Facebook has been quietly gathering steam in the content world, but a new hire signals some big ambitions, as well as a headache for rights holders.
According to the Guardian, the social media giant is about to hire Eurosport’s CEO, Peter Hutton as part of a bigger move into the content space. Although Facebook has dabbled in sporting content previously, it was one of the bidders trying to secure the rights for Indian cricket’s IPL, it has not been as active as Amazon or Twitter, both of which have been successfully pushing for some time.
While this appointment is unconfirmed at the moment, it certainly would be a good addition for the Facebook. Hutton was a key figure in securing the rights to broadcast the Olympic Games across Europe, and has previously worked at sports rights group MP & Silva, responsible for selling the rights for such properties as the Fifa World Cup and grand slam tennis. This is a heavyweight in the sports broadcasting world.
In terms of Facebook’s ambitions, it adds a new dimension to the platform, which is at risk of becoming a bit stagnant. The last couple of months have seen CEO Mark Zuckerberg and his cronies play around with various aspects, attempting to increase engagement and continue the staggering growth, but differentiation comes with risk. Arguably, the new ideas to date haven’t inspired Facebook to new heights, and if the rise of Bitcoin has taught us anything, what goes up quickly, can come down quickly as well.
Facebook is in a precarious position at the moment because it is a platform which is driven by user experience. It’s peers at the giants table of the internet are facing less of a threat because of the idea of functionality. Facebook needs to wow users each day to continue to keep them coming back, and while it might not be responsible for fake news trends or spreading hate speech, it is being held accountable because it impacts the experience users have on its platform.
Google and Amazon, who also sit at the top table of the internet, don’t have these issues. Their platforms are function, with user experience reliant on the success of an action, not the interpretation of behaviour. Search for ‘where Australia is’ and you’re happy. Buy a B*Witched CD and you’re happy. The core businesses are based on direct performance of the main product, not reliant on whether users can behave themselves by saying nice things.
When you combine the fact Facebook needs to find new reasons to charge advertisers, make the platform engaging again and generate some positive news, and you have a good driver for a sports content business. But what implications could this move have on the sports content business on the whole.
First and foremost, you have to think about the players who already have skin in the game. The likes of Sky and BT in the UK, for example. If the Premier League decides it wants to make an extra couple of billion and auction off the rights to a streaming partner as well as an official broadcasting partner, it will have to be very careful.
You have to consider the number of subscriptions poor sports fans will have to have if they are to follow a sports team. If BT has X amount of games and Sky Sports has Y, there might also be Z number of games which are on the streaming service exclusively. When we attended IBC last year, one of the problems being faced by the industry is the number of different services which are out there. Content is being spread too thin, arguably meaning there will be little value in any one subscription before too long. Sports is no different in this respect.
“No doubt web brand have the cash (to buy sports rights), but the move poses some interesting dilemmas,” said Paolo Pescatore of CCS Insight.
“Take the forthcoming premier league rights auction. Let’s say BT Sport, Sky Sports and a web brand are successful, that will mean consumers will be forced to sign up to three different providers, three different billing relationships. Ultimately consumers will suffer and will have to pay more. Rights owners need to tread carefully.
“You could also argue the escalating cost of sports rights will drive consumers to watch it live via illegal streams.”
The short term benefit of an extra couple of billion for the Premier League fat cats could very quickly turn into a disaster. Why would any of the content players want to spend ridiculous amounts of cash in buying the Premier League rights if they are not going to get a big enough audience? At some point ambitions to be a sports content player have to take a back seat and you have to question how you are going to get ROI. The guys who are buying the rights now might find other areas to invest.
This is of course assuming Facebook takes the premium product route. Should the Premier League rights owner want to deal with Facebook, there would surely have to be some promise that the social media giant would charge for the product, otherwise it would simply be signing the death warrant of its other customers. The ones who are paying big bucks now and hiding the content behind subscriptions.
This presents its own problem as Facebook does not charge for content currently. The user is used to free videos and is not likely to react well to a premium channel. You could put Amazon or Netflix in the same bracket here, but these are all businesses you already have a billing relationship with; subscription models would not be too much of a shock.
“One of my predictions is that Facebook launches pay-per-view transactions for selected events by 2019,” said Pescatore.
“The company recognises that it cannot rely solely on offering free content on an ad-funded basis. It strives to avoid mistakes made by rivals such as Google, which has failed to make a successful move into paid content. Facebook’s effort to secure more premium material offers scope to charge for selected events, such as sports, on a pay-per-view basis and could extend to event based advertising. The approach will prove attractive to content and media owners.”
A final problem which for the social media mammoth is the idea of production value. To date, Facebook’s approach has centred around user-generated content, where anything dodgy or poor quality is kept at arms-length; sports is a different beast and will test Facebook’s ability to hire the right people.
“Another aspect that needs to be considered is the production cost associated with each event” said Pescatore. “BT Sports and Sky Sports do a great job of providing analysis, insight and commentary pre/post and during the game.”
For sports, the content doesn’t finish with the battle on the pitch/court/track, there is a huge amount to spend on the production in the days before and after the event. Do it right and there will be silent fans, do it wrong and there will be incredibly vocal detractors.
Facebook needs to do something new, otherwise it will take the slow decline to irrelevance over the next few years. Those who don’t believe us simply have to look at how much of a colossus MySpace was. Sports is a good option due to its emotional connection to the audience. That said, the path to success is littered with obstacles, not only for Facebook, but the content rights owners, the current broadcasting players and the consumer.