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Fistianados commentary: boxing’s entry into the streaming universe – part II

Canelo Alvarez, clad with The Ring middleweight and P4P belts. Photo by Tom Hogan-HoganPhotos / Golden Boy Promotions
Fighters Network
22
Dec

This is a continuing series of articles that looks at how the boxing world is adapting to the next technological age of broadcasting. Evan Rutkowski is a former HBO Sports marketing executive and host of the Fistianados Podcast, which looks at the business side of boxing. Click here to read Part 1 of the series.

Listen to Rutkowski’s latest Fistianados Podcast:

Canelo Alvarez’s third-round destruction of Rocky Fielding last Saturday wasn’t a shocking result inside the ring. The surprise to casual boxing fans who have ordered Canelo’s fights in the past though, was how they watched it. Rather than go through their cable company and pay somewhere between $70 and $85 to watch Canelo on HBO PPV or Showtime PPV, this time the fight required signing up for a new streaming service, DAZN, for $10 a month. DAZN, aiming to be the Netflix of sports, has spent big money to enter the boxing world and is counting on the sport to be a pillar of its entrance into the U.S. market. Alvarez, boxing’s biggest star, is their largest acquisition to date and expected to be a driving force in building subscriptions in the U.S.



“We believe our model and our proposition gives a long overdue alternative to the PPV model” says Joseph Markowski, Executive Vice President of North America at DAZN. “Primarily, we bring to sport fans a price, access, and production quality that is a major value to the pain of pay TV and PPV.” It’s hard not to be impressed by Markowski’s grasp of the challenges that U.S. fight fans have faced over the last few decades to watch the biggest fights for reasonable prices.

DAZN may just be establishing their brand awareness and value to consumers in the U.S. right now, but the company has a proven track record with solid subscription numbers in several other markets around the world, working with a variety of other sports programming. In fact, the first party data that they already have plays an important role in how they select sports and attempt to crossover fans. The deals that DAZN signed with MLB and Bellator MMA reflects an ambition to use data to build fan bases in multiple sports. “We lean on a number of different data points. DAZN is Perform Group, and we’ve worked with rights for a while. We know which content works well in combination. Of course, U.S. boxing fans are different than Japanese fans, but there are a lot of crossover points as well. Baseball is without question the sport that appeals most to the Latin-American audience, and we’re very committed to the Hispanic sports fan.”

Photo by Tom Hogan

These quotes and verbiage sound a lot like a Netflix or Hulu exec speaking in global terms of how statistics or a specific algorithm can inform them on what type of content from a specific creator or genre helps them generate buzz in a certain market. That type of thinking has colored what the enormous financial agreement with Canelo really means. While Canelo Alvarez’s deal has been talked about from a financial standpoint as a huge contract and risk for the network, Markowski confirms that in addition to the Fielding fight, DAZN owns the worldwide rights to Canelo’s next 10 fights. He’ll be one of the major factors in how they choose to enter new markets, along with the political and economic readiness for a streaming service. The goal is to expand responsibly, already with announced plans to enter Spain and Brazil in 2019. Canelo’s contract takes on a whole new meaning and value in this context given his star power in many parts of the world.

DAZN’s behavior is markedly different from the way that any broadcaster has traditionally looked at boxing content in terms of scale and global approach, and they now have a prized asset in Canelo Alvarez who on his own generates huge amounts of media coverage and will surely be a cornerstone with which to build upon for the future. While DAZN has built its brand identity, infrastructure, and signed major deals, the question remains—can they make the fights that both core and casual boxing fans want to see? Core fans have no doubt been impressed with the World Boxing Super Series and the volume of fights, but a few early cards have left something to be desired. In particular, launching their first U.S.-based card on October 6 opposite the Conor McGregor PPV fight against Khabib Nurmagomedov was questionable scheduling, and it’s fair to also criticize the location switch and matchups for their November 17 card. DAZN now faces perhaps their most important stretch of time since they’ve entered the U.S. market. This upcoming six-month period that started with Canelo’s fight last weekend leading up to the rumored date of Canelo’s next fight, May 4, is critical to demonstrate that they can follow through with strong fight cards. Markowski promises to deliver with great upcoming content.

“I can say with absolute certainty there will be PPV quality fight cards before May 4. This is not a short-term stunt. Our ambition is to take boxing off PPV.”

There is no question that many fight fans relish in only paying a monthly subscription fee to get Canelo’s fights, but DAZN must follow through with consistent high quality cards or risk an unhealthy subscriber churn. Many consumers and industry insiders welcome the first legitimate attack on a PPV system that is outdated and whose benefits to distributors far outweigh any other party involved. In theory, DAZN has the chance to completely remake the model for boxing so both fans and fighters could benefit. They have many advantages that other broadcasters, even other streaming services, wouldn’t have as they come into the U.S. market. Not only do they have the financial backing of owners with deep pockets, they have viewing habits and statistics from many other markets to make informed decisions.

But are there disadvantages to be all-in on streaming? DAZN’s competitors like ESPN, Showtime, and Fox are able to diversify and offer live boxing over both traditional television and via streaming. Markowski brushes aside such concerns “These are legacy broadcasting businesses that are launching streaming services. They need to cannibalize their core business at some point. It’s the wrong place to invest our cash.” This style of thinking surely will reap benefits in the long run, but it may work against DAZN in the short term.

Consumers respond to quality fights with popular fighters, and more than anything, DAZN needs to deliver those fights by Canelo’s next fight on May 4. Given the money spent on Canelo’s contract and the MLB deal, DAZN will certainly need to hit subscriber numbers that go well past Canelo’s recent PPV buy rates. The question remains—is the general sports world ready for a subscription streaming service? We know that the answer for all other content has been yes for a while. Boxing fans are now on the front lines of this debate, and they will play a huge role in what the answer is for sports.

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