SingTel uses 2014 World Cup to bag 2-year contracts

[SINGAPORE] SingTel's mio TV is making a play for viewers with the beautiful game, using the 2014 World Cup matches to nudge viewers towards two-year contracts in an exclusive move that has left StarHub feeling snubbed.

The red-hued pay-TV operator has won exclusive rights to 2014 Fifa World Cup Brazil which kicks off on June 12, and will sell the matches to rival StarHub's customers. The matches will be cross-carried on StarHub's platform.

All 64 of the matches will be free for people who either sign up for - or extend existing - mio TV Gold Pack contracts or standalone Barclays Premier League (BPL) contracts for 24 months.

The Gold Pack is a combination of entertainment and BPL content on the mio TV platform. The standalone BPL content package is available to both mio TV and StarHub subscribers.

Viewers who want a World Cup-only deal will pay a one-time price of $105, excluding GST. This is the most expensive World Cup fee to date - 19 per cent higher than the pre-GST price of $88 and 59 per cent higher than the early-bird price of $66 for the 2010 World Cup.

2014 World Cup pricing for business owners will be announced "shortly", the operator said.

In 2010, the World Cup rights were acquired in a joint bid by mio TV and StarHub. Asked whether SingTel had actively tried to work with StarHub on a joint bid this time, Allen Lew, SingTel country chief officer for Singapore, said: "Because we had an experience doing it together in 2010 . . . this time, we tried to see whether we could do something."

"We decided that, putting different factors together, it was best to do it on our own."

StarHub's Jeannie Ong was less equivocal. "We made a sincere offer to our competitor for a similar arrangement as the last World Cup," Ms Ong, chief marketing officer, said yesterday.

"A joint bid would have spread the cost of the content and allowed both operators to offer the tournament at a more affordable price. . . Unfortunately, our competitor chose to acquire the rights exclusively."

In response, a SingTel spokeswoman said the joint bid was one of the first options explored, but they were unable to agree on a joint offer that would "meet the content rights holder's expectations".

StarHub's Ms Ong also implied that SingTel had overbid for these rights. She said that unlike with the BPL, StarHub will not offer a rebate for the World Cup content that is cross-carried on its platform this time around, as the BPL rebate had "inadvertently encouraged our competitor to continue making higher exclusive bids . . . We do not support overbidding of content prices by our competitor."

SingTel rebutted this claim, saying that they "negotiated as low a price as we could achieve". Mr Lew declined to reveal how much the World Cup rights cost. Deloitte had previously estimated that the value of premium sports broadcast rights worldwide would increase 14 per cent to US$24.2 billion this year.

The purported historical price for World Cup rights has climbed steadily, from the $10 million reportedly paid by StarHub in 2002, to the estimated $15 million in 2006. By 2010, the operators were reportedly asked anywhere from $40 million to $100 million. The final price tag for the 2010 World Cup was said to be about $20 million.

SingTel's 2014 World Cup gambit - the latest in a string of increasingly aggressive moves for football content - will be costly by objective measures, even if it is easily absorbed by the telco giant's bulk.

Market watchers have long pegged the event as a loss-leader, even with the bump in revenue that it usually produces for the month.

Now, SingTel is promising a plethora of goodies that cost it money - multi-view angles for a match and studio content on the World Cup that it has commissioned a third party to produce here.

At the same time, it will make key World Cup matches - the opening match, two semi-finals and the final - available on free-to-air channels and on mobile devices, also for free.

mio TV now appears to be forgoing the bulk of the World Cup residential revenue, in order to make it up on revenue from the two-year contracts that it is pushing.

Such contracts will end at about the same time as SingTel's hold on the current set of BPL rights.

"If they get an X number of re-contracts or new contracts, that should see them through to the end of their exclusive BPL licence. It's about rebuilding market share," said Forrester telco analyst Clement Teo.

While StarHub has little to lose with this World Cup move, it must be watching mio TV's trajectory of football domination with apprehension. At the same time, mio TV continues to make significant headway.

"The (average revenue per user) of mio TV has been increasing quite significantly . . . it shows that we are selling these customers other programmes beyond their basic diet of soccer," Mr Lew said yesterday.