In depth with John Skipper part one: Joining DAZN and the pioneering path for OTT
Associated for years with one of the titans of traditional sports media as president of ESPN, John Skipper has struck out in a new direction as executive chairman of global OTT frontrunner DAZN. Here, he discusses that change of tack.
John Skipper is enjoying himself.
“It’s fun,” says the executive chairman of DAZN, sharing his thoughts with SportsPro from the company’s US office in his languid North Carolina drawl. “And you like being at the vanguard of change, having been at the apex of legacy.”
There is something about change that agrees with him.
“I was in the publishing business with The Walt Disney Company when they bought ABC CapCities, which owned ESPN, and they moved me over to start ESPN The Magazine,” he recalls. “So I didn’t have in mind to have a career in sports media. It was opportunistic and serendipitous. And then, I guess you would say, it turned out to be serendipitous and opportunistic that I pursued a more revolutionary, disruptive career at this point in my life.
“I’ll tell you, it’s really fun, having had a long career in established media, print media, book publishing, magazine publishing, moving into the greatest entertainment company in the world in The Walt Disney Company, then managing the preeminent sports media company in the world. It’s a blast to be able to pivot and potentially help [DAZN chief executive] Simon [Denyer] and his team create the most disruptive sports media company of the 2010s and 20s.”
That varied media career took him to DAZN in May 2018 and is headlined by a spell as president of US cable pioneer ESPN, where he signed massive long-term rights deals with the likes of the National Basketball Association (NBA) and Major League Baseball (MLB). And when it comes to sports broadcasting, he has faith in one core constant.
“I think in the world we’re heading into,” he says, “which is going to be overwhelmingly about streamed content as opposed to linear networked content, I think sport will continue to be the most valuable video content in the world.
“And it’s valuable because of the level of passion people have for it. Why would people pay for it? If you’re a Spurs fan, which I happen to be, there’s very little you want to do during a match other than watch that game. It’s at the top of your list. If you’re an NBA fan or a cricket fan or whatever, sport remains the content of the first order of passion for people.
“It’s also valuable because it tends to drive the adoption of new platforms. It’s how Sky built their business. It’s how Fox Broadcasting in the US built its business. It’s how Sony built its sport business in India with cricket.”
It’s how, of course, DAZN has been building its platform. Launched out of what was the Perform Group in 2016 and part of British billionaire Sir Leonard Blavatnik’s Access Industries conglomerate, it is the highest-profile ‘pure OTT player’ to enter the international market so far. It is headquartered in London, although it does not have a consumer operation in the UK – DAZN is currently active in Japan, Germany, Austria, Switzerland, Italy, Spain, Brazil, Canada and the US.
DAZN does not discuss its figures publicly but according to documents seen by SportsPro in May, it has committed US$6.1 billion in rights outlay over a period beyond five years from April 2019, with US$2.2 billion invested by Access Industries and other parties in the company to date. Revenues grew by 136.2 per cent between 2017 and 2018 to reach US$277.6 million. UK reports linked DAZN with a UK£3 billion stock market flotation earlier this year. In 2018, Japanese media giant Dentsu Aegis bought a ten per cent stake, albeit before the reorganisation of key assets, for a mooted US$300 million.
Nothing quite like this – a global service going straight into the direct-to-consumer market without a definitive home territory – has been tried before. As Skipper has noted elsewhere, even the channel’s infamous ‘Dah-Zone’ pronunciation is more intuitive in some languages than others.
“We want to be in big markets and we want to be in markets that have a certain level of broadband infrastructure,” he says. “So those are the decisions that put us into a market.”
Typically, DAZN has expanded into new markets on the back of major rights buys. Skipper’s homeland is the exception. “The US will take a little longer to aggregate the volume of content that we want,” he says, “but we wanted to be here to establish credibility and brand before the next rights deals come up.”
With the NFL, NBA and NHL off the market domestically for the next couple of years at least, DAZN is establishing an identity in the US as the new home of boxing through major deals with the likes of Matchroom and Golden Boy. A digital partnership with MLB for highlights and in-play video is meant to serve notice, however, of broader long-term aims.
The boxing landscape may be relatively unfamiliar territory for Skipper but, generally speaking, there can be few who know the US sports media market better. He led ESPN for five years before stepping down with unexpected abruptness, citing problems with substance abuse, in late 2017. After undertaking a course of therapy, he told the Hollywood Reporter’s James Andrew Miller in March 2018 that “someone from whom I bought cocaine attempted to extort me”, an incident he felt left him and ESPN owner Disney in an untenable position. Having addressed the matter in that interview, he now considers it firmly closed.
Whatever the circumstances, the episode left Skipper in the position to make a new start. He had considered a “variety of things”, he says, from media roles to consultancy and management positions at leagues and teams.
But for someone who had seen the upending of broadcast media from inside an established stronghold – the ESPN+ OTT service was being developed during Skipper’s tenure, after Disney’s purchase of streaming specialist BAMTech from MLB Advanced Media (MLBAM) – an offer from DAZN seemed to be “a chance to do something that could really matter and build something that would really be transformational”.
Skipper was introduced to Denyer by “Michael Linton, who actually is the person who hired me at The Walt Disney Company in 1990”. Over breakfast, Denyer and Skipper discussed a prospective role “building out an American presence and then moving around the world”. Skipper met Blavatnik a week later.
“And it was the intriguing nature of the opportunity, the scale, what you could get created here, the global nature of it, the disruptive nature… I liked sort of being on the flipside of where I was before, just for intellectual stimulation and fun,” he says. “It came together, by the way, in two or three weeks.”
Such a move from linear media to the forefront of OTT may look symbolic or strategic, but that effect is coincidental. “DAZN happened because DAZN happened,” Skipper says.
He adds: “I can’t say I looked across the landscape and identified this unicorn in the distance. It actually came close to stabbing me in the chest.”
Skipper is relishing the challenges of his new environment. He speaks with no little enthusiasm about moving from the preeminent US sports broadcaster to a more “innovative”, “disruptive” and most of all “global” player.
“It’s fun to be able to go to Japan and see how you’re affecting the local market,” he says, “and to get launched in Brazil and be the first innovator in this sort of space in Latin America. It’s more fun. It’s more dispersed. At ESPN, we were mostly headquartered in Bristol, Connecticut and New York City. Here, we’ve got offices in Milan and Berlin and Toronto and New York, and there’s fun to all of that.”
And it is not just the international nature of Skipper’s remit that is new. At DAZN, the dynamics of the relationship with the viewer are intrinsically different.
“At ESPN we had dramatic leverage with the distributors, and what you did know was once you had the distribution deal, you weren’t engaged with the consumer,” he says. “We’re now engaged with the consumer who, as you know, may or may not understand exactly what kind of broadband connection they have, may not understand that they’re getting buffering because too many people in their neighbourhood are overtaxing the last hundred feet of connection.”
That technical challenge for OTT companies comes in many parts, with new entrants having to consider the quality of broadband infrastructure, the relative usage and compatibility of different devices and platforms, and what Skipper calls “the hurdle of acceptability”.
“If you’ve got a pay-TV subscription and you’ve been used to getting all this content by putting on channel 83 and suddenly you’ve got to download an app,” he says, “you’ve got to educate people as to how to do it and why ultimately it’s better value and it’s a better product.”
One way DAZN is pursuing a more “seamless” experience is through distribution partnerships – a recent deal with Comcast to appear on its Xfinity Flex and Xfinity 1 platforms is the latest in a series of agreements that see the channel distributed across the likes of AppleTV, Sony Playstation and Roku in various markets. Ultimately, Skipper sees DAZN drawing people to a medium he believes will be “dramatically better” than what has gone before.
“Cable television is a one-way communicative device,” he says. “You’re receiving signals that somebody sends you and about all you can do is change from one channel’s signals to another channel. I’m excited by the ultimate promise of streaming services in that its interactive.”
The priorities of any OTT service at this point are availability, reliability and security but Skipper expects an “iterative” journey towards something more distinctive in digital broadcasting.
“Right now,” he suggests, “if you watch a Serie A match on DAZN versus Sky Italia, there is not a dramatic difference in what that actual production experience looks like. I think over time, data and interactivity can begin to transform the experience into a different experience for some people.
“Many people will simply want to watch the game. The key word is ‘personalisation’, which is where we need to create some options where people could see live data, where people could interact and play games with their friends around the game, where people could guess the outcomes, where people could put up a column on the right side of the screen and put up all their results for the players that are in their fantasy team.
“So I do think you’ll see a divergence over time between what a game looks like on a linear channel, that can only send the same thing to every person, and an interactive experience on a streaming service in which you could actually individualise what somebody got or you can allow them to individualise it.”
DAZN has begun to introduce new additions to its live streams over the past year, such as bookmarked highlights, or the option to watch multiple games on a single screen. The fantasy sports option is “specifically happening”, says Skipper.
“We’re in the process of doing gamification, by which I mean, we have this show in the US called Change-Up, which is a baseball show,” he adds. “And we could say, ‘We’re going to ask six questions and you could answer them on your screen right now, and everybody who gets the six right is entered into a sweepstake.’ We’re doing research and development to create that kind of experience.”
Personalised, data-based dynamic advertising will launch in “a couple of markets, probably some of the more mature markets” from 2020. “We have no intention of filling up the game, as linear television does, with 75 30-second ads during a basketball game,” Skipper says. “We’ll do more relevant content, branding content, integrated marketing content that feels more seamless. We’re working on that as well.”
DAZN Dynamics, an off-platform advertising service used on the group’s other brands Goal and Sporting News. has been built in partnership with Adform and Opta by DAZN Media, the commercial arm created by the broadcaster in March as it sought to reorganise its operations. SportsPro understands that DAZN Group had made US$77.2 million from advertising sales across its properties, which also include Goal, Sporting News and Spox, in 2018.
In April the company launched by the establishment of DAZN Connect – a cloud-based network described in an official release as ‘an IP-based live sports content distribution service for rights holders, broadcasters and media partners’ with early clients including BT Sport, ESPN and Fox Soccer. Then in July came confirmation of a deal to sell most of Perform, the data and analytics company from which DAZN grew, to Vista Equity Partners, owner of leading competitor Stats.
DAZN and Perform Content had already become distinct entities within a renamed DAZN Group and Stats Perform, as that merged company is now known, will now prioritise data and AI research and development while the broadcaster concentrates its efforts on the OTT sector.
“We sold a majority of the Perform assets in order to create a focus on the high-growth DAZN business,” Skipper explains, “but we retained an interest in Perform and Simon Denyer is on the board at Perform because we do think that as there becomes increased interactivity on DAZN that data will be important to that, analytics will be important to that, potentially proposition betting will be important to that, potentially fantasy play content will be important to that.
“So we thought keeping a connection to Perform, which is of course the foundation of the company, would be important. But again, we wanted to create focus – both executive focus and technological focus and financial focus – on what we thought was this disruptive, scaleable business of sports streaming.”
In a fluid market, Skipper accepts competition can come from anywhere.
“I would think that in every country that we’re in, we see the local pay-TV and broadcast networks as competitors,” Skipper says. “People are competitors to buy rights or to have a direct relationship with consumers. The traditional folks are the likely competitors for rights. There are local over-the-top services, although they do not have the platform to be global, that we do think about.
“The big tech companies over on the west coast of the United States – Apple, Amazon, Google and YouTube, Facebook – are potential competitors. But I remain a little shocked that I’ve been here about 15, 16 months and that no one else has launched a global service like we have. They’re either individual countries or individual sports. We’re kind of the only party that looks like we look.”
Still, Skipper thinks it would be “wise to assume” a similar venture will appear soon and says DAZN “must try to get as much distance between us and them as we can before they do”. With a new wave of entertainment streaming services set to arrive in the US and beyond, consumer expectations and behaviour will only shift further.
One thing that is clear amidst all of this is that DAZN has no intention of letting up. It intends, Skipper states, “to plant the flag in different places”, and to understand better how to operate across different cultures, in different currencies and regulatory systems.
“The ceiling is that we want to be the leading global streaming service,” he says. “We have global ambitions. We have ambitions throughout the world and we have ambitions to be in an elite position – which we are right now. No one is in as many places with as many subscribers.
“We’ve not announced the number of subscribers but we do have more subscribers in more countries with more rights, with more production capabilities, than anybody else in this space in the world.”