DAZN’s true aim in suddenly “increasing the fee by 1,000 yen | FRIDAY DIGITAL

DAZN’s true aim in suddenly “increasing the fee by 1,000 yen

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Junya Ito, who scored his fourth consecutive goal for the national team against Saudi Arabia in the Asian final qualifying match for the World Cup on February 1, and Yuto Nagatomo, who assisted him, are among the players whose future on DAZN depends on whether we will see the same spectacle against Australia on March 24 (Photo: AFLO).

DAZN, a subscription-based video service specializing in sports, began raising its monthly fee by approximately ¥1,000 for its regular members on February 22. The one-month free trial service for new subscribers was also discontinued. The price setting of 3,000 yen, almost 1.5 times the previous monthly fee of 1,925 yen (including tax), has caused quite a stir.

The key point of the price increase is “Moriyasu Japan Soccer

DAZN, based in London, England, began offering distribution in Japan in 2016 with broadcasts of soccer Premier League games played in its home country. In July of that year, the company made headlines by signing a broadcasting rights contract totaling approximately 210 billion yen over 10 years until 2026.

The following year, in 2017, the company began distributing all games of the Meiji Yasuda Seimei J-League, and this year, now in its sixth year, the service is currently available in 10 sports, including professional baseball and motor sports, as well as e-sports and documentaries.

The price increase is based on the overwhelming number of contents, which exceeds 12,000 compared to other distribution media, and “we decided that 3,000 yen per month is a fair price” (Manabu Yamada, Executive Vice President of DAZN Japan). What is the “real aim” of this aggressive price hike?

DAZN, which started out offering its services in only four countries and has now expanded to more than 200 countries, suddenly announced a price hike on January 25 this year, but in fact, that is not the case. It is assumed that a careful plan was in place. Many people involved with commercial broadcasters assert that the price increase is nothing more than a price hike “with March 24 in mind.

So what is “March 24”? It is the date of the final Asian qualifying match for the World Cup Soccer Tournament in Qatar against Australia in Sydney. The kickoff time is 18:10 Japan time, which can be broadcast on terrestrial TV from 19:00 to 22:00 in prime time. The away match will not be broadcast on terrestrial TV at all, as DAZN and the Asian Football Confederation (AFC) have signed a broadcasting rights agreement that runs through 2028.

Even before the opening of the final qualifying round, most of us TV people predicted that the away game on March 24 (against Australia) would be the game that would decide who would qualify for the tournament. Moriyasu Japan struggled by losing their opening home game, which they must not lose, but with five consecutive wins, they would qualify for the World Cup if they won this game.

If there was a terrestrial broadcast, we could expect a figure close to 30%, even though TV ratings have become tougher. If we can expect that kind of figure, I think we will be able to sell the game at a significantly higher price when we go to the sponsors in advance,” said a commercial TV broadcaster.

For DAZN, it is highly likely that the price increase is in anticipation of the “Battle of 3.24,” with a view to a significant increase in subscribers and the accompanying increase in revenues. The timing of the price increase coincides with the World Cup deciding match, which is held once every four years.

In January of this year, DAZN announced its subscriber viewing trends for 2021. In the “Live Content Viewing Ranking,” the top five matches were the final Asian qualifiers for the World Cup. The top five matches in the “Live Content Viewing Ranking” were the final Asian qualifiers for the World Cup, from the first-place match against Vietnam (November 11, 2011) to the fourth-place match against Saudi Arabia (October 8, 2011), all of which were away games for the Japanese national soccer team that DAZN exclusively broadcasts.

DAZN also announced that its total streaming hours worldwide amounted to nearly 1 billion hours per year, with more than 220 million of those hours being streamed in Japan. The company also boasted that it is the industry leader in sports distribution. The data was all there to convince us that even a strong price hike would be enough to get us there.

There is one thing that concerns me. DAZN has kept the number of subscribers a “top secret” from the outset. Incidentally, for 10 years from 2007, the J-League broadcasting rights were owned by the CS broadcaster SKY PerfecTV! The number of subscribers for the purpose of viewing the J-League has remained between 200,000 and 300,000,” said a J-League official.

At a press conference on August 29, 2017, DAZN CEO James Rushton, 44, stated that “the number of subscribers in Japan surpassed one million in one year. “March 19, 2018. NTT also announced that the number of DAZN for docomo (1,950 yen/month) subscribers has surpassed 1 million.

The official announcement was made one day before DAZN’s price increase on February 22, which was inexplicable. The first time I saw this, I was surprised. (DAZN responded, “Each partner makes different announcements regarding price revisions.)

The press conference on July 20, 2016, when the J-League and DAZN signed a 10-year broadcasting rights agreement. At far right is Hiroo Unoura, president of NTTGroup (at the time; photo: AFLO).

According to multiple sources, “DAZN’s target for acquiring subscribers in Japan is approximately 3 million, and the number of subscribers it is surely reaching now is only about 1.5 million. If this estimate is correct, 3 million subscribers would be enough to reach the break-even point, but currently only half of that number has been reached.

DAZN’s broadcast rights contract with the J-League, which runs from 2017 to 2026 and costs a total of 210 billion yen over 10 years, has been the talk of the town. However, the upfront investment was too much, and the company posted a large loss. The first contract was signed in 2017, and it was for a three-year period, but in 2026, it was extended for another three years. The contract was changed from one in which a fixed fee was paid to one in which a fixed amount was paid each year.

Although the contract term has been extended for two years, the annual contract amount has decreased from 21 billion yen when it was first signed to approximately 18.7 billion yen, a simple calculation of 2.3 billion yen per year. Herein lies DAZN’s dilemma.

That is why they decided to raise the price before March 24, when the number of subscribers is expected to increase. Incidentally, if the number of subscribers paying 3,000 yen per month for this price increase can be kept at the 1 million that CEO Rushton revealed in 2017, the simple calculation is 3 billion yen per month. Assuming that the “1.5 million subscribers” whispered among those involved were watching at the monthly price of 1,925 yen before the price increase, the monthly revenue would be 2,887.5 million yen, and even if the number of subscribers were to decrease by 500,000, the revenue would increase.

However, on February 18, a few days before the price increase went into effect, the following article appeared on the DAZN website: ” Access Industries,” the largest shareholder of DAZN, has announced a $4.3 billion (approximately 498 billion yen) capital increase for DAZN. The announcement was made by the company’s president.

The article goes on to say that “Access Industries” has subscribed an additional $250 million ($28.7 billion) in new shares. With such an abundance of money, why did DAZN still decide to raise prices and demand payment from its subscribers (subscribers)?

When we contacted DAZN, we received the following response.

We have been calling the first five years an investment period since our launch in 2016. We did not raise prices during this period. However, during this period, premier sports content was added, including distribution of all J-League games, 11 professional baseball teams, F1, Premier League, and 14 AFC tournaments including the final Asian qualifier for the World Cup in 2021. And as DAZN Japan enters its sixth year, we are committed to delivering a better sports viewing experience for fans in Japan.”

One of the reasons for DAZN’s recent price increase may be that the period for upfront investment has passed. And now it is time to “recoup” the investment.

DAZN was unable to renew the broadcasting rights contract for the English Premier League, which had been one of its core contents, and the contract will be terminated at the end of this season. Instead, the South Korean subscription video distribution service, Ekura Media Group, has acquired the broadcasting rights for Japan and other Asian countries.

The Daily Mail reported that the total amount of overseas broadcasting rights fees for the Premier League, including those for Asia, will be up to 5.3 billion pounds (about 832.55 billion yen) starting next season. There is a “war” going on in this world to move huge sums of money in order to create better content.

Therefore, DAZN will be looking to minimize the drop in subscribers in the Japanese market by raising the monthly fee, and will be looking to raise funds to try new developments, the first of which is to get Japan’s national soccer team to the World Cup.

Again, the top four spots in DAZN’s top 10 last year were occupied by Japan’s away games, and if Japan, which is seeking its seventh consecutive appearance at the World Cup, should miss out on the tournament, it would be a killer for DAZN. The company will be watching closely not only to see if Japan wins or loses on March 24, but also to see how the number of subscribers to its content will change as a result.

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