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Market Insight

DAZN agrees distribution deal with Eurosport in four European markets

July 18, 2019

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit

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Streaming sports service DAZN has formed a partnership with Discovery which will see the US group's channels Eurosport 1 HD and Eurosport 2 HD added to its services in Germany, Austria, Italy and Spain.

Contents on the Eurosport channels include the Grand Slam tennis, road cycling Grand Tours, the most popular wintersport events and the 24 Hour Le Mans. Eurosport has also rights to the Olympic Games, including the 2020 Tokyo summer games. 

No financial details for the agreement were revealed.

In Germany and Austria, DAZN will sublicense 45 Bundesliga matches per season and the DFL Supercup match between Bayern Munich and Borussia Dortmund to be played on 3 August. Importantly, the Bundesliga matches will continue to be available on Amazon Channels in Germany and as part of the Eurosport linear channels on the HD+ satellite service. 

DAZN launched in Germany, Austria and Switzerland in August 2016, in Italy in August 2018 and Spain in May this year. With the addition of new rights including the Eurosport channels, DAZN's monthly fee in Spain is to be increased from €4.99 to €9.99, in line with the other European markets. DAZN has recently reported more than four million paying subscribers across the nine markets where it operates.

Our analysis

As we noted in an insight report last year - Online sport: evolution, not revolution - DAZN is the only specialist sports streaming service of scale to have launched worldwide in recent years. Most other streaming services are an add-on to an existing linear business - such as ESPN+, Sky's Now TV, NENT Group's Viaplay, and Eurosport Player itself. While US sport federations like the NBA, MLB and NFL have been particularly aggressive in launching online subscription pass services, all of them continue to license their rights to free to air and pay channels where they can.

Whether this continues to be the case remains to be seen, especially with the arrival of 5G promising to reduce latency, one of the issues that bedevils live streaming of sports. Major media owners have made moves into the streaming space: Walt Disney Co buying BAMTech, NBC creating PlayMaker Media and Turner buying iStream Planet. In addition, the sports agency/production group Endeavor acquired Neulion last year. Amazon is also increasingly involved in live sports, offering Thursday night NFL games worldwide and building a portfolio of sports including tennis and (from the next season) Premier League matches in the UK.

The challenge for a start-up like DAZN is the amount of investments necessary to aggregate a strong enough rights portfolio. It has generally avoided head-on competition for the most expensive contracts such as Premier League in the UK or US major league sports, but opportunistically moved in where companies have withdrawn from the market or hesitated over a renewal. In Italy, for example, DAZN replaced Mediaset as Serie A partner, in Japan it wrested control of the J-League from SkyPerfectTV and in Spain it took Moto GP and Euroleague basketball from Telefonica.

However, the scale of the risk is underlined in the latest accounts files by DAZN for the 2018 financial year: rights commitments due over the next five years totalled more than £4.3 billion ($5.8 billion), with $1.4 billion in payments due this year. While DAZN's revenues grew significantly last year to £213 million ($280 million), it needs to scale rapidly if it is to reach break even.

DAZN has already entered partnerships in some of its markets to help the process. In Japan, which is its most succcessful market in terms of subscriber numbers, DAZN has a partnership with NTT DoCoMo, the leading mobile phone operator, where the service is bundled in with various packages. Success in Japan not only enabled DAZN to acquire additional rights from Softbank, which decided to fold its sports streaming service, but also last year brought the giant agency group Dentsu on board as an investor. In Italy, DAZN has also agreed a joint distribution deal with Sky, when it entered the streaming market at the beginning of the previous Serie A season.

Bundling in the Eurosport channels - especially with the Bundesliga package - will certainly strengthen the appeal of DAZN in Germany and Austria and could herald further deals with other linear channel providers or direct-to-consumer offerings from sports federations. Carriage partnerships could be beneficial for DAZN to lessen the degree of competition with local incumbents in still-nascent markets but also could bring to DAZN cross-promotional benefits. 

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