Thursday, 22nd May 2008

DATA BOX

More Strength in IPTV Growth
Research & Markets Study featured on Rapid TV News, 21st May 2008

Fresh data shows that IPTV-based subscriber growth is steady, particularly in Asia and Europe. But while Europe's subscriber size in 2012 will remain dominant, Asia's subscriber base will nearly equal Europe's in 2012, followed by North America. The Research & Markets study says that IPTV subscribers will grow from 24.4m to 92.8 million in the 2008-2012 time frame, and service revenues totalling $37.1bn by 2012, with CapEx growing to $5.5bn.

The report also reviews Mergers and Acquisition activity. "While the IPTV industry will continue on its M&A path toward consolidation in certain sub-sectors, such as DRM and Middleware," states MRG President, Gary Schultz, "there is no question that the IPTV industry will see unique new mergers and partnerships in the next 3 years."

"We believe strongly that IPTV as a technology and as a business is already having major impact on the entire Telecoms world, and will continue beyond 2012," states Steve Hawley, Sr. IPTV Analyst of MRG, Inc. "The Telecoms sector is thriving partially because of distressed sectors like transportation, housing and fuel, while investment continues in advanced communications technologies."


SPORTS SHORTS

* Ralf Schumacher, the former Formula 1 motor racing driver now competing in the Germany-based Deutsche Tourenwagen Masters Championship, has added Drettmann, the German luxury yacht manufacturer, to his pool of sponsors. Thanks to the agreement, Drettman will be able to place logos for its Elegance and Bandido yacht brands on Schumacher's overalls. Schumacher recently agreed a one-year deal to compete in this season’s DTM after spending 11 seasons in Formula 1. Sportcal, 21st May 2008

* Taiwanese public broadcaster PTS has launched a trial high definition service, HiHD, the latest country to launch HD on digital-terrestrial using MPEG4 compression. The 1080i-format service will carry drama, documentaries, music, arts and sports including events from the Beijing Olympics. A four-hour schedule starts each evening at 8pm, which will then be repeated until 8pm the next day. Broadcasts will start initially in Taiwan’s major cities of Taipei and Kaohsiung in the north and south of the island. Taiwan is a heavily-cabled country with some 84% cable TV penetration of its 6.7 milion homes. Rapid TV News, 21st May 2008

* Japan’s public broadcaster, NHK, is funded by licence fees. But while it is the law to pay these fees there are no penalties for non-payment. Japan’s Communication Ministry is looking at toughening up the rules. Viewers watching terrestrial signals pay ¥2,690 ($26) a month, and a joint terrestrial + satellite fee of ¥4,580 ($44). But there’s no conditional access applied for public network transmissions. A report issued May 20 said public broadcasting might have to be scrambled to get around this problem. One solution under consideration is to superimpose messages onto the screens of non-payers. Japan’s viewers can also subscribe to conventional pay-TV supplied by SkyPerfect TV, and more than 4.2m homes pay. Rapid TV News, 21st May 2008

* Globecast has won a contract from Brazilian TV broadcaster Rede Record Internacional to launch its channel over Asia. Globecast already provides similar services for Rede Record on SES Astra over Europe. Rede Record will be broadcast on AsiaSat 2’s craft (at 100.5 deg East) which has a massive footprint that covers some 53 countries from the Middle East and Africa to South East Asia, and including China, India and Japan. Rapid TV News, 21st May 2008

* Belgium’s Ligue Pro de Football (LPF) will wait until Friday before awarding broadcast rights after the tender attracted disappointing bids. The LPF is mulling a joint bid from Belgacom TV and public broadcasters VRT and RTBF. Although the bid being considered came to a total of €44.7 million per season - an increase of around €8.7 million on the current rights - it is well below the €50 million per campaign the LPF had been hoping for. Belgacom bid €36.7 million, with VRT and RTBF tabling an €8 million offer for the highlights. The new rights packages will run from 2008-11. The Belgian Football Association confirmed the number of teams in the Eerste Klasse top flight will be reduced to 16 from the 2009-10 season. Sports Media, Sportcal, 21st May 2008

* The University of Hawaii’s athletic department has cashed in a 30% hike in guaranteed rights fees for a new local television contract. Coming off its Sugar Bowl appearance, the athletic department will receive at least $2.3 million per year for a minimum of three years and a provision for six years under an agreement with Oceanic Time Warner Cable and KFVE. That is a $550,000 per year increase on the $1.75 million UH had been receiving and the school will earn more if pay-per-view sales of its games reach higher levels. If revenues reach $7.5 million in the first three years of the contract, it automatically rolls into a six-year deal, otherwise the parties may still agree to extend it but are not obligated to do so. Honolulu Advertiser, Honolulu Star, 21st May 2008

* The Deutsche Fussball Liga (DFL) has told the 36 football clubs in the country's Bundesliga that extensive free-to-air coverage of the top two divisions will remain key when the competition's broadcast rights are handed out. The DFL explained to the clubs in the 1.Bundesliga and 2.Bundesliga about the potential marketing models that could arise when the rights are awarded for the three seasons starting with the 2009-10 campaign. The tender process has been delayed by investigation of the Federal Cartel Office into the DFL's deal with marketing partner Sirius. The tender documents will be sent out as soon as the Cartel Office has concluded its investigations. Sports Media, Sportcal, 21st May 2008

* Mobile phone Web browser maker Opera on Tuesday released a study that found that 41% of all mobile Web traffic on phones using its software goes to online social networks, including over 63% of Opera Mini browser traffic in the U.S. Opera Mini is the world's most popular mobile Web browser, used by over 11.9 million people worldwide in March 2008 to visit some 2.4 billion Web pages and generate 33 million megabytes of data traffic. The quarterly "State of the Mobile Web" report also found that full Web surfing - as opposed to scaled-down WAP or .mobi destinations - comprised over 77% of mobile Web traffic. Top mobile Web destinations for Opera Mini users were MySpace, Google, MocoSpace, Yahoo and Facebook. Digital Media Wire, 20th May 2008


MORE NEWS

Elsewhere/General: Champions League Victor Set to Cash In

The winner of tonight's first ever all-English UEFA Champions League final in Moscow will take home more than £85 million, according to a study commissioned by MasterCard, UEFA's longest running sponsor of the competition. Barclays Premier League heavyweights Manchester United and Chelsea will go head-to-head at the Luzhniki Stadium just days after Sir Alex Ferguson's men clinched the domestic title. The two clubs stand to profit from positive economic impacts such as increased squad value, prize money, sponsorship deals, television rights and growth in season ticket sales, with even the loser pocketing more than £30 million from the game.

The MasterCard study - conducted by Professor Simon Chadwick, director of Coventry University's Centre of the International Business of Sport - noted that in getting to the final, the two sides each may have already earned more than £30 million, meaning a winning Champions League campaign will be worth in excess of £115 million. The figures compare favourably to the economic impact of the 2007 final in Athens, where MasterCard research found that AC Milan stood to earn up to £67 million from its 2-1 victory over Liverpool.

Professor Chadwick suggests that the clubs will not be the only beneficiaries, with Moscow set to receive an economic boost to the tune of more than £35 million, compared to the £18 million Athens was believed to have enjoyed from the 2007 final. Russia's capital also stands to profit from a longer term economic legacy, realised through increased tourism, civic sponsorship and a greater likelihood of hosting future 'mega events'.

Professor Chadwick said: "The 2008 UEFA Champions League final is not only the greatest prize in European club football, but it is also expected to be the biggest yet in economic terms, with a total cumulative impact that could amount to upwards of £210 million. Quite apart from the qualifying, group and knockout stages of the tournament, this places the final itself on a par with the world's leading regular, one-off sporting events, such as the NFL Superbowl." It is expected that well in excess of 42,000 fans will travel to Russia and more than 20 million people will watch the game at home in the UK on television, with around 100 million tuning in around the world. Football Insider, Sport Business, Sportcal, 21st May 2008

Elsewhere/General: Platini Says FIFA Plan is Illegal

Michel Platini has dealt a blow to FIFA president Sepp Blatter's hopes of winning support for rules to limit the number of foreign players by declaring the plan "completely illegal". The UEFA president said he supported Blatter's objectives and will meet him today for further talks but under European Union (EU) law the 'six-plus-five' proposal was unworkable. Blatter could now use FIFA's Congress to gain backing for a mandate to pursue discussion on the six-plus-five rule rather than seek a change to FIFA's laws via the Congress. Under Blatter's plan, each starting XI must have a minimum of six domestic players and a maximum of five foreigners. He has no plans to impose limits on the number of foreign players in a squad.

UEFA believes the way forward is through its licensing system, where clubs playing in European competition must have at least four players in the 25-man squad who have come through their academy and a further four trained at an academy within the same national association. UEFA's system has fallen within EU rules because it does not judge the players on nationality, merely where they were trained. Football Insider, 21st May 2008


ARTICLES, COMMENTS, INTERVIEWS & OPINIONS

A Whole New Ball Game
Josephine Moulds writes for CNBC European Business, June 2008 Edition

If you thought Euro 2008 was just about the football, think again. Th ere is much more at stake than a silver trophy. The smart money is riding on either Germany or Italy walking away with the Euro 2008 trophy in June this year. The champions, whichever team it may be, will pocket a cool €7.5m, but the real winners will be the companies that successfully capitalise on this critical, mass media event. Euro 2008 is the world’s third largest sporting event based on viewership after FIFA World Cup and the summer Olympic Games. The Union of European Football Associations (UEFA) is expecting an average of 150 million live viewers per match, across 200 countries. And several million more fans are expected to travel to host nations Austria and Switzerland.

The sheer volume of people that follow the tournament and the passion it excites means there are fortunes to be made and lost in the three short weeks of the competition. MasterCard, one of the championship’s official sponsors, commissioned research into the event, which found that Euro 2008 will likely generate more than €1.4bn for the European economy.

So who will be the financial winners of the tournament?

Even before the first football is kicked, Euro 2008 has thrown up some surprises. England, where more than 40% of adults claim to have a strong interest in football, failed to qualify, and its absence is expected to have a major impact on the economics of the tournament. The team’s progression to the quarterfinals of the 2006 FIFA World Cup reportedly generated an additional €2bn worth of economic activity. As such, some organisations have suggested that England’s failure to qualify may hit overall revenues from Euro 2008 by up to €2.8bn.

THAT’S SHOWBUSINESS Television rights make up around 65% of UEFA’s revenues Television companies, especially those in the UK who purchased the rights to broadcast matches long before they knew who had qualified, will suffer a major decline in viewers from England’s absence. Drew Barrand, head of media at Sports Industry Group, a business of sport consultancy, says: “Will ITV be worse off? Absolutely. It’s not only the advertising slots around the live games; if England were in it, they’d be selling football related advertising across the board.” He adds that major advertisers will be furiously renegotiating their yearly rates with the channel to reflect the smaller audiences it will probably attract.

In Austria and Switzerland, the host countries, while police forces may be celebrating the lack of English football hooligans, tourist boards will sorely miss the England fan, his pockets bulging with beer money. “England is one of the big football nations. Fans will travel to games, not necessarily to watch them live, but to sample the atmosphere. Their lack of presence is a huge loss on the ground,” adds Barrand.

Bookmakers are also smarting from the absence of England and with it some of their most optimistic customers, who tend to bet higher stakes than their European counterparts. Michael Maerz, director of sports betting at PartyGaming, says: “Football really is the only sport where the English bet with their hearts, be it their team in the Premiership or England, who have not won a major tournament for more than 40 years.”

FINANCIAL HEADACHE England’s failure to qualify could mean revenue losses of up to €2.8bn PartyGaming should be somewhat shielded from the loss of those punters because it is not limited to the UK. Maerz says: “The impact on business for a bookmaker who is predominantly UK-focused and operates only from high-street premises is probably going to be quite marked. Online sports betting operators, however, tend to draw customers from right across Europe so the impact from England’s absence from Euro 2008 will be that much lower.”

Russia’s qualification, on the other hand, is seen as a “great intangible”. Dr Simon Chadwick, founder and director of the Birkbeck Sport Business Centre and professor of Sport Business Strategy and Marketing at Coventry University, says: “Economic growth and income levels [in Russia] are rising, the telecommunications market is strengthening and the sponsorship and commercial rights market is burgeoning. Moreover, expenditure on overseas tourism and interest in football are growing.” However, he does not expect football fever to take hold in Russia until 2012, when the tournament is held in nearby Poland and Ukraine.

Aside from these surprises, the other major European footballing nations have all made it into the tournament, ensuring a dedicated following for the competition.

UEFA is one sure-fire winner of this kind of media attention. The Association enjoyed a bonanza from the sale of the television rights this year. Rather than selling them to a central body, the European Broadcasting Union, it distributed them on a market-by-market basis through Hamburg-based sales agency SportFive. Competition was fierce and UEFA managed to secure a 32% increase in revenues from the sale of TV rights compared with Euro 2004, and more than 10 times what it earned for the 1996 tournament.

UEFA is not-for-profit, so income is distributed to the participating national associations in the form of prize money, as well as to the 53 UEFA member associations to fund the development of football. Philippe le Floc’h, UEFA’s marketing and media rights director, says: “UEFA always tries to have the right balance between revenue generation and access to the fans as we maximise distribution while optimising revenues. The revenue generated should be reinvested in football and its development, and not end up in the pockets of businessmen and therefore out of the game itself.”

TV rights make up around 65% of UEFA’s revenues; it earns another 20% from lucrative sponsorship deals, with the rest comprising hospitality programmes and match tickets. Companies fight hard for the chance to link their name with the competition at every turn. Official sponsors, who span everything from Castrol motor oil to McDonalds, are thought to pay between €13m and €19m as an upfront sponsorship rights fee. Barrand of Sports Industry Group comments: “The normal, accepted rule is that you spend one and a half to two times that fee on leveraging it.”

MasterCard, for example, is launching more than 200 promotions in almost 30 markets globally, focused on card acquisition, card usage and card issuance. It has also developed ‘spot the ball’ sweepstakes, which will allow cardholders to win match tickets. Paul Meulendijk, head of sponsorship at MasterCard Europe, comments: “We’re working with customer banks and developing promotions around the world. We’re seeing activations in Malaysia, Nigeria, banks in Mexico...”

The company enjoyed triple-digit growth in the host nation Portugal following Euro 2004. But Meulendijk says sponsorship is worth much more than signing up new customers. “We use our own specific measurements. We’re looking at brand value, reputation, specific business objectives; return on investment is a very important piece but it is not the one and only. We have a very clear objective to ensure this property is helping us and our banks and merchants to create that kind of impact.”

One thing that is assured is that it will be a well and truly commercialised event. Le Floc’h of UEFA says: “We are not against money in sport, but feel that the way it is then being used is the most important factor in helping protecting the game and its roots.” He believes UEFA has succeeded in its mission. “The winners of Euro 2008 are the future footballers, referees, and coaches of our 53 member associations who will benefit from funding to develop their skills. Society at large also benefits from the impact that football can generate, by helping to integrate people from different cultures and by offering them the chance to do some physical exercise.”