The AFL grand final is yet to be played but Telstra may have already kicked a winning goal: its AFL smartphone app has been downloaded almost 1 million times and the telco says its $153 million investment in internet rights will soon start to pay off.
But it may end up being a victim of its own success. Rival sporting codes are set to charge Telstra and other broadcasters a rising premium to beam live matches straight to smartphones.
Sports-related apps are big business – so big that Tennis Australia is considering letting punters place bets through their apps while watching live games.
In April last year, Telstra paid $153 million to lock in the exclusive AFL internet rights for five years. While some analysts at the time described the price as a “splurge”, Telstra’s director of digital media and content, Adam Good, said he was happy with user take-up and expected the cash generated by online subscribers to be a significant source of revenue.
“The app’s development would have cost us over $100,000 because of the video and billing components,” he said. “We’ve gone from nothing to becoming the No.1 sporting app in the country and we’ve been quite happy with the growth.
“This is the first year and people have a whole new experience they need to get their head around . . . but more than 74 per cent of customers converted from the free trial to the [paid] product so that’s been great.”
While only Telstra customers had been able to watch games on the app so far, Mr Good said it had been so successful that, next year, mobile phone users at rival telcos would be allowed to pay a subscription fee to watch games on the app.
“Yeah, I think I see [a time when app subscriptions become a significant revenue generator],” he said. “You’ve just got to get the right price points. We’ve had a $50 season pass and a great take-up of that, so we think it’s the price point people have felt happy to pay.” Happy with its AFL rights, Telstra is negotiating to obtain exclusive streaming rights for the NRL.
NRL chairman John Grant said the code had “absolutely” thought about the rising use of apps in sport broadcasting.
“We’ve let out our broadcast rights for pay TV and free to air TV but we’re still in the process of negotiations around our mobile rights, which includes apps on smartphones,” he said. “In order to garner greater support for our game we’ve got to present it in a multitude of channels so it’s very big on our agenda.
“I think we can get real money out of [mobile rights] – Telstra’s demonstrated you can . . . but it’s not yet proven and there’s a large lump of faith that it will continue to be a high-growth area.”
Tennis Australia chief executive Steve Wood predicts the value of mobile rights will rise as more people switch to mobile streams. He said while Optus had signed an agreement with Seven Network to stream one of its feeds to mobile phones and tablet customers, separate mobile-only rights could be negotiated when current arrangements end in 2014.
Smartphone apps could provide a wide range of add-on services including sports betting to generate revenue for the game.
“I think all those monetisation systems around apps and streaming are going to be more valuable in the future because 91 of the top 100 programs in North America last year were sports,” Mr Wood said.
“The template we’ve seen with AFL and NRL could come to tennis and soccer and cricket. [Current] apps provide information like live scores and match updates . . . and would make a natural extension towards sports betting because that is one of the fastest growing businesses in the world, particularly in tennis.”
