We all love sticking it to the man, so it's little surprise that Optus' TV Now court victory was hailed as a win for the mobile-wielding little people. Yet, in the longer term, the decision will force Stephen Conroy into a tricky legal corner; the resolution of the issue could see mobile-broadcast rights sequestered, or see footy all but eliminated from free-to-air networks.
Optus' landmark court win last week was hailed far and wide as a victory for the forces of openness and equity. It had that same sort of stick-it-to-the-man mentality that fuelled the recent Occupy protests, unsympathetic discussions about physical versus online retailers and anti-establishment vitriol on websites far and wide. Sports clubs were exhorted to get with the times, be grateful for increased viewer numbers and think outside the box — but what if their only possible response ends up compromising the league, or pulling popular sports from free-to-air (FTA) television?
Free access to sport is held by many to be a fundamental right, given that it's enshrined in explicit anti-siphoning legislation. However, running league competitions for our collective entertainment isn't just a licence to print money; it's complex and expensive, requiring money for ground access and maintenance, player salaries, marketing, wages, insurance and so on. In its record 2010 year, the AFL had revenues of $335.8 million, and paid players $147 million, paid clubs $142 million, helped build the $140 million Gold Coast Stadium, funnelled $30 million into community projects and more. The $30 million per year that Telstra paid for mobile broadcast rights represents one 10th of the AFL's total revenues, and there's no question that its loss would be felt.
Monkey on their back: Optus' TV Now victory paves the way for recording free-to-air broadcasts, but could it push the footy onto pay TV? (Screenshot by David Braue/ZDNet Australia)
In this context, the TV Now decision is a problem for all involved. Sure, it's a clearly legal service in the sense that it's only enabling time shifting of the sort that has already been protected; Optus even compared it to Foxtel IQ, although some might argue that there are differences. But even as sports fans fete it as a victory for viewers' rights, it's also bringing two warring interests into a pitched battle that has no clear outcome.
Assuming the TV Now decision is upheld — and I suspect that it will be — the leagues relying on sponsorship dollars will have to make some hard choices. If the broadcasting of matches on FTA networks can be shown to have a demonstrable and material impact on the leagues' viability — and if the government refuses to back away from the constraints placed on the leagues by anti-siphoning legislation — then the AFL, the NRL and other disgruntled leagues could well be pushed towards the nuclear option.
And that option would be to reduce the presence of league sports on FTA TV. Current legislation means that the leagues would still have to offer FTA networks first go at the rights, but there is nothing in that legislation preventing the leagues from demanding such a high price for the rights that the FTA broadcasters have no choice but to pass.
If the government refuses to back away from the constraints placed on the leagues by anti-siphoning legislation ... disgruntled leagues could be pushed towards the nuclear option ... reduce the presence of league sports on FTA TV.
Absent buyers, leagues could then wait until 12 weeks before a match, then happily negotiate mutually beneficial terms — including extra costs with Foxtel or any other broadcaster that keeps the games out of TV Now's reach. This would restore the revenue-raising opportunity posed by mobile access and valued by Telstra at $153 million — while at the same time diminishing the availability of games on FTA TV.
It's a difficult choice, and would be an undesirable outcome, but the situation represents a clash between two government-backed rights: the right to time shift content, and the right to free access to sport. If leagues, broadcasters and telcos can't work it out among themselves, then Stephen Conroy (assuming he retains his position past the 2013 election) may be forced into a policy decision centred on one basic question: should anti-siphoning legislation extend to mobiles, too?
He faces a difficult choice here. If he decides that it doesn't apply to mobiles, which would allow broadcasters to tightly control mobile broadcasts of all matches, then the government would need to amend broadcasting laws so that content on the anti-siphoning list is explicitly banned from recording by services like TV Now; this would stop the inadvertent mobile broadcasting of high-value matches.
Imagine the outrage fuelling allegations that the government is putting private interests ahead of the public interest — because that's exactly what it would be doing, but with the goal of protecting the broader public interest, in terms of getting free access to sports matches.
If, on the other hand, Conroy decides that the list does apply to mobiles — thereby extending Australians' right to broad access to sporting broadcasts on their mobiles — he would be validating mobiles as a broadcast medium while killing the leagues' rights-centred business models. Cue salary reductions, a reduction in the number of teams or rounds played, player strikes and other repercussions as the leagues fall back on the one thing that they can control: the supply of content.
The Optus decision isn't only about the AFL and the NRL; with the Olympics coming up later this year, the International Olympic Committee (IOC) would be watching this decision very, very nervously. For the IOC, after all, pay TV is a growth market; figures suggest that 28 per cent of all 61,700 hours of the Beijing 2008 Olympics events broadcasted were delivered to pay-TV subscribers, while 72 million streams representing 2000 hours of Olympics coverage were delivered to online consumers in the US alone.
Compare this with just 680 hours shown on TV, and it's clear why streaming, on-demand and mobile content are becoming big business. The IOC knows the value of mobile, with its report into the Beijing 2008 broadcasts noting that "a multi-platform offering through TV, the internet and on mobile devices enhanced TV ratings. It is now realistic to broadcast and consume each and every moment of the games, not just on-demand, but live."
The IOC and footy leagues will prefer to have their content in tightly controllable ecosystems, where rights-buying telcos still have some say about where it ends up. And that, sadly, means pay-TV and closed-mobile ecosystems.
Don't think for a moment that the IOC is promoting mobile services because it's nice, warm and fuzzy; the committee will wave these numbers in the faces of potential rights holders to justify charging even higher prices for the rights to broadcast content to what will be larger numbers of viewers. For obvious reasons, the IOC and footy leagues will prefer to have their content in tightly controllable ecosystems, where rights-buying telcos still have some say about where it ends up. And that, sadly, means pay-TV and closed-mobile ecosystems.
Given the IOC's notorious tight and localised control over content rights, you can bet your bottom dollar that it's not going to be happy if Optus TV Now lets just anybody watch the Olympics on their mobiles without the IOC being paid extra for it. Nobody knows how much of the London Olympics will be watched on mobiles, but warnings of a "meltdown" in London internet services suggest that the numbers will be huge. Just look at the past: US network NBC, for one, reported 87.1 million mobile page views, and 2 million mobile-streaming videos delivered during the 2010 Vancouver Winter Games, up from 34.7 million views and 301,000 streams in Beijing.
There's gold in them thar streams, and every party in the broadcast sphere knows it. The question is: is it possible for exclusive-rights deals to circumvent TV Now's ability to extend anti-siphoning legislation to new platforms? And how far will the government go to protect Australians' right to watch free sports?
It's easy to laud the consumer protections afforded by this decision, but leagues aren't going to walk away from tens of millions of dollars without a fight. Just as Optus' TV Now ads say, "it's a great day for you and the monkey on your back", the leagues will surely become the monkey on the government's back. And if they have to scale back their competitions or use subterfuge to wrestle match broadcasts off FTA altogether, well, then, who will be the winners in the end?
What do you think? Should the leagues just suck it up and get their money elsewhere? Or could TV Now — and the government's response to it — inadvertently see footy taken off FTA channels altogether?
