Twitter: Tech brands won't replace pay-TV for sport any time soon

Platforms can complement traditional broadcasters, director of content partnerships says.

Twitter's Theo Luke speaking at Future Fit
Twitter's Theo Luke speaking at Future Fit

Despite the financial heft of the US tech giants, they are unlikely to challenge traditional broadcasters for the primary rights to show sports competitions in the near future, Twitter’s director of content partnerships, EMEA, has said.

"Just because it wags its tail and barks like a dog doesn’t mean tech companies think the same way as a traditional broadcaster," Theo Luke told Campaign’s Future Fit conference in London today.

In the US, he said, Facebook makes around $100 (£76) a year per user, while in the UK that figure is less than half of that at about £31. In contrast, Sky makes £540 a year per account – more than 17 times more than Facebook in the UK.

"The Premier League is not a cheap date," Luke said. "Despite broadcast fees declining, Premier League rights cost just under £4.5bn. TV customers are simply worth more.

"Facebook has four times as many users [as Sky] and their margins will be better, but why would they spend roughly three-and-a-half times their entire ad revenues [of £1.3bn] to buy Premier League rights when their users are already content with baby pictures and skateboarding dogs?"

In contrast to Facebook, Luke explained, Amazon looked closer to having "worked out how to pick the locks off pay-TV". Although the money it brought in directly from Amazon Prime subscriptions was only £79 a year per account in the UK, he suggested its revenue from deliveries to the average Prime customer was closer to Sky.

But he pointed out that Amazon was "only" spending hundreds of millions of dollars on rights – something he called "test budgets" when compared with the $13bn it shelled out on buying Whole Foods Market.

Likewise, Luke argued that although Facebook was doing some "very interesting things" such as acquiring the rights to Spain’s La Liga in India, it would not expect to see a return on such investments.

Twitter did not see itself as "a replacement service for TV but as an obvious complement", Luke said: "While our peer set might be engaging in a rights arms race, we think the power of our real-time conversation is to help traditional broadcasters monetise their assets in real time."

The platform is working with broadcasters such as ITV, which, during the World Cup, used Twitter to share real-time highlights of the matches it had the rights to. These clips were monetised through pre-roll ads for brands such as Assassin’s Creed; ITV was able to control which advertisers appeared and shared the revenue with Twitter.

The arrangement means "Assassin’s Creed is essentially underwriting ITV’s social marketing and driving additional revenues," Luke added.