Inside DAZN's Big Canelo Bet, and the Biggest* Contract in Sports
NEW YORK—“Today represents a major shift in over-the-top sports content,” DAZN executive chairman John Skipper announced from the Madison Square Garden stage Wednesday, discussing his streaming service’s $365 million exclusive contract with 28-year-old world champion boxer Canelo Alvarez.
How big of a shift is it? We'll start by looking at the wider sports streaming landscape.
To date, the biggest digital packages for sports fans have been aimed at niche audiences and obsessive followers. “Super-serve” is the preferred word of ESPN executives discussing their ESPN+ strategy, which often involves providing supplemental content that previously wasn't easily accessible, rather than putting exclusive access to the biggest events behind a paywall. At B/R Live, the most valuable pieces of content are those Champions League matches that are not shown on TNT. Out-of-market packages like NBA League Pass fall into the same category, as do Facebook’s experiments with surfing and crossfit coverage.
DAZN has something different in mind—a goal more similar to Netflix or Amazon Prime Video—to be the home of must-watch programming. And the subscription service’s Dec. 15 Alvarez vs. Rocky Fielding fight will be the closest thing yet to its first blockbuster.
Canelo’s last fight—a September victory over Gennady Golovkin—generated nearly $100 million on HBO pay-per-view. But at the end of the month, the network announced it was leaving the boxing space behind entirely. Days later, Skipper was in Los Angeles, trying to convince Canelo’s team that they should join DAZN. Having signed a deal with Golden Boy Promotions while serving as ESPN president, Skipper had the advantage of a personal connection with the outfit. He also had $365 million to offer—more if you include the 10 additional fights Golden Boy has agreed to put on the service starting early next year. However, there are obligations Canelo must meet to earn the full amount, and reportedly there are “caveats involved” should he lose during the five-year, 11-fight agreement he’s signed on to. The contract was finally signed around 1 a.m. eastern Wednesday morning.
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For Skipper, that means the sprint continues. At $10/month, DAZN’s thinking goes something like this: If a fan subscribes for a year, that $120 is not much less than two straight Canelo pay-per-views would earn (his fight vs. GGG started at $85), and the service also provides a plethora of other combat sport content on the weekends Alvarez isn’t in the ring. That subscription money in turn can be used on deals outside of fighting to attract a larger subscriber base and, thus, even more money for securing content. But if the offering isn’t good enough—or consistent enough—to keep subscribers around after each Canelo fight, then the whole plan is in jeopardy. Whereas Netflix or Amazon can rely on their back catalog to keep subscribers engaged, DAZN will need to regularly pump out must-see live events. Hence, the sprint.
“We think this accelerates the pace of growth of our subscription service,” Skipper said after yesterday’s press conference. “If you grow a subscription service faster, you have more cash generated which allows you to do more things more quickly—I won’t be more specific than that.
“We will have other announcements about content within the next 30-60 days.”
At the moment, DAZN represents a different business proposition in each country it has launched in. The company has used its NFL access to grow in Canada and soccer games to entice Italian users, for instance. But the long-term mission is clear.
“Our goal is to be the leading, multi-sport aggregator of rights in every country that becomes a sports fan’s first choice to buy to get sports in that country,” Skipper said. A month in here, Skipper said DAZN’s U.S. growth has gone about as expected. “This is a difficult market,” he said. However, Skipper is confident that DAZN is better set up for the future because it does not have to split its rights between linear and digital platforms like most of its competitors. And in the meantime, the company’s big budget will help it compete.
