Will Facebook-LaLiga deal disrupt sports broadcasting in India?

Nearly five years ago, when Star India started streaming live sports on its website, there was much scepticism about the impact such platforms would have on the behaviour of viewers in India. Today, there has been somewhat of a revolution. Millions of viewers are watching sports online.

This year, 202 million people watched the Indian Premier League on the video streaming platform Hotstar, while 70 million people watched the FIFA World Cup on Sony LIV. More and more people are watching Premier League, the top level of England’s football league system, on Hotstar in India than on television. And now in a deal which points to the future of sports broadcasting in India, the Spanish football league—LaLiga—has signed a deal with Facebook for exclusive broadcast of matches, magazine shows and packages on the world’s most popular social networking app. The deal covers the Indian subcontinent, Afghanistan and the Maldives. The matches will be broadcast free of cost.

For LaLiga, home to iconic football clubs such as FC Barcelona and Real Madrid CF, the deal is an aggressive move to grow in India. A market where England’s Premier League has always reigned supreme. Although financial details of the deal remained confidential, the Financial Times reported quoting a source that the Facebook will pay anywhere between €10 million and €20 million. This would be significantly lower than the $32 million ( €28 million) Sony Pictures Network reportedly paid for the rights between 2014 and 2018.

While the upfront value of its content appears to have slipped marginally, LaLiga stands to gain a much higher reach amongst Indian audiences, specially to the right target audience. According to the Internet and Mobile Association of India, there were 481 million Internet users in the country as on December 2017. Of these 270 million use Facebook.

“We are doing a huge investment both in increasing our digital reach and the way we connect to the fans and also we are making a huge effort towards the internationalisation of our brand. India is one of the key markets for LaLiga both for our international strategy and digital strategy point of view,” Jose Antonio Cachaza, head of India at LaLiga, tells Fortune India.

LaLiga has seen a surge in following on social media platforms in the last one year. For example, on Facebook, its following has grown by nearly threefold to 3.02 million. On Twitter its following has grown more than fourfold to 239,029 while on Instagram the following has nearly doubled to 381,476.

However, that Facebook is not a traditional sports broadcaster will bring its own set of challenges. “We are mindful of the fact that this is the first time that one of the major digital operators assumes full control of broadcast rights of a major sporting league in a major audio-visual market,” said Cachaza.

Crucial to the success of the partnership between LaLiga and Facebook would be ensuring video quality. Technical teams of Facebook and La Liga based in Madrid have already begun addressing this. “They are finding a way of making the matches available to all the fans for free, wherever they are, on any device they want to watch with the best quality,” says Cachaza.

A Facebook spokesperson added, “We're still in the early days of having live sports on Facebook, but we continue to learn a great deal with every broadcast we have on the platform. We will apply the learnings from our other partnerships around the world to this deal. We will also work closely with our production partner, Media Pro, to deliver an innovative broadcast. Ultimately, we are committed to delivering a fantastic viewing experience for fans — and will continuously look to enhance it over the course of the deal as we listen to feedback from fans.”

Given that Facebook is not a traditional sports broadcaster it will depend on LaLiga for shoulder content like magazine shows, pre-game and post-game shows and highlights packages, all of which the Spanish football league produces.

Providing the punditry for the matches would be a pool of experts including former Real Madrid defender and four time LaLiga champion Michel Salgado, and former Barcelona and Atlético Madrid midfielder Luis Garcia.

For Facebook, the deal is an important experiment. It has been trying to win broadcast rights in India to major sporting events including the Indian Premier League. “We see this as a great opportunity to bring people together around world-class football and also help La Liga reach new audiences,” Peter Hutton, Facebook’s head of global live sports programming, said in a press statement.

The social networking behemoth has started showing live sports in other parts of the world, but even for Facebook, getting broadcast rights for all matches of a major sporting league for three years is a first.

“Live sports, in particular, are historically good at cultivating conversation and bringing communities together. We're currently testing a variety of live sports business models, including a media rights deal such as this one. However, we have the flexibility to support a variety of different business models. And that's important because different partners value different things,” a Facebook spokesperson added.

Currently, Facebook has four different business models for live sports broadcast — sponsorship, conversion, sublicense and reach.

The Facebook spokesperson says that some sporting leagues may not have major rights available but still want to drive incremental revenue through their content. This can be done by distributing content on Facebook and selling a sponsorship against it. Under the conversion model, Facebook has a partnership with Eleven Sports in the UK and Ireland for some of the channel’s top football content to be broadcast free-to-air on the social media platform. A Facebook spokesperson says that by building an audience on the social media platform, Eleven Sports can promote subscriptions on to its OTT (over-the-top) platform.

Under the sub-license model, Facebook secures the right from broadcasters to supplement the existing distribution. In the US, Facebook has such a partnership with CBS Sports for college football and basketball. And under the reach business model, Facebook partnered with the International Cricket Council to broadcast all 15 matches of the Champions Trophy tournament in 42 countries across Europe and Japan where television rights were not being utilised. More 300,000 people watched the final between India and Pakistan on Facebook.

Cachaza says the time is right to get into such an agreement. “The way people are consuming sports is changing rapidly. They don’t just want curated content that is available on different sports channels. It is more proactive. They search for the content and they want to watch it anytime. Therefore these kinds of alliances will help us cater to new demands of the consumer in a much better way,” he says adding that the deal will offer LaLiga a new way to interact with fans in the region more closely.

The experiment will begin on Friday. And it could be more than just La Liga fans tuning in. Successful implementation of the partnership could see more such deals as sporting clubs, federations and leagues seek newer ways of monetising their proprietary content. For example, Formula 1 has recently started a streaming service where users can pay an equivalent of $2.99 per month to watch on-demand content. The ATP already has an app where tennis fans can subscribe for Rs 999 a month to watch the top ATP Masters events and on-demand content. Even one of the Premier League’s most popular teams Manchester United has launched an app where fans can watch on-demand content from MUTV, the club’s in house television channel. Thus, what appears to be a novelty today could soon turn into the norm.