January 4, 2012 by dannybishopcreative
The rumour mill in the UK has just dropped a very interesting morsel: Apple will bid on the next round of English Premier League IPTV rights.
Should Apple decided to bid for the rights it would most likely be a different looking outcome that was was negotiated back in 2009. The domestic live rights for 2010-2013 were negotiated for £1.7B, which are currently split between pay TV providers BSkyB and ESPN. The current rights are divided into 6 packages each featuring 23 matches, with the Sky taking 5 packages and ESPN the remaining package.
Apple are unlikely to be keen to take just a portion of matches. They have a history of keen negotiation with record companies and movie studios. When the record companies wanted to only sell complete albums Apple pushed back and forced track-by-track sales within iTunes. While Steve Jobs has gone, there’s little doubt that Tim Cook understands that for Apple to make any EPL move work it will require the right package to be on offer in the first place. If the EPL merely offers 5 minute highlights, as they currently do for Yahoo, then I doubt Apple will ever make a bid. For Apple to throw their hat into the ring they would need to be able to stream full matches live, offer on-demand full match replays and more.
Right now the only package that comes close to offering that latitude is the full £1.7B which includes broadcast TV rights.
There’s one thing in all of this that has played directly into Apple’s hands – and as unlikely as it seems a pub owner in Portsmouth could be the best reason for the EPL to look at restructuring their entire rights offering in such a way as to make them easier for Apple to use.
A recent ruling in the European Court of Justice has ruled that UK residents (and pubs) can use legally obtained satellite decoders from other countries to watch (and show) EPL matches. The ruling means a pub can pay £100 per month to show EPL matches live instead of £1,250 by buying a decoder from countries like Greece instead of English rights holders BSkyB.
The ruling from October 2011 will mean that the EPL will already be thinking about trying to change the way they provide the rights. One option would be to try and package all European rights into one big grab-bag, and then let the subsequent owner auction the rights to each country themselves. That would mean any income generated from the rights in any country eventually finds its way back to the overall rights holder.
A more interesting option would be for the EPL to set up its own broadcast arm. With just 19 months left in the current rights contract their is probably just enough time for the Premier League to consider setting up its own channel, but it would take a massive leap of faith on their part. Massive leaps of faith are hard to make, especially when the revenue from the current model is generating such massive income.
However the market is unlikely to repeat the numbers from the last time the rights were negotiated, even before the Portsmouth pub ruling is taken into account. Europe is a basket case, economically speaking. This alone would be reason enough for the Premier League to expect no great price uplift. Add in the ruling from the EC and the rights look less and less likely to deliver the same windfall experienced in the 2009 negotiations.
So where does that leave Apple? While not quite in the box seat, the time is right for Apple to make a move. Between iPhones, iPads, iPod touches and Apple TV they are ideally placed to deliver content. If the rumours are true as to the Cupertino company being ready to reveal a stand-alone TV then the one of the best ways to bring people into a new system is via sport. Sport has advantages for a broadcaster that are virtually impossible to match versus any other programming material.
Until recently the “live” nature of sport has resisted traditional piracy, but with rebroadcasting websites like Justin.tv broadcast TV sport is set to be disrupted in much the same way that Napster did to the music industry and Pirate Bay did to the film industry.
Apple might be the saviour for the EPL, able to value the Audio-Visual rights somewhere above £2.5B for a world-wide package over 4 seasons. And at that price I think they’d have no trouble turning a profit. Apple are well versed in taking something that looks like an behemoth and turning it into bit-sized chunks. So instead of being forced to buy a cable package worth hundreds of pounds to watch a dozen matches, Apple would make each match a pound or two, with an option to buy a season for your team. It would be a much cheaper option than the current pay TV option. Your rivals got thumped 6-0? Buy that too! Or buy the whole EPL season if you so choose, that would still be cheaper than a satellite subscription I’ll bet.
And that’s before you take into account the relative ease of consumption Apple now have available to them. Start watching a match on your Apple TV and run out of beer & chips? No worries. Grab your iPhone and watch as you walk to the shops. And tomorrow morning at the office bring up the match defining moment on your iPad as you talk around the water cooler.
The only company that could come close to providing a similar experience is Google. But similar is relative. They already have the component infrastructure in place with YouTube and control over their own mobile/tablet OS in Android. If Apple and Google get into a bidding war then there is no doubt that the EPL stands to earn a lot more from the next round of rights than previously, and with that in mind they might do everything they can to make sure the packages available are more attractive to Silicon Valley. The EPL would provide coverage and on-sell limited Pay TV rights, while the bulk of the product moves online.
Will it happen? I’m sure it will. The one thing I’m not sure of is if it will happen this time round, or if it will be Apple or Google that becomes the first rights holders for one of the most popular sporting competitions on the planet.