sports broadcasting market, the question about the ability to deliver live sports content over-the-top in real-time and at scale was inevitable. Whereas I just published a two-part column tackling the "OTT Technology in Sports" (Part I & Part II), a few points jumped out to me:

First, Skipper considers Perform-powered DAZN and BAMTech-powered ESPN+ as having the market’s best technological capabilities. Although I strongly agree with DAZN having the most advanced streaming and hosting infrastructure when it comes to live sports (see: here, here & here), I have repeatedly heard that BAMTech's capabilities are nowadays not as superior as everybody thought at time of the takeover from the MLB and that other streaming service providers such as Deltatre (enterprise value: +/- $170m) or NeuLion (enterprise value: +/- $250m) would have been equally potent acquisition targets for The Walt Disney Company, but at a much lower price point. Skipper is certainly a little bit biased given that, having been ESPN president back in 2016, he was highly involved in the process of acquiring BAMTech from the Major League Baseball at an enterprise valuation above $3.0bn, or approximately 12.0x sales. [Valuation refers to first transaction of assuming 15% - stake in BAMTech, the current majority stake (75%) of Disney was acquired over two additional rounds in early 2017 at higher valuations, but unknown sales multiples.]

Second, Skipper referenced recent remarks by Brian Rolapp (EVP Media @ NFL, CEO @ NFL Network) that there're still major improvements needed by pure streaming platforms to be considered for exclusive rights packages in the future. Technological limitations, in addition to the long-term lock-up of premium sports properties by legacy media companies, might be the biggest roadblock for digital-only players towards national broadcasts of major league games on an exclusive basis in the United States, a market which requires much more scale as the fragmented media market in Europe. (see: Twitterpost)

Considering that Skipper sees DAZN's infrastructure market-leading while admitting that their own current state-of-the-art technology still faces its limitations at +/-10 million concurrent live viewers supports the standpoint of the NFL executive. Against this background, Skipper's prediction to be able to stream reliably to +/- 15-20 million viewers anytime soon seems pretty aggressive as OTT services, including DAZN, have already struggled with serious issues at much lower concurrent viewership figures in the past.

After the DAZN Group has already greatly benefitted from the presence of John Skipper during private negotiations for rights acquisitions (see: Golden Boy Promotion), it has now started to leverage his presence to raise the company's public profile, even if this means the occasional question regarding his still somewhat mysterious exit from ESPN.


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