Game on in Germany: Media giants Axel Springer launch sports streaming service

Aufmacher_Axel Springer_Sports_Streaming

Game on in Germany. Outgoing German Football League (DFL) president Christian Seifert is launching a sports streaming service with the backing of Axel Springer. The market is already flooded with competitors but that’s not the biggest challenge Seifert will be facing. With a focus on acquiring the rights to sports such as handball, hockey and basketball, he’ll have to overcome one big glaring omission: the rights to the continent’s most popular sport, soccer.

Christian Seifert has headed up the DFL since 2005, one of the most influential soccer organizations in Germany, along with the DFB (German Football Association), of which he has been VP since 2005 as well. When he announced in October of 2020 that he would step down from his role in 2022, speculation was rampant on what he’d do next. This week news broke he’ll be launching a start-up. Along with Axel Springer (Europe’s largest digital publisher), Seifert will be seeking to establish a sports streaming provider focusing on sports not named soccer. The plan is to push sports such as handball, basketball and hockey and increase their popularity and profile exponentially, according to a statement by Axel Springer on the deal. Launch is slated for the fall of 2023.

Proximity to the competition

What the service will be called, (it’s currently registered with the German chamber of commerce as “S Nation”) is as unclear as the amount of invest by Springer or who the team leading the endeavor will consist of. Seifert, who along with majority-owner Axel Springer has a significant stake in the project, will assume a role akin to managing entrepreneur. According to the press release, a list of candidates for the roles of CEO and COO is being compiled. The company will be based in Cologne, which is significant not only for its proximity to other major German media networks, such as RTL and Pro-Sieben-Sat1, but also because of a robust following of hockey, basketball and handball clubs.

In Cologne, Seifert is also basing his startup just a few leaps and bounds along the Rhine river away from Bonn and the HQ of its primary “niche” sports competitor. Launched in 2019, Deutsche Telekom’s Magenta Sport has a similar offering of live sports including games from the top flights of German basketball and hockey, women’s soccer and 3rd tier men’s soccer. It does not seem that the sport streaming competitors are interested in giving up broadcasting rights to each other. In response to OMR’s request for comment, a T-Mobil spokesperson said, “We have taken note of plans to establish a new sports streaming platform with great interest.” The spokesperson went on the say that in Magenta Sport they have successfully built up a similar sports offering on the market over the past several years and that they plan to further expand the portfolio moving forward.”

Top-flight competition

If Seifert wanted a challenge, he would appear to have chosen the right market. By no means is Deutsche Telekom the only household name in competition for S Nation. In fact, the market is flooded with deep-pocketed live sports players. Two of the biggest are streaming services DAZN and Amazon, pay-TV network Sky, cable TV network Sport1 and niche providers such as Sportdeutschland.tv. The latter of the list was founded in 2015 by Pro-Sieben-Sat1 and the German Olympic Sports Federation (DOSB) with the charter to focus on sports that do not generate significant media coverage. Pro-Sieben-Sat1 said of the deal at the time, our aim is to create a home for all sports, from professional leagues down to amateur events. According to web analytics tool Similar Web, however, the number of impressions in December 2021 totaled a paltry 1.3 million.

Seifert apparently believes his chances of succeeding are good—and that many sports can be marketed much more effectively than they currently are. Back in his days as DFL boss, he sanctioned recordings of soccer matches with a 16:9 aspect ratio, which lends itself to an improved viewing experience on smartphones. “70 to 80 percent of smartphone usage by today’s youth is done so using portrait,” he said, explaining the reasoning behind the recordings. Word is, as well, that he had hoped for a bit more courage on the part of soccer clubs, in order to keep the Bundesliga from being left behind by the Premier League, the NBA and NFL. “If we don’t seek out the competition, the competition will seek us out,” warned Seifert in the fall of 2021.

Partners, not competitors

Axel Springer has said that the primary source of revenue is to be subscriptions, meaning that when it launches it will be a fully-developed offering. Springer also focusses on subscriptions with its other media offerings, Welt and Bild. Ad revenues will also form a key revenue pillar for the new service, Springer says. In order to amass the requisite reach, S Nation will seek out partnerships with other platforms, i.e. acquire sublicenses from other players—a commonplace occurrence with sports broadcasting rights today. There have been similar agreements in the past between Deutsche Telekom and Sport1, as well as DAZN and Sky.

Another factor in Axel Springer’s decision to get in on the game figures to be its own brand. Vertically integrated content partnerships with its own brand Bild, for example, which has a strong focus on sports coverage and has also had its first forays into recording the Bundesliga. Bild also recently launched its own TV network, which could, in theory, function as a distribution channel. That would make it a direct competitor to Sport1. “The streaming offer should work independently of Bild, but a co-op would, of course, make complete sense,” said someone with knowledge of the company.

Sports broadcasting rights hitting the market

The timing of Axel Springer and Seifert’s joint endeavor could not have been better. In the coming months, rights for numerous sports will be up for grabs and negotiations heating up on rights’ packages. The contract for professional handball with Sky Deutschland, ARD and ZDF (both German public broadcasters) expires on June 30, 2023. The Handball Bundesliga will probably open negotiations for its rights this summer. Deutsche Telekom also only has broadcasting rights to the Basketball Bundesliga and the Basketball Euroleague through 2023. Negotiations would figure to commence soon here as well. Deutsche Telekom’s contract with the German Hockey League (DEL) also expires soon, at the conclusion of the 2023 and 2024 campaign.

For winter sports, however, no rights will be switching hands anytime soon. The German Skiing Association and ARD/ZDF runs through the 2024-25 season, meaning there will be no ski jumping, biathlon or slalom events with S Nation launches. Not a big deal perhaps, as one industry expert stated that there is “no need for a streaming service for a 3-month season.”

What about the NFL?

What is unclear is who will acquire one of the most compelling and, possibly, lucrative rights packages for Germany: the NFL. The professional American football league has managed to steadily expand its fanbase in Germany in recent years, with Sat.1 and its program “ran Football” consistently showing an uptick in viewership during the playoffs. The recent playoff tilt between the Dallas Cowboys and San Francisco 49ers on January 16, 2022, for example, had a 19.7 percent share among 14-49 year-olds. While soccer remains the undisputed king of sports in Germany, market research shows that American Football is the second most popular sport in that demographic.

The contract between Pro-Sieben-Sat1 and the NFL was last renewed after the 2019-20 season, but the contract term was not disclosed. DWDL speculated at the time of the deal that the contract figured to be valid for about 3 years. According to that timeline, the rights would hit the market again in 2023. For its part, the NFL is also seeking to push its product in Germany further, with live matches scheduled to take place in the Fatherland very soon. Recently, the New England Patriots, Kansas City Chiefs, Tampa Bay Buccaneers and Carolina Panthers franchises were awarded rights for the German market. The increasing popularity of the NFL notwithstanding, the word in Axel Springer circles is that it will place its focus on German sporting leagues to start.

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Author
Florian Rinke

Florian Rinke is responsible for the "OMR Podcast" in the OMR editorial department. Before joining OMR in early 2022, he reported for more than seven years on startups and digital policy for the Rheinische Post and built up the "RP-Gründerzeit" department. In 2020, his book "Silicon Rheinland" was published.

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