Going big in America is the holy grail for many a British export. For the poster child of live sports streaming, it is strictly a matter of business.
Often described, perhaps reductively, as ‘the Netflix of sport’, UK-based DAZN has taken its over-the-top (OTT) streaming service to American shores for the first time, having initially launched in Germany, Australia, Switzerland and Japan in 2016, and then in Canada last year. It could be the boldest and most significant play yet for a company with designs on becoming the world’s leading digital sports content provider.
Over the course of the summer - a period which also encompassed a separate launch into Italy - DAZN bosses spent several months building a US rights portfolio that centres on boxing and mixed martial arts (MMA). In June, the company partnered with Viacom-owned MMA promoter Bellator, signing a global rights deal worth a nine-figure sum. A three-year agreement for exclusive US rights to the fledgling World Boxing Super Series was announced the following month, while in September DAZN penned a multi-year deal to show English-language coverage of Combate Americas, a US-based MMA promotion geared towards Hispanic fans.
But it was the venture that preceded those deals which truly signalled DAZN’s intent in sports media’s most competitive market.
In May, just days after snaring former ESPN president John Skipper to oversee its US operation, DAZN revealed a landmark eight-year deal with British-based Matchroom Boxing. Trumpeted at the time as the biggest in boxing history, the deal would see the promoter and Perform Group, DAZN’s parent company, invest a combined US$1 billion to create Matchroom Boxing USA, a joint venture that would stage 16 fights a year across the US, with DAZN serving as the exclusive American broadcast partner for those events plus Matchroom’s existing 16 fight nights in the UK.
“This is a dream scenario for us,” Matchroom boss Eddie Hearn said on announcing the deal. “America - we have well and truly arrived. Let the fun begin.”
Matchroom managing director Eddie Hearn signed a US$1 billion joint venure with DAZN back in May
DAZN’s US service went live on 10th September. Priced at US$9.99 month, the ad-free, no-strings-attached platform provides exclusive behind-the-scenes content and original programming as well as coverage of live events, the first of which saw Matchroom’s heavyweight boxing star Anthony Joshua - now a DAZN brand ambassador - successfully defend his IBF, WBA and WBO world titles against Russia’s Alexander Povetkin on 22nd September.
The Matchroom deal, which has since been expanded to Canada, ensured that no fight cards would be delivered via pay-per-view (PPV), with North American viewers instead able to access them via DAZN’s subscription service. It was an important statement from both parties, one articulated with characteristic candour by Hearn shortly before Joshua’s defeat of Povetkin.
In September, the outspoken Londoner proclaimed that the current PPV model - the very model that has sustained boxing for a generation - “would end in tears” owing to what he sees as over-saturation on both sides of the Atlantic. While PPV revenue remains the lifeblood of the fight game, Hearn argued, the industry’s move to put more and more bouts, many of them not exactly box office material, behind one-time paywalls was only undermining the business and hitting fighters hardest.
For DAZN, too, the decision to initially build its US service around fight sports is rooted in its belief that boxing fans are being underserved by the PPV model. Echoing Hearn, company executives have vocally heralded their strategy as taking PPV-grade fights away from PPV outlets, and their overarching intention is to rethink the way fight sports content in general is delivered.
“That’s the reason we’re launching into it,” confirms Paul Morton, DAZN’s chief financial officer, “because we think that boxing has become unaccessible and unaffordable for the majority of boxing fans. By launching DAZN in the US in an accessible way, in a way that you don’t need any hardware or kit, you don’t need to be part of a broader broadcast bundle - you can simply download the app and subscribe for a very reasonable US$9.99 a month - it’s very much about reengineering the way fights are brought to the fight sports audience.”
We think that boxing has become unaccessible and unaffordable for the majority of boxing fans. This move very much about reengineering the way fights are brought to the fight sports audience
Paul Morton, DAZN chief financial officer
Morton adds that, according to DAZN’s own estimates, there are 23 million fight sports fans in the US “who are willing and able to pay for content but who have been priced out” by the PPV model. Speaking to SportsPro on the eve of Joshua’s clash with Povetkin, he adds: “It’s only a very small sub-section of fight sports fans that have been able to consume the largest fights, and those largest fights have been screened on a very infrequent basis.
“What we’ve been able to do with our partnerships with Matchroom and Bellator is to ensure that over the course of a year, we’ll be screening more than 80 live events. We’ll be screening more than one major fight night every week and we’ll be doing it at a very competitive price point.”
For Perform - which rebranded as DAZN Group in September as part of a broader corporate reorganisation, one which served to underline the importance of the streaming service to the wider group - the Matchroom deal represents a significant outlay. For Morton, though, it is an investment worth every penny - provided, of course, Matchroom can continue to pull in the prize fighters punters will pay to watch.
“In exchange for that investment Matchroom are committed to staging 16 fights a year featuring some of the biggest boxers in some of the major premium venues across the US,” he explains. “To get a return on our investment those fights need to deliver significant sign-ups and, ultimately, a subscriber base.”
Recent reports suggest Hearn is working on a deal to add middleweight star Gennady Golovkin to the promotion’s stable after the Kazakhstani fighter’s agreement with HBO expired following his rematch with Mexico’s Saul ‘Canelo’ Alvarez in September. Mayweather Promotions-backed Gervonta Davis is another high-profile Matchroom target, but any deal to sign Golovkin in particular would be a major coup for both the promoter and DAZN given his stature both in the US and worldwide.
“Our US team are working very closely with the Matchroom team to ensure that we get the best boxers on our fight cards,” says Morton. “What that investment does, and that commitment from DAZN, is give Matchroom the certainty and the backing to go out and collate a very strong stable of fighters. That’s not only existing fighters, but investing in up-and-coming fighters and building a story around those fighters to drive audience engagement around their fights.”
Anthony Joshua is the centrepiece of the Matchroom stable and face of DAZN's US launch
DAZN’s stated aim is to become “the home of boxing” in the US, but its expansion comes at a time of heightened competition and perceptible flux in the fight sports marketplace. HBO and CBS-owned Showtime have long been the dominant market players - although the former recently announced it would end its live boxing coverage from this October after 45 years in the business.
Meanwhile ESPN has moved to throw its considerable weight behind Top Rank Boxing over the coming years and Fox Sports recently signed a new deal with Al Haymon’s Premier Boxing Champions (PBC) series. MMA will be a similarly tough nut to crack. From a digital perspective, UFC Fight Pass reigns supreme in the US market, while Disney’s new ESPN+ streaming service will be added to the mix when its new deal with the UFC kicks in at the start of next year.
But it is not only fight sports that DAZN is eyeing. Morton, a Perform stalwart who has served in his current role since July 2016, believes there are a wealth of rights acquisitions “under consideration” in the US market, and while he will not be drawn on which properties are of interest, he says the major domestic leagues could all come into play when their rights come up for renewal in 2021 and 2022.
“What we’ve demonstrated before is that we aren’t afraid to acquire domestic rights if they can be acquired at an economically sensible price,” he adds, pointing to DAZN’s prior purchases of Serie A rights in Italy and Uefa Champions League rights in Germany and Austria.
“We are willing to consider buying rights if we think we can build a sensible business model around it. Clearly, in the event that we ever have aspirations to acquire any of the major US sports domestically, we would need to have demonstrable evidence over a number of years that we have a strong and robust platform that would be capable of delivering the kind of scale and volume that a domestic US rights holder would expect a broadcaster to have.
“It’s not a comment either way on what the long-term objectives are but certainly we absolutely need to demonstrate that we have a scaleable, flexible platform that would be capable should that be something we want to consider at a later date.”
DAZN's US offering is also a home for other fight sports, namely MMA promotion Bellator
In the interest of building a name for itself and proving the concept to potential partners, DAZN’s deal with the National Football League (NFL) to exclusively carry the league’s Sunday Ticket and RedZone offerings in Canada could prove pivotal. The service debuted in the country last year but its live streams were soon hampered by technical issues including muffled sound and persistent buffering, leaving Canadian viewers frustrated and forcing both the company and the NFL to apologise for ‘inadequate service’.
DAZN has since made significant investments to address last season’s issues, while it has also moved to sign sub-licensing agreements for Sunday Ticket coverage with a selection of cable and satellite providers. Nevertheless, NFL executives are likely to be monitoring the performance of the service with interest throughout the ongoing season.
“We believe that in Canada we can achieve the subscriber and audience milestones that we have set ourselves,” insists Morton, though he declines to give specific figures. “Hopefully it’ll be a good showcase for US rights holders that the model can work.”
Proving the viability of the subscription-only model is a challenge DAZN will continue to face across each of its seven markets. Self-described as the world’s first pure OTT sports provider, its strategy so far has been to avoid selling advertising, and to build its service on a compelling mix of premium international properties and highly sought-after local programming, such as domestic soccer in Japan and Italy. Whether that approach will work in the US, where sport formats are ripe for advertising and competition for the most coveted rights is always voracious, remains to be seen.
“The way that we’ve modelled the US is slightly different to how we’ve modelled the other markets because of the nature of the content,” explains Morton. “The other markets largely revolve around seasonal leagues, whether they be European soccer or Japanese soccer, [so] we know that when people come in, they’re likely to stay with us for the remainder of the season. I think in the US it will be a bit more spiky and we’ll see people dip in and dip out of the service based on the fights.
“But certainly, given the quality and the quantity of the fights, we’ll do everything we can to keep them as engaged and retained on the service for as long as possible.”
When you sign up to DAZN, you know you’re going to be getting it all. If you sign up to ESPN+, you’re not necessarily getting everything that ESPN has on offer
DAZN Group executive chairman John Skipper (left) with DAZN chief executive James Rushton
In any case, says Morton, DAZN’s competitive edge over its digital rivals is that it does not reserve its best programming for linear distribution. “DAZN only has one offering,” he adds. “When you sign up to DAZN, you know you’re going to be getting it all. If you sign up to ESPN+, you’re not necessarily getting everything that ESPN has on offer. To get everything that ESPN talks about and advertises, not only do you need ESPN+, but you also need a cable subscription.
“With us, we’re very open in terms of the content that we have, and anyone who signs up to our service knows that they are going to get everything.”
That ultimately ties into DAZN’s USP, which Morton says is to “give sports fans a better and fairer way to watch sport”. He adds that the company always looks to “exploit the full value and potential of IP to give subscribers a very personalised, immersive, data-driven approach to how they consume their sport”.
He continues: “Having that IP delivery means we can log every action that our subscribers take on the platform so it means that we can put data at the heart of our business and make sure that we are making decisions in terms of how we acquire customers, where we acquire them from, how we programme content, how we editorialise the product, how we make decisions around rights renewals and the value of rights. Because we have that level of customer intelligence, we can make very educated and intelligent business decisions off the back of that data.”
Looking ahead, Morton confirms that that data-informed approach will continue to guide the company’s global expansion. More new market launches are in the pipeline for 2019, but it will be the potential for major rights acquisitions that will ultimately determine where DAZN goes next.
“As we sit here today, we have delivered pretty much bang on our projections in terms of subscribers,” Morton says. “We are very happy with what we have delivered and we’re very confident in our outlook for the rest of 2018 and 2019 based on the rights that we have. We sit here in a very good place.”