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[Danbi Sports] The inside story of the money game surrounding broadcasting rights


After the 2002 Korea-Japan World Cup, there was a soccer boom in Korea. During the tournament, soccer stars such as Park Ji-seong, Lee Young-pyo, and Ahn Jung-hwan were born, and players began to advance overseas, including Europe. As Korean players advanced to Europe, Korean broadcasters began broadcasting live overseas soccer broadcasts. Cable TV, including MBC ESPN and KBS N SPORTS, the predecessors of MBC SPORTS, shared and broadcast overseas professional soccer games such as the Dutch Eredivisie League and the English Premier League.


Currently, Spotv broadcasts exclusively. In December of last year, Sportibi broadcast El Clasico, Spain's biggest soccer rivals, Real Madrid and FC Barcelona. It is a game watched by about 400 million people worldwide. The problem is that Spotibi paid a separate 'Pay per View' to viewers watching this game in addition to the 'channel subscription fee'. Why did you pay twice the subscription fee and viewing fee per program to enjoy overseas soccer broadcasts that you enjoyed for free?




▲ Spotify subscription fee notice board. ⓒ Spotify homepage



On July 11, 2005, Park Ji-sung signed a contract with Manchester United FC. On August 28, Lee Young-pyo transferred to Tottenham Hotspur FC. Two Korean players moved to the Premier League, one of the four major leagues in the world, and received a lot of attention. The Premier League is a league in which many world-class soccer players play. Korean viewers felt catharsis watching a Korean player compete shoulder to shoulder with a famous foreign soccer star. On days when the two players played, viewers stayed up all night and “watched” the live broadcast.


Realizing the popularity of overseas soccer, broadcasters competed with each other to obtain broadcasting rights. At first, MBC ESPN, the predecessor of MBC SPORTS, broadcast the Premier League and UEFA (European Football Federation) Champions League, and KBS N SPORTS broadcast Serie A (Italian professional football first division) and Ligue 1 (French professional football first division). did. Broadcasting companies gained a lot of viewers by acquiring broadcasting rights centered on the leagues in which Korean players are playing. Because of the time difference, overseas soccer games were mainly broadcast at night and early in the morning in Korea, but on days when Korean players such as Park Ji-sung, Lee Young-pyo, and Seol Ki-hyun were playing, viewership ratings rose from 2.5% to a maximum of 7%. According to TMI, a research institute, the viewership rating for the match between FC Seoul and Suwon Samsung Bluewings on April 8, 2018, called the domestic K-League Super Match, was only 0.09%.


Although broadcasting rights were expensive, it was difficult to give up overseas soccer broadcasting due to relatively high viewership ratings and advertising revenue. In particular, from 2007 to 2010 was the heyday of English Premier League broadcasting, thanks to Park Ji-sung's ratings guarantee check. However, after Park Ji-sung retired, there was no player to replace him. Viewers were only interested in the confrontation between teams called 'big clubs' and did not pay attention to the matches of small and medium-sized clubs. In 2017, the average viewership rating for Premier League matches broadcast by SBS Sports was low at 0.516%.




▲ In the 2017 viewership survey by game, the viewership ratings for Premier League broadcasts are half of Korean professional baseball broadcasts. ⓒ Nielsen Korea


At this point, UK Sky Sports and BT Sports, which owned the Premier League rights, began raising their rights. Negotiations on broadcasting rights are renewed every three years. Between 2007 and 2010, broadcast rights were £1.773 billion. From 2016 to 2019, it almost tripled to £5.136 billion.




▲ Trend of increase in Premier League TV rights fees. ⓒ Naver Namu Wiki


As the broadcasting of overseas sports events in which Korean players advanced has become a new source of revenue for broadcasters, competition has begun between broadcasters to secure broadcasting rights. Broadcasting companies formed a “Korea Pool” to prevent bloody competition. It is a consultative body for a joint contract for broadcasting rights, composed of three terrestrial broadcasting companies, KBS, MBC, and SBS. However, in 2010, SBS terminated this contract when it signed a contract for the rights to broadcast the World Cup in South Africa alone. SBS was able to exclusively broadcast the World Cup, but it served as an opportunity to trigger an increase in broadcasting rights. SBS was sued by another broadcaster over this. Again, SBS SPORTS turned its attention to sports broadcasting rights. Since 2009, they signed a contract to exclusively broadcast the Premier League and Champions League, but the broadcasting rights fee was 14 million dollars. MBC ESPN, which had broadcasting rights first, gave up the contract due to financial pressure.


As new media evolves, great changes have taken place in the broadcasting ecosystem. With the development of the Internet and communication technology, viewing behavior has also changed significantly. In the past, players' games were watched for free through terrestrial broadcasting or through cable TV, after paying only the channel subscription fee. Now, with the development of smartphones and the Internet, an environment has been created in which it is not necessary to “attack” real-time live broadcasting through terrestrial or cable TV at dawn. The number of viewers who only watch summary videos such as game highlights through portals such as Naver and Daum has increased. As a broadcasting company, revenue decreased due to declining viewership and profitability, and skyrocketing broadcasting rights fees, and finally turned into a situation where it was in the red. SBS SPORTS gave up the exclusive broadcasting rights contract from the opening match of the 2018/2019 season after contemplating an extension contract for broadcasting rights.


While terrestrial broadcasters were agonizing over broadcasting rights, agencies that purchased broadcasting rights were targeting niche markets. A representative company is Spotify. Spotibi was one of the companies that bought broadcasting rights instead of cable channels. However, when terrestrial broadcasters worried about broadcasting due to viewership ratings and profitability, they established a subsidiary to create a sports broadcasting channel. Spotify, which started broadcasting the English Premier League in 2016, has been broadcasting the English Premier League, Champions League, and UEFA Nations League since the 2018/2019 season.

Spotify also participated in the broadcast, but faced a decline in viewership and revenue due to changes in viewing behavior. This is because broadcasters have to provide relay service that is comparable to that of terrestrial broadcasters with a smaller budget than terrestrial broadcasters. In the end, Spotify introduced a billing system in which viewers received a “subscription fee” of 8,000 to 12,000 won per month, plus a “viewing fee” per program. A double billing system was used for popular team games, and only a subscription fee was allowed for relatively unpopular games. Viewers protested, saying, “If you get paid twice, make the broadcast fun.”
Website: https://hanntv.com/



▲ Through Naver, you can watch sports broadcast by Spotify. ⓒ Spotify broadcast screen capture

In foreign countries, the billing system in the form of ‘Pay per View’ is common. In Korea, viewers are not accustomed to this system, so viewer complaints are bound to come out. Sports broadcasts, which were provided free of charge through terrestrial broadcasting, now require viewers to pay a double fee to watch them. There is nothing wrong with paid services. However, the conversion to pay was made too hastily, and the quality of the content is also lacking compared to watching through terrestrial broadcasting in the past. A simple alternative is to supplement the qualitative part as in the past relay.

The representative inconvenience picked up by viewers is the lack of ability of commentators. It is certain that the current commentators are experts rather than ordinary people. However, viewers feel that they lack the experience and expertise of SBS Sports or MBC Sports commentators in the past. In response, Spotify recruited commentator Jang Ji-hyun, who has been broadcasting the Premier League for the past 13 years. After seeing the reaction of the viewers, it was decided to recruit additional commentators, but it is still insufficient at the moment.

To reconcile profit generation with universal viewing rights, Spotify needs to communicate with its audience. Spotify does not compete with other broadcasters as it broadcasts exclusively. While expanding free VOD (Video on Demand) services in the form of clips through portals widely used in Korea, such as Naver and Daum, and various channels of the company, such as SPOTV NOW and SPOTV ON, real-time paid channels are investing for high-quality relay services. should not be spared

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