Tuesday, August 07, 2007

Footballnomics 8: Who wants to pay to watch EPL?

There is currently a discontent among the English Premier League (EPL) watchers as this season the broadcast rights are owned by Astro TV, a new subscription-based TV. That means, those who only have access to free, network-based local TV won't be able to watch the games. Even for those who have access to other paid channels, like me, are upbeat because it is still unclear whether Astro will block ESPN/SkySports broadcast in other channels.

The problem began when the former holder of the rights, Trans7, decided not to continue broadcasting EPL. That was in spite of them having the first option to extend the rights. As I happened to 'work' for them, and personally know some people in the EPL production team, the new management does not consider EPL as profitable. (You may recall that Trans7 was formerly TV7, bought by Trans TV in August last year).

"The broadcast rights are very expensive, and we have to purchase all games as a package," my friend explained.

"That means we have to pay for 'small' games or games played in weekdays. Compared with the revenue from our sponsors, the margin is not that big. We showed EPL games mostly for image, not financial reasons," he added.

That means, the management thinks that it would be much profitable to allocate the weekend prime time slots for, let's say, broadcasting Hollywood Blockbuster (lower costs, same revenue, means higher profits), or another 'Extravaganza'-type program (higher revenue, similar costs, also means higher profits).

But that means we, the consumers are losing with this kind of business, aren't we? True -- it hurts my type, and other EPL-watcher type, of consumers. What about the other customers? Well, just see how much we are willing to pay to have EPL in our TV.

The thing is, in the non-paid networks, consumers' willingness to pay is irrelevant. Because we don't pay the station to broadcast the program we like. It is the sponsors. But the sponsors' decisions are based on consumers' willingness to pay for the products (how many cigarettes you'd buy after watching the game, how many SMS you'd send to join the quiz, etc.). Or, at least on the consumers' willingness to watch the program (e.g. via the rating system).

True, EPL watchers are fanatics, football lovers. But unfortunately that is not translated in substantial willingness to pay for watching the games. Many would be willing to pay high for a Liverpool-MU match. But who wants to pay to watch a Wednesday midnight match between Charlton and Watford? Who wants to pay to see ME commenting on that game (I may have to pay you to watch it!).

Things may be simpler if the TV can buy the match rights-per-show. So the TV can charge the consumers or sponsors only for the selected matches. However, the fact that the rights are sold in a bulk make the discussion irrelevant.

As a paid-service, Astro can then translate the consumers' willingness to pay into actual financial revenue. The fact that you'll have to pay a flat rate regardless of your match preference reflects the cross-subsidy from prestigious matches to the smaller ones. (Cross subsidy also comes from Astro customers who subscribe for non-EPL reasons).

For EPL lovers, the choices are:
  1. If you consider the subscription charge worth all matches that will be shown (or even only for a fraction of matches you'd plan to watch), then it's worth subscribing.
  2. If you are willing to pay only for selected matches, then watch them on the nearby pubs. Make sure that your expenses do not exceed the monthly subscription rate you'd have to pay instead.
  3. If you can identify who else are pissed off with this decision, you can coordinate and collect money among yourselves to buy the rights, then give it to a local TV network (or subsidize the TV station). I personally like the idea. But definitely I would free ride on your efforts.
Note: a similar situation happened when my favorite radio, M97 FM, ceased to exist. Classic rock lovers are a cohesive group and highly fanatics. But as long as it does not translate into willingness to pay (or, indirectly, willingness to pay for sponsors' products), that will be irrelevant.

Update: Rara's anticipating the new season of EPL...

1 comment:

  1. wah kayaknya ada yang kehilangan kerjaan neh:). Kalo boleh saran buat trans7 mungkin ada baeknya untuk membeli hak siar liga argentina atau brasil atau AS. Karena mereka maennya bagus-bagus juga.