Sports streaming service DAZN, under the watchful eye of executive chairman John Skipper, is now one of the top combat-sports content distributors after just 11 months in business.
Skipper spent two decades at ESPN, including the last six years as president, before abruptly leaving in December 2017 after disclosing “substance addiction” issues related to reported cocaine use. He was on the sidelines for just five months before joining London-based sports media company The Perform Group (now the DAZN Group) to launch DAZN (pronounced “Da Zone”) — which was already available in countries such as Japan, Germany and Austria— in the United States, the heavyweight sports-media market.
DAZN’s U.S. launch came last September to much fanfare, as it quickly landed several body blows to the established players in pay-per-view boxing — and a virtual knockout punch to 45-year stalwart HBO Sports — when it signed middleweight champion Canelo Alvarez, possibly the fight game’s biggest PPV draw, to a reported $365 million, 11-bout deal in October.
The Alvarez deal added to a lineup of combat-sports events that included at least 70 exclusive boxing and mixed martial arts events over the past year, including past PPV staple Bellator MMA, as well as cards involving such marquee fighters as former middleweight champion Gennady Golovkin and former heavyweight champion Anthony Joshua. The high-profile offerings helped to support the service’s initial $9.99 monthly fee, and a subsequent price increase to $19.99 in March, although DAZN has yet to disclose specific subscription numbers.
“John is one of the most significant leaders in the history of our industry,” DAZN CEO Simon Denyer said. “His stewardship of the U.S. business and contributions to DAZN ambitious growth plans so far have been invaluable.”
DAZN’s goals go well beyond the squared ring. It has teamed with Major League Baseball on a daily highlight series, ChangeUp, that puts it head to head with the legacy cable and broadcast outlets that cover major professional sports. When the rights for the National Basketball Association, National Football League and others come up in the early 2020s, DAZN expects to negotiate on the same playing field as ESPN, Fox, CBS and NBC.
It’s a solid start for DAZN and Skipper, who has quickly returned to the higher echelon of sports TV executives.
“John Skipper has had a rollercoaster ride,” sports analyst Lee Berke said. “He was at the absolute pinnacle of sports television and then had his challenges, but has had the skill, ability and relationships to come in at the ground floor of another terrific sports outlet. This time around he gets to build a sports service from scratch, and he’s generated a lot of momentum.”
Skipper, selected as Multichannel News Sports Executive of the Year for 2019 for his savvy guidance of the genre-busting streamer, recently spoke about his personal renaissance at DAZN as well as the future of sports television distribution and DAZN’s role in future negotiations for marquee TV sports rights. Here’s an edited transcript of the conversation.
MCN: Given everything that had transpired surrounding your departure at ESPN, did you ever think you’d be in this position at a growing TV sports service?
John Skipper: I’ve been here since May of last year, so we’ve just hit about 14 months. Clearly, I’m not clairvoyant, so could I have seen myself here? I don’t know, but I do see that the experience at ESPN uniquely prepared me to be here, given my relationships with league commissioners, producers and personalities in sports. That experience with how pay television, broadcast television and sports business works put me in a unique position to understand that business’s strengths, and where [DAZN’s] nimbleness might give us an advantage.
Prior to leaving ESPN, I was the principal architect of the strategy to launch ESPN+, so I’d had a chance to think about how we were going to build an over-the-top subscription business. The biggest difference being here [at DAZN] is that we’re a pure play, so I don’t have to think about building it within the context of a larger organization with lots and lots of legacy benefits and complications. We are going to buy our rights and put them on a streaming platform. We do believe that’s the future. So, I’m quite happy to be here, whether or not I was clairvoyant. I’m prepared, I’m experienced and I understand what to do.
MCN: Even with your background and experience, was that transition from an established, linear sports leader like ESPN to a startup streaming service in DAZN daunting for you at the beginning?
JS: I think it’s actually been an easier transition because new things are stimulating, right? Perhaps the biggest transition, the biggest change, is just the global nature of our business. We’re based in London. Our largest businesses are in Germany and Japan. We’ve got a big business in Italy, and we’ve got a growing business in Spain. We launched in Brazil, so that’s really fun.
I’ve transitioned from going back and forth to Los Angeles regularly to going back and forth to London regularly, and then down to São Paulo and Rio [de Janeiro]. We recently launched in Brazil, so there’s a little more worldwide travel and that’s been fun. I don’t think the transition has been hard at all. It’s allowed me to do some new things, be stimulated and have some fun.
MCN: Define the DAZN brand for me.
JS: DAZN is a pure-play global streaming platform. We have unique propositions in each market we’re in. Our mission is to become the global leader in sports streaming services — to have the most subscribers, to have the best platform, to have the most rights. That’s our goal.
MCN: DAZN had established itself globally before coming to the U.S. last year. What was the strategy behind launching in the U.S. at this point in time?
JS: If you’re going to build a global brand, you’re going to need to have an established brand and figure out a strategy to compete and thrive in the United States. We are in nine countries on four continents. Six of those nine countries are six of the 12 largest sports-consuming countries in the world: Germany, Japan, Italy, Spain, the United States and Brazil.
We want to be in big markets. We are not looking to experiment in a laboratory in small markets. We’re looking to establish a lead by being in the biggest markets, so we need to be in the United States. It’s also the case that, as we think about building into global leadership and being positioned to potentially talk to investors and to have an IPO, you need to have a brand in the United States because that’s where the capital is and it’s where the largest companies are, and so we wanted to get started here. But it’ll take a while to get established.
You also have the factor in that with rights mostly being tied up in the U.S. for several years, we don’t want to come in just as those rights are becoming available. We want to show some success, build the brand and be viable.
MCN: You mentioned there are very few pro sports leagues with TV rights up for grabs, so DAZN decided to step into the boxing ring. Why was boxing was the best choice for building a new sports service?
JS: We believed boxing was an opportunity. It’s not that we looked at the landscape and everything was available to acquire and we could go, “What do we want to do to launch?” We had to look at an existing landscape and go, “What’s available? What makes sense?” This was done before I got here.
Simon Denyer, who is the founder and CEO, really deserves the credit with his team. Some other guys, [chief revenue officer] James Rushton and [executive vice president of finance] Paul Morton, identified boxing as the one sport that was available for which the major U.S. sports media companies didn’t have the rights tied up for a long time. It provided an opportunity, because the most popular events were in a format where consumers were already paying for them via pay-per-view. So you had a customer who’s used to pulling out their credit cards and paying for them. That’s what we want them to do here. It’s a little bit more of a natural transition.
We also think there are ways to improve the presentation of boxing that will allow us to present a superior proposition to the boxing fan. Also, [boxing has] enough fans to build a big business so that we’ll have the base when other rights come up — we’ll have established our brand and how our platform works. They’ll see we’ve had success, and then we can have a better atmosphere in which to negotiate those rights.
MCN: The reason why a lot of these networks haven’t secured boxing rights in the past is because it’s been a risky proposition with promoters who don’t always necessarily want to see the best and biggest fights made. How were you able to coalesce all of that and create a platform where boxing actually works for the streaming service?
JS: We realized that we needed to do some dramatic things to get going faster, so we did a deal to get [middleweight champion] Canelo Alvarez — the world’s most important fighter and the most attractive pay-per-view boxer — to move him over to a subscription service rather than pay-per-view. That really made a statement and it has brought us hundreds of thousands of subscribers, and gave us credibility in other places.
That allowed us to go do a deal with Triple G [former middleweight champion Gennady Golovkin], who we’re thrilled to have with us. It’s allowed us to talk and sign other fighters like World Boxing Organization middleweight champion] Demetrius Andrade and [middleweight contender] Danny Jacobs. We recently signed [lightweight contender] Devin Haney, and we got [featherweight boxer] Ryan Garcia signed to Golden Boy. So, we’ve got some young exciting fighters as well as some champions and former champions like heavyweight Anthony Joshua.
MCN: Joshua’s fight on DAZN this past June was a major upset to Andy Ruiz. Was that a major setback for DAZN?
JS: You’ll never hear me say there’s anything good about his losing, but you have no choice when something happens but to make the best of it. The best of it is there’s a lot of interest in the rematch. The good thing for us would be for him to come back and win.
When we made that fight, we knew that Andy Ruiz was a very good boxer. He’s a guy that fought 40 times, had never been knocked down and lost one controversial match. Anthony Joshua is a very skilled fighter and we knew it would be a test for him. I’ve talked to AJ and it will be a learning experience. We still believe in his skill and talent, and we expect him to get a rematch in an effort to reclaim his championship.
There are also a lot of other heavyweights, as you know, that we believe are great for the sport, so the heavyweight division getting better will be great for us. Ruiz made it more competitive, so Joshua has to win his next fight and reclaim his belt, then we’re back in the race.
MCN: Do you know when and where the rematch will take place?
JS: The rematch has not been made yet and we don’t know whether it’s going to be here or in the U.K.
MCN: With nearly a year under your belt on the strength of boxing, has DAZN met your performance expectations in terms of subscriptions and financially?
JS: We’re very pleased with where we are. This turned out, in a lot of ways, different than what we thought. We didn’t plan to have Canelo, Triple G, and we didn’t know that we’d have Joshua make his U.S. debut. I think we’re ahead of where we expected to be in terms of the quality of the fighters.
We still have some things to learn about with boxing. For example, we have to get a consistent schedule. Boxing’s problem is, it’s hard to announce for the year. We now think we have 10 to 12 fighters that we can identify dates and build a consistent schedule. We’ve had lots and lots of trial subscribers come in and many have stayed. We’ve been able to build up a subscription base. And we’ve learned that we don’t need a free trial because you got Joshua or you got Canelo and people will pay.
MCN: What is DAZN’s subscriber count? ESPN+ claims they have over 2 million subscribers at this point.
JS: We have not disclosed where we are and I’m not going to disclose it and I appreciate the effort. We think [we have] a pretty clear No. 2 position to ESPN, and may announce something at the end of the year.
MCN: Is there a timetable for reaching 1 million subscribers?
JS: Look, we’d like to be able to announce something before the end of this year.
MCN: DAZN has increased its subscription price to $19.99. Can you be successful at that high price when competitors such as ESPN+ are under $10?
JS: We’ve had great acceptance in the $19.99 price; we don’t find that anybody has any problems with that. We think there may be some upward elasticity on that price, though right now, we’d rather drive volume than maximize revenue, because we need to build a schedule to get the retention first. That’s the first thing for us to do. People like the [$99-peryear] price — it’s a good price.
MCN: Was DAZN’s deal with Major League Baseball to secure a primetime, highlights-driven daily show an effort to not only provide a consistent show that subscribers can watch, but also to extend DAZN’s content reach beyond combat sports?
JS: We did the baseball deal as a clear public declaration that we’re not looking to have a singular sport proposition, but instead looking to be a multisport proposition. We’re looking to be in business with the major leagues in the U.S. I have a long relationship with [MLB commissioner] Rob Manfred and [MLB chief operating officer] Tony Petitti. I went to see them and said, “What can we do?” Because we wanted to have something that says, “We’re in business, and not just for boxing.”
To your question, the answer is we’re a multi-sport proposition and we’ve got a long horizon. We expect to be in the discussion for all major rights that come up. We’ve been public that we have had discussions with the NFL about NFL Sunday Ticket. They are assessing their options on what to do with Sunday Ticket and we’ve had conversations with them. We know that NFL content is a game-changer for people and it helps to build emerging platforms. It helped to build ESPN, Fox Broadcasting and DirecTV. We’d love for it to help build DAZN.
MCN: When those rights come up, are you confident that DAZN will be in a position to compete financially?
JS: Let me be clear: Sports rights in the U.S. will remain quite expensive. I think we will be smart and look for [content properties] like Sunday Ticket [the out-of-market package currently exclusive to DirecTV], where there are maybe over-the-top rights available, and we’ll look for alternative packages. We may talk to some of the big broadcast and cable networks about partnering on buying some rights. I don’t want to come off as though I don’t understand the rights landscape when the NFL is selling billion-dollar-plus Sunday-afternoon packages and Monday-evening packages. I’m not sure that that’s going to be the best bang for our buck right away.
I think that the rights around the rest of the world are being rationalized in a way that the rights in the U.S. are not right now. If you look at the U.K. and the Premier League, the [TV] rights went down for the first time ever in a cycle. There are headwinds because of the stagnation of pay TV around the rest of the world that are causing rights to go up slightly, stay the same or go down slightly.
That’s the trend around the world, partly because there are no other countries that have the number of well-capitalized media companies that the U.S. has. You have Turner, you have ESPN, you have CBS, NBC, Fox, as well as potentially the big tech companies. In most of the world, you have a broadcaster and one or maybe two pay TV platforms. So in those markets, you’ll see us competing for the highest level of rights as we’ve done in Italy and Japan and Spain. Here, you’ll see us be a little more opportunistic as we grow our business smartly.
We have a bigger world to look at than just the United States, so it’s going to have to make sense for us to buy [marquee TV sports rights]. All that matters is what does it cost and what is the return on subs — what is the ARPU [average revenue per user] in that country and how does that get value at some point relative to investment, IPO or some other financial event?
MCN: How much will streaming dominate the TV sports playing field over the next five to 10 years?
JS: Here’s what I know. There is secular change happening around the world, including in the U.S., in which there is a transition from appointment viewing on linear networks to on-demand viewing on streaming networks. It happened in entertainment with Netflix and it happened in music. I think the same thing is going to happen in the U.S. sports arena. You’re looking at a decades-long event and we’re already a year or two into it. I personally believe you’re going to get another round of rights agreements where broadcast networks, news, and regional sports networks are still going to be must-have content for distributors.
If you don’t have that must-have content, then your next negotiations with distributors will be hard. Their margins are being squeezed and they can’t keep raising their prices. It’s also generational. There are more and more people who will never get a cable television subscription, and that’s just going to accelerate. I think we’re in the best pure-play position to take advantage of that.
MCN: How do you think the industry views your accomplishments, leaving the top sports network the way you did and going to basically a startup?
JS: I came here because of the opportunity. I knew from my experience before that streaming is the wave of the future. [DAZN] is privately-owned, so I was able to move quickly — I like that, because I was restless. I feel like my experience before has allowed me to move DAZN a little faster. I think people think of me as an experienced executive who understands the business, but I do understand that a lot of the point of this award is that I happened to come into the position — which is clearly in the forefront of where the future is going to be — but I want people to understand that DAZN had success around the world before I got here. I’ve been a slight booster rocket to get them going to where they were going anyway, and I’m flattered by it all. It’s given me a chance to rebuild relationships and reconnect with old friends and re-establish myself, so I’m gratified and humble.
MCN: No regrets from your past?
JS: I’m quite happy with where I am right now. If you want to try to go back and reconstruct the past it never works. It’s the butterfly effect which says if you change one little thing you never know where you’re going to go. So if I went back and changed what was done in the past, I wouldn’t have all the good things I have now. I have a great job and a wonderful relationship, so I wouldn’t change anything. DAZN has given me a great opportunity and I want to reward them for that opportunity.
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