This analysis was first published in SvD Näringsliv, in Swedish, on August 15th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
A World Cup run for Sweden means new millions for the broadcasters who hold the rights. But around the corner, far bigger wallets are waiting to enter the bidding.
There is a category of television events that are hard to ignore — events that become a shared gathering point. A classic Swedish example is Melodifestivalen.
Major sporting events, such as an ongoing football World Cup, are another kind of campfire TV. People talk about “the match” without needing to specify which one. Everyone already knows.
For broadcasters, a deep run by the home nation is instantly a boost to the bottom line. More viewers means higher advertising and sponsorship revenue.
This, combined with fans’ loyalty, has made sports rights one of the most important factors in the success of pay TV.
Time and again, it has been shown that viewers are more loyal to their favorite club than to the TV provider broadcasting the matches. Successfully acquiring — and keeping — key sports rights therefore often becomes an existential question for broadcasters.
A clear example of this is Viaplay, which has had a turbulent year on the stock market. The share price has fallen over 73 percent since the start of the year. The company’s then-CEO, Anders Jensen, resigned when the company issued a profit warning and lowered its annual targets at the start of the summer.
Many Viaplay subscribers pay their monthly fee solely to access Premier League.
For Viaplay, it was primarily the international expansion that failed. In the Nordics, its position has been relatively stable. The reason for that comes down to one word: Premier League — the English football league. Viaplay holds exclusive rights to broadcast its matches in Sweden, Finland, and Denmark until 2028. Such an investment is enormously costly, but subscriber interest is also very high.
The battle for coveted sports rights has been ongoing for many years, and prices have been driven up by fierce competition.
On the horizon, however, you can sense that this safe card for driving subscribers could be threatened for Viaplay. Not because interest in sport on television is waning, but because those who might start bidding up prices have considerably deeper pockets than the Nordic players.
We are, of course, talking about the tech giants. Historically their interest in sport has been quite limited, but as their ambitions in video have grown, sports rights have become increasingly relevant.
In 2022, Apple paid $85 million — roughly 920 million kronor — annually to broadcast selected baseball games from the American MLB league. And just a few weeks ago they signed an exclusive streaming deal with Major League Soccer (MLS) — the football league in the US — worth 27 billion kronor over ten years.
Amazon with Prime Video has also invested in sport. The popular Thursday Night Football — American football in this case — costs Amazon 10.8 billion kronor per season.
Sums like these paint a potentially difficult competitive picture. So far, the American tech giants have mainly invested in domestic sports rights — but that should be seen only as a starting point. Both Apple and Amazon have far-reaching international ambitions, and have launched their video services in numerous countries — Sweden among them.
Having additional bidders in the race for the most coveted rights is not in itself a huge problem. Telia-owned C More and Viaplay have long driven up prices for each other in this regard.
For a competitor like Viaplay — which only has video to offer — it could become very difficult to compete.
What could end up being different is the scale and the underlying business model.
Neither Amazon nor Apple has video as their primary business. For Apple it is a complement to selling hardware; for Amazon it is a complement to e-commerce. Video is a way to reach even more potential customers who can then go on to buy a wide range of products and services. For a competitor like Viaplay — which only has video to offer — competing on those terms could prove extremely difficult.
It could also become very expensive. Apple’s 27 billion kronor to show the American football league over ten years sounds like a lot. But that sum is only around 0.09 percent of the company’s market capitalization — or about four percent of what Apple holds in cash. For the sake of the local players, one can only hope it takes a while before the tech giants start paying attention to European sport.
