The Economic Times reports that the introduction of pay-and-view format in China for the English Premier League (EPL) football games, has resulted in a precipitious decline of viewership from 30 million to a mere 20000. The Broadcaster, WinTV, which bought telecast rights to the hitherto free EPL matches for a period of three years, are charging $80 (or 588 yuan) every year for each connection. The huge fall in viewership has not only hit WinTV, but also affected the EPL clubs themselves, who had spent millions in courting the massive Chinese market for EPL merchandise.
This is an excellent example of how monopoly pricing has almost wiped out a very vibrant and huge market. It is also an object lesson for sports administrators across the world to be not blinded by the huge telecast rights offered, which may like the aforementioned example, kill the goose that lays the golden eggs. A sporting event without viewership is something similar to a classroom without students.
There may be lesson to be learned for sports administrators from the example of online newspapers and magazine, which increasingly offer all their content free and rely on online advertisements for revenue. There is a very strong case for adopting a similar model for telecasting sporting events. In any case the proportion of money from viewership susbscription is small when compared to the potential advertisement revenues. As numerous studies have repeatedly shown, the critical determinant in the success of any advertising campaign is to get a captive viewership for the advertisement. It is therefore in the interest of any company to pay more for an advertisement platform that is able to capture a big viewership. Popular team sports are one of the best examples of such platforms. Pay-and-view format defeats this objective.
The case becomes all the more compelling for very popular team sport like cricket in India, Football in China and Europe, Baseball and Basketball in the US.
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