By Leslie Crang

The first goal of this brave new era, though, was not scored by one of the ultra-elite. It was scored by a team whose presence among the then 22 runaways was something rather remarkable in itself and by a player who was a £40,000 signing from Doncaster. Sheffield United had been plummeting when Dave Bassett brought Brian Deane to the club in the summer of 1988. Four years later he would rise above the Manchester United defence to head home the first ever Premier League goal. Golden Goal

As Brian Deane’s goal nestled into the back of net at Bramall Lane in August 1992, a revolution had arrived within football. Not the revolution of inexorable books written on the preceding years that followed (1, 2, 3, 4 & 5). No. It was more that. It’s how the media of Sky Sports would take over Football within the newly formed English Premier League.

This post, will therefore look at how Sky Sports can be seen as a Clayton Christensen called a ‘disruptive technology’. A Disruptive technology is:-

A technology whose application significantly affects the way a market functions. An example of a modern disruptive innovation is the Internet, which significantly altered the way companies did business and which negatively impacted companies that were unwilling to adopt it. A disruptive innovation is differentiated from a disruptive technology in that it focuses on the use of the technology rather than the technology itself.  DEFINITION

 It will then look at whether it is now being ‘disrupted’ and if so how. With a look for a way to see how this may be stopped by Sky Sports and what it’s doing to stop being ‘disrupted’.

Firstly, a brief historical backdrop to this. Prior to television, the only way to observe a match was to attend the event itself. James Walvin has talked of the cheapness (and therefore large crowds) at matches in the early twentieth centuries. Games would cost ‘mere pennies’.

As radios became introduced to most homes from the 1920’s onwards. Boyle and Haynes state between the 1940’s-1950’s Sports Report and commentator attracted 12,000,000 listeners.

Sport was popular to people to attend and listen to. With the introduction of television, especially in the post war period. Hutchins and Rowe, in their perceptive book Sport Beyond Television : The Internet, Digital Media and the Rise of Networked Media Sport said ‘Sport plays a vital role in this context as a reservoir of market value in a media landscape where reliably profitable content is difficult to locate for producers, and may, in some instances, be drying up.’

David Tossell in his book The Great English Final: 1953: Cup, Coronation and Stanley Matthews has discussed the importance of the first recognised game of live football on British television and how the Cup final became an annual media event. The importance of the media would certainly be increased in the preceding years. By 1990 this was underlined by Peter Davies excellent All Played Out: Full Story of Italia ’90, in which the World Cup would be termed ‘planet football’, due to the reach of a mediated world especially with viewing figures of the 1990 World Cup semi-final between England and Germany reaching a record 26.2 million in the UK. This had indicated that Football, a sport often regarded as for ‘a slum sport played in slum stadiums and increasingly watched by slum people’, as the Sunday Times reported it in the 1980’s. By the 1990 World Cup, one could see the national sport of football could be sold and subsumed to the more affluent middle classes.

By the mid-1980, Rupert Murdoch had looked to replicate a media model that had been a success in the USA. That was Satellite Television and his creation of Sky Television and faced off against another competitor in BSB in the UK. Alex Fynn and others have pointed out that within the context of the media, three things attract viewer’s films, porn and sport. Porn was too contentious in the context of the UK both politically and socially. Therefore, at first Sky had a channel of Sky Films, which had blockbuster movies, paid for at an extortionate price. This, unsurprisingly, became a loss leader and sales (and losses) were haemorrhaging money. Then, Murdoch made perhaps his greatest decision. He hired Sam Chisholm. Chisholm renegotiated the film deals as well took the call from Sir Alan Sugar in 1992 to ‘blow the [ITV] out the water’ for the media rights to the new English Premiership League. Sky’s taking

This is where one may see Sky as a disruptive technology, in that it built a new business model of Direct to Home [DTH]. This is ‘disruptive’, as the money was being made not by adverts (which were still an important source of revenue) but by selling ‘packages’ to consumers. These could include news, children’s programmes and films etc.

The irony of disruptive technology is that often is does not have to be a superior product. Horsman points out that Sky had inferior technology to BSB broadcast that BSB had Marco Polo Satellite, which gave a superior picture quality to PAL. Whereas, Sky decided to rent a few transponders on Astra, which required larger receiving dishes would be needed, receivers were simpler, and cheaper. This kind of disruption can be seen in other markets. The most obvious, for me, would be Netscape versus Internet Explorer in the early 1990s [for a fuller account read Michael Lewis’ The New New Thing: A Silicon Valley Story: How Some Man You’ve Never Heard of Just Changed Your Life].

In both instances, the stronger and richer Company [SKY and Microsoft in these instances] succeeded due to their wealth and not from having better technology. I would also argue that Sky and Microsoft share another similarity. Political lobbying and political power. For Sky, when BSB and Sky merged in 1990, Sky was not asked to go before the Monopolies and Mergers committee. Even though they would have sole control of the UK Satellite business. Internet Explorer, a Microsoft product that was packaged with Microsoft 95 [but not Netscape] was not investigated until Lawrence Lessig took Microsoft and the US Government to court in 1998. Both companies would therefore have gained an unfair advantage over their competitors.

In disrupting the way we view Television, we had now moved from simple analogue television [these being the BBC and ITV in the UK with a maximum of four Channels] to a model of Satellite Television, with an extensive choice of channels via obtain the EPL media rights. Sky would (and has) retained the media rights to football. Which it has with great (and expensive success). An example can be seen by the graph below:-

PLTV

BBC Link

 

Academics have been quick to point out that Sky has changed the English Premier league both socially and financially. Peter Milward has described it as The Global Football League. Whilst the role of attendance has been overtaken by its media presence with Babatunde Buraimo pointing out ‘Since the 2000/2001 season the FAPL’s revenue from broadcasting has dominated those from match-day attendances or other commercial activities.’

Unfortunately, with the introduction of the Internet, the digital world has overtaken the Satellite World. Hutchins and Rowe [2012] say we have moved from ‘Analogue scarcity’ to ‘digital plenitude’. This has meant that Sky is facing competition from the Internet for people to watch Television. The competition can often be free [YouTube videos]. Some is also illegal (such as streaming). But some is also social. Such as how people watch programmes (the binge watching found on Netflix rather than watching at designated times, as was done on analogue and satellite television).

Also, the younger generation does not follow previous standards of viewing. For example, recent analysis has pointed undergrads drink less than previous generations at University. This may have an impact on watching football in a Public Houses and was discussed recently by Joe Devine.

So what problems and ‘disruptive technologies’ are Sky Sports facing? Well, from my analysis, quite a bit to be honest. To me these disruptions can be financial, social and technological.

Within the cost of the last deal to Sky is unlikely to be repeated or surpassed in my opinion (slightly contentious I know), under the proviso that Sky is a profit maximiser (which I assume it is). Firstly, the most obvious competition of BT Sport in business model examples. It’s £1.2 Billion Champions league deal, indicates a very serious intent on the monopoly that Sky has held within EPL. Roger Domeneghetti points out ‘Football was also a driving force in BT’s plans, announced in 2002, to sign up 5 million broadband customers by 2006. High quality content was crucial to get people to switch away from dial-up and so the company turned to football, offering streaming coverage and highlights from the UK, Brazil and Argentina as well as delayed ‘as live’ coverage of Serie A matches.

Professor John Hughson argues:-

The intrusion of Google TV into US sport has implications for football in the UK that go beyond the current offering of statistical and other match updating applications. Showing live matches in full on alternative media platforms into the future is feasible pending deals being struck between an outlet like the Google-owned YouTube and the most popular EPL clubs

But Sky is not just facing competition BT but also social media websites and ‘new’ media. Examples are plentiful but not highlighted fully within academic circles I would suggest.

Also, websites like Copa90, owned by Big balls, has defined itself as:-

COPA90 IS THE HOME OF GLOBAL FOOTBALL FAN CULTURE’ [capitals in the company homepage]

 In recent news it has revealed Copa90 to start showing live football – promising fan focus over ‘suits in a studio’ punditry. Although this is not a large company, It does indicate that Copa90 has tapped a return what might be that invented tradition ‘fan culture’ (such a misnomer). But, this could eat into market share, especially parts of the Longtail. Which is defined thus:-

Our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare.

epl2

 

As Stefan Symanski has written:-

Many fans would disagree, perhaps because whatever it costs now, it was cheaper in the past. Ticket prices have gone up, but more important for sports businesses has been the ability to sell broadcast rights-first on radio, then on TV, and now on the Internet and cell phones. Small amounts of money extracted from tens of millions of fans are worth much more than expensive tickets bought by a few thousand fans in the stadium.

Other example are Twitter announces a new deal for year-round NFL content that includes live video, but no games. Or YouTube rules out Premier League bid despite Europa League final coup. Or Amazon recently buying the Radio rights for the Bundesliga from season 2017/18, indicate ‘new media’ companies are looking at using sport to increase their market share. This is what is often termed the ‘digital hub’, discussed by Steve Jobs in 2001, as the holy grail of media providers [you get all or most content from one provider put simply]:-

 

They may not have moved into the EPL, but it is a threat to Sky Sports. Especially as these new media companies have a better understanding of what has been termed ‘millennials’, the important age range of 16-35 year olds, with [allegedly] disposable cash. But also millennials watch sport differentially. This is an example of disruptive technology. The reason these companies want sport is the use of ‘second screens’ [multi-tasking online] which one critic has said of:-

What emerged, though, was the second wave of second screen, call it Second Screen 2.0. Rather than being all about apps, 2.0 is all about the data that’s collected from second screen experiences that take place on Facebook, Twitter, Tumblr, Instagram, Snapchat, Pinterest, and a host of network OTT apps. The data is valuable because it’s gleaned from individual users, not households.

This would indicates a different financial model is disrupted by these companies.

Giulianotti and Robertson have discussed streaming of live Sport and termed it ‘Consumer piracy’ in their book Globalization and Football, whereby individuals find ways to view matches through ‘foreign internet platforms,’ thus avoiding the cost of satellite television subscription. Andrew Kirton has pointed out the impact of this in The Challenge of Unauthorized Online Streaming to the English Premier League and Television Broadcasters saying Setanta and ESPN have indicated this affected their profitability when they had EPL media rights.

So Is Sky being affected by the new disruptive technologies? Yes. The FT reported Sky TV suffers fall in viewers of live Premier League games.

So, what are Sky doing and what can they do? Well, they could buy into a media company and look ‘hip’; Oh, they bought Myspace and that really did not work.

They could have Premier League chairman berating their own fans for watching streams like Niall Quinn did when The Guardian reported Niall Quinn ‘despises’ Sunderland fans who watch foreign broadcasts. Unfortunately, people like Mark Longden of the FSF pointed out :-

Once the TV money dries up the only people who keep clubs going are the diehards who come through the turnstiles. The clubs, and the Premier League, want to seriously ask themselves if they can afford to lose these people because with the way ticket prices are going they could do.

 This was previously done when Lar Ullrich of Metallica took on the digital download website of Napster in which he noted afterwards that ‘I underestimated what Napster meant to people in terms of the freedom it represented.’ Making your consumers the people you go after is unwise. It creates a ‘them versus us’ scenario.

 Or, they could give fans something they want or give it to them cheaper or they could could look for a different revenue stream. They could give them a 3pm kick off on a Saturday perhaps. Giving fans what was ‘originally’ what the game was meant to be kicking off at [a misnomer, as floodlights were not introduced until the 1950s and football did not kick off at 3pm in the winter prior to that].

You could reduce the price of Sky Sports and give a better product than streaming. This is something Apple did with digital music and ITunes and the IPod. This comes with the issue that Sky would need to offer less on the next EPL deal.

Or, they could look at making Sky Sports something else. For example, the Music industry has used the digital environment to either give away music etc. for free or cheaply (via YouTube or sound cloud etc.), but then sold merchandising to create another revenue stream.

In conclusion, with the 25th anniversary upon us of Sky taking over the English Premiership, we are now seeing a decline perhaps in their power over English Football. It does feel somewhat feel like Mark Twain’s quote of his obituary when still alive that ‘The reports of my death have been greatly exaggerated’, but I seem to indicate a change within Sky’s business model. I feel it’s antiquated and it needs to look at a change of tact, because its user base has changed and is being seriously disrupted by new media companies and business models.

 

Les Crang gave a shortened version of this article at Footycon 2017 at Manchester in June. The Prezi Presentation can be found here. Les Crang is finishing his Msc in Sport Management & the Business of Football at Birkbeck in which he is writing up his dissertation on CS Lebowski, which he has discussed here previously. Please feel free to contact me on email: lcrang01@mail.bbk.ac.uk or twitter to chat.