Pay per view - an avoidable own goal (just do a little research first)
Although reactions to the Premier League’s introduction of pay-per-view have ranged from unease to open hostility from almost every quarter, they have thus far resisted calls to change course.
Research conducted by O&O before PPV was introduced suggests that reputational damage aside, the current model fails to maximise revenues for clubs by outpricing many football fans and risks season ticket holders stepping up demands for refunds. In its current format, 72% of season ticket holders would expect a refund if they have to pay for matches, leaving clubs far worse off than if they had given the matches away. A lower price would see much higher demand, higher revenues, and less dissatisfaction.
In contrast, the EFL is keeping season ticket holders on side by giving them free access to matches and is steering them to their iFollow service, securing consumer data and establishing it as a destination for the future.
Introduction
The 2020/21 football season in the UK has begun as the last ended: with empty stands. Bar a handful of pilot events across the EFL and Women’s Super League, matches look set to continue behind closed doors. There has been one change, however: while last season, post-restart, all Premier League matches were broadcast (including several free-to-air), this season the Premier League has decided to use pay-per-view for the matches that sit outside Sky, BT and Amazon’s core broadcast contracts. Following the announcement of the plans to put these matches on Sky and BT’s Box Office channels (at a charge of £14.95 per match) there has been almost universal discontent, particularly amongst supporters of teams in the lower half of the league who are much more likely to have to pay for a match pass to watch their team.
In research commissioned by Oliver & Ohlbaum Associates and our partners at FlyResearch, a survey of 1,298 football fans across the UK was conducted in order to shed light on fan’s willingness to pay for matches on a pay-per-view basis and the impact of matches behind closed doors on the number of season ticket holders. We conduct this kind of bespoke, in-depth research all the time – it underpins our rights valuation work, our investment support, and our strategy advice. It can be done quickly, and is often key in making the right choices – or avoiding mistakes. The broadcasters understand this; Sky is renowned for the detail it goes into before making any decision. Sports, it seems, do not see the need to understand their customers. That needs to change.
Premier League season ticket numbers have declined, but reasons why differ
Amongst our respondents, 44 per cent of Premier League season ticket holders from last season have also purchased one for this season.This figure is much lower than normal as many clubs have paused season ticket sales until there is greater clarity around the situation regarding crowds; others have allowed a one-year holiday, recognising concerns that many fans may have. Around a third of buyers are confident of a return to stadia, while 18 per cent were keen to financially support their club given that around half of matchday revenue in the Premier League is generated by season tickets. In total, this has led to a 39 per cent decline in Premier League season ticket holders according to our research.
77 per cent of respondents who had bought a season ticket for a Premier League club this season expected their clubs to provide a way to watch matches as part of their season ticket price and so clubs are likely going to have to refund fans – they are not going to tolerate being charged twice.
Amongst Premier League fans who had a season ticket for last season but not (yet) this year, 52 percent would be likely to consider purchasing one if it included the ability to stream additional matches at no extra cost. Season ticket revenue could prove to be a lifeline at a time when many Premier League clubs are pleading poverty; the Premier League’s current strategy puts this at risk.
Figure 1: Reasons for purchasing season ticket for 2020/21 season (all UK football fans and Premier League)
Pay-per-view price tag may be an own goal
We found that respondents were largely interested in the provision of a pay-per-view service. Most Premier League season ticket holders were willing to pay for the £14.95 match pass; many would even pay more. This came, however, with the expectation from 72 per cent that they would receive a complete refund on their season tickets if matches were to continue behind closed doors. Many season tickets have a higher cost per match than £14.95, so forcing fans to pay – and in doing so making them far more likely to actively seek refunds – will be self-defeating. Extrapolating those survey results to the whole league across a full season, Premier League clubs would need to refund up to 290,000 season ticket holders at a cost of c.£130-150m, leaving season ticket revenues at around 15 per cent of the 2019/20 total (before partial refunds were given for closed door matches). Revenue from season tickets has been the only contributor towards matchday revenue for clubs so far this season and those who had put tickets on sale have now sacrificed ticket revenue that may have been generated.
Figure 2: Amount Premier League fans without a season ticket are willing to pay for a match pass
Even without refunds - £14.95 is the wrong price to charge
Based on our survey, the current price also deters most non-season ticket holding fans who would otherwise be willing to pay for a more affordable match pass. The optimal price appears to be £7.95; this would appeal beyond the most loyal supporters and could generate c.£90m for clubs if season ticket holders were to receive home games for free. Even if clubs (and broadcasters) resist pressure to drop the price this far, a £10 price tag and free access to home games for season ticket holders, in line with the EFL’s iFollow, would still offer clubs c.£80m in net revenue, which is c.£120m higher in comparison to the current pricing (when the pressure to give refunds will become overwhelming). Lowering the cost of the service would also somewhat safeguard consumer willingness to pay over an extended period. £10 also covers the costs incurred by Sky and BT for the broadcast, encryption and conditional access systems.
Fan irritation is clear to see and boycotts such as the one encouraged by Newcastle fans for their match against Manchester United may become more widespread. It is time for a new strategy if matches continue with no crowds: either through a lower pay-per-view price, free streams for season ticket holders or a return to showing matches at no extra cost to sports subscribers. Sky and BT will no doubt look to protect the value of their own Premier League offering which makes a dramatic price reduction unlikely, however a product in line with the EFL’s own iFollow service would go far to appease both fans and broadcasters.
The EFL has led the way in giving fans access
The EFL are some way ahead in their approach to pay-per-view - iFollow was first introduced in the 2018/19 season for midweek matches and since the lockdown has provided fans with the opportunity to watch their teams in action even without extensive Sky/BT coverage. Season ticket holders have free access to streams of home and midweek away games, while other fans can access games for £10. 42 per cent of EFL fans in our survey said that they had utilised the service in the past months, from which EFL clubs receive 70 per cent of net revenue generated. The increase in EFL season ticket holders in our survey for the 2020/21 season is a sign that a sensibly priced pay-per-view service can have a positive impact upon protecting this revenue stream. Additionally, fans are becoming accustomed to using iFollow, positioning it for the future, and the EFL is gaining more detailed data about users and their usage. Using BT and Sky to manage a pay-per-view service may keep the broadcasters happy but does not give the Premier League this future platform. In the upcoming rights deal, the Premier League needs to consider how it can develop a relationship with its customers.
Conducting some thoughtful, well designed consumer research could have avoided this situation. But we are where we are, and if the Premier League is set on continuing with pay-per-view, then both the price and their policy towards season ticket holders must be quickly adapted to avoid further damage. Fans seem to be prepared to do their part – you just need to keep them onside.