Netflix model ‘could up sports teams’ revenues by x56’

Major football clubs could up fan revenues by a multiplier of 56-times by replicating Netflix’s subscription content model, according to the GM of Microsoft’s sports business.

Speaking at the KPMG and Microsoft Football Benchmark Forum in London last week, Sebastian Lancestremere claimed that clubs have “so many stories you can tell” and that taking a new approach to video and content creation was just one of the many innovative digital steps they could take to increase ARPU.

“Some of the clubs in the UK, in Spain, in some other markets are already selling a subscription model, but the content needs to be really, really great – like Netflix,” said Lancestremere, who said a freemium approach would help to attract viewers.

Considering other approaches, he said that applying Facebook’s social media business model – which revolves around advertising and data – could see clubs’ ARPU climb by x7. Meanwhile a mobile games approach could increase it by x15.

“Millennials, which are going to be 40% of the global population by 2020, spend an hour and a half per day on social media,” Lancestremere told DTVE on the sidelines of the event. “The clubs have the passion, the content, the players. What they need to enable is the possibility to create that engagement – 24/7.”

On a panel at the same event about the impact of digitalisation on football clubs, Real Madrid’s new media director, Rafael de los Santos, said that content is “the next thing” that the club needs to focus on.

“I always tend to say that ‘at the end of the day, we are a football club, we dedicate our activity to football’. But in reality what we are is a content company,” said de los Santos

Describing the “next step” in Real’s digital transformation, de los Santos said there is much potential in telling stories that engage beyond the 90 minutes of football that are played each week on the pitch.

“The content that is around the players, the content that is around the game, the pre-match, the post-match – there’s a lot of things,” he said. “The kind of money that the clubs have invested in this kind of content nowadays I don’t believe is aligned with the potential that the content has.”

By taking more of a Netflix-style approach to funding content, de los Santos said “the return of that investment will probably be huge and the levels of engagement will be much higher.”

Speaking on the same panel, former Twitter exec and current consulting partner at Seven League, Lewis Wiltshire, said that all football clubs are “at the start of a journey” in terms of digital strategy.

“Football is vast, huge and popular and shows no signs of slowing down,” said Wiltshire, “but people do not consume music in the same way that they did five years ago, they certainly don’t consume news in the same way that they did five years ago, and they don’t consume TV in the same way. It’s a really good bet that they won’t consume sports in the way that they do now in five year’s time.

“I think that every football club and every sports organisation needs to get ahead of that and have a strategy that includes ‘how are we going to reach, retain and monetise this audience?’”