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A Testing Growth Phase For Sports

The growth equation for TV in Asia is getting more complex – and sports broadcasting is no exception.

Malaysian pay-TV company Astro is banking on niche channels and OTT services to bring in new eyeballs and additional revenue for its sports business, an area where growth in audiences and ad revenue growth is starting to tail off.

The company is rolling out a la carte cricket, golf and wrestling channels, and is planning to include sports content (its own and from Fox International Channels) in an upcoming streaming service, due to launch in the next one to two months.

“Hopefully, we can see what people who have never subscribed to Astro are interested in,” said Astro’s sports business VP, CK Lee (pictured), speaking at the Sports Matters conference in Singapore last week.

“We can stream a linear channel but we need to do much more than that,” he added.

More than ever, channels and platforms need patience, a clear head, and a long-term view on investment in sports broadcasting, as the sector enters a testing, transitional phase in Asia.

“We are at a crossroads right now,” Lee said. “What is the new business model going forward?”

Lee’s sentiment echoed across this year’s Sports Matters, running at the same time as the next bidding cycle for Premier League football rights in multiple Asian markets.

The result of those deals will do a lot to shape competitive dynamics and strategies for the rest of the decade, as new channel entrants look to launch with a bang while both local and other international properties vie for a larger slice of the pie.

Future promise

Sports still has plenty of long-term promise in the region, thanks to greater investment in local talent and local leagues.

ROI from these initiatives will require subscription income as well as ad revenue however, often in markets where consumer content spend and pay-TV penetration are currently low.

“Building out a local league is not about viewership, it is about something that people will pay to watch, on a digital service or on a pay-TV service,” said Rohit D’Silva, EVP – Commercial for Fox International Channels (FIC), also speaking at Sports Matters.

FIC, which recently completed its Asian footprint for Fox Sports after launching in Korea last month, has acquired a good spread of international rights for the medium term.

Now the broadcaster laying the foundations for a new longer-term cycle of growth, looking for partnerships and investments in local sports that will take both time and strategic know-how to pay off.

“It is important for us as a sports business to look how these leagues can be built as premium properties, how they can be built as avenues to drive subscription as well as advertising,” D’Silva said.

Returns and margins will remain squeezed for the foreseeable future however, prompting FIC to also explore additional revenue lines from online sales and its own, which can offset some of that pressure.

A new attempt to increase the value of local sport is taking place in Malaysia where earlier this year local football association FAM signed a 15-year development pact with sports agency MP & Silva for an estimated US$250 million, the largest deal of its kind.

More live broadcasts, thanks to staggered kick-off times, as well as livestreaming on a dedicated FAM OTT platform for smaller clubs, will broaden exposure and commercial opportunities.

Those benefits will take time to trickle through.

“I think we will leap forward in the second cycle of the rights sales,” remarked Football Malaysia’s CEO Kevin Ramalingam, also speaking at Sports Matters.

Football Malaysia is the company that will manage Malaysia’s domestic league, alongside FAM and MP & Silva, from next year.

“There can be a bigger growth at that point, but it is baby steps for now,” Ramalingam cautioned.

“The first cycle will be a good cycle in taking things from where they are now to where they need to be.”

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