Could DAZN Be the Netflix of Sports?

This weekend DAZN (pronounced Da Zone) will host the Canelo Alvarez fight on its streaming service. It will be the first of 11 fights Alvarez agreed to do on DAZN. For these 11 fights — to take place over the next five years — DAZN paid Alvarez $365 million.

The contract was an eye popping one that immediately made me take notice. Who exactly, was behind DAZN, and what might the future of this streaming company be?

Over the ensuing couple of months I’ve done quite a bit of research on the company because I’ve been fascinated by this question — could anyone in sports disrupt the existing sports television marketplace in a fashion similar to what Netflix has done to the entertainment industry.

The DAZN business model is straightforward and simple — you pay $9.99 a month for access to its bevy of sports rights. In America the two most prominent rights deals they’ve acquired are the Canelo Alvarez fights and a new Major League Baseball rights package that will effectively be the Red Zone for baseball fans, jumping around from one pressure packed moment after another in nightly baseball games.

But this is just in America.

You honestly need to look at all the rights they’ve purchased across the globe so far to get a sense for this company’s global ambitions.

DAZN’s a massive gamble that the future of sports will be streamed and it’s a bet being placed by Len Blavatnik, a Ukranian born American billionaire who became filthy rich as Russia turned to capitalism in the 1990’s. Blavatnik’s background is utterly fascinating — you should read this long profile in The New Yorker about his rise to wealth — and he’s reportedly worth over $20 billion, making him one of the fifty richest men in the world.

He spends much of his time now in London, where he was knighted by Queen Elizabeth last year, and has donated hundreds of millions of dollars to philanthropic causes around the world.

Having conquered many businesses, a couple of years ago Blavatnik turned his interest to sports and began acquiring direct streaming rights across the world, placing a massive bet on a big idea — that the future of global sports isn’t going to be on your television, it’s going to be in streaming.

Blavatnik’s business strategy can be summed up in four words, he’s trying to build “the Netflix of sports.”

Now you might be thinking to yourself, okay, why wouldn’t Netflix be the Netflix of sports? The answer is pretty straightforward because Netflix CEO Reed Hastings doesn’t believe that should be Netflix’s business. Hastings is choosing to spend his billions of dollars in content on creating new shows across the globe. None of them, significantly, are rooted in live broadcasts of news or sports. Hastings has said he believes the future of television will be primarily live — that is live news and live sports, effectively the media business Rupert Murdoch is embracing as he sells his non-live event assets to Disney. And he believes Netflix isn’t in the business of live content.

But could that business work? Could a monthly streaming service attract a large enough sports audience to eventually pay for itself and then, and here is the real crux of the business, if the business does work could it turn so profitable that suddenly a company like DAZN could become the Netflix of sports?

Sure, it could. (Provided, of course, the technology could be built to handle tens of millions of live streams, which is no small technical challenge.)

In fact, this business plan, one that disrupts the existing sports infrastructure by placing games on a new tier of programming, is pretty similar to what happened thirty years ago when ESPN was founded in Bristol, Connecticut.

Initially ESPN carried mostly third and fourth rate sports programming and was ridiculed by the broadcast networks as an upstart unworthy of their time and attention.

But then something interesting happened, as cable and satellite subscriptions grew, ESPN’s revenues exploded. Over its thirty year growth ESPN went from airing strongman competitions in the middle of the night to eventually making so much money it could afford to buy Monday Night Football and the college football playoff and put both exclusively on cable. Where did the money for ESPN’s rise come from? You and me, through our cable and satellite subscriptions. (Every cable, satellite and streaming service subscriber pays $8 a month to ESPN. ESPN only makes about 25% of its money from advertising).

As ESPN’s revenue grew the quality of its programming grew until it eventually took over many of the top rights in sports. In other words, as the business increased in value the quality of the programming increased too. Which then led to more money which led to better programming, it was a virtuous business circle.

ESPN, in many ways, was the original Netflix of sports, it implemented the Netflix business model before Netflix did it, but instead of going direct to consumer, it went direct to cable and satellite companies and then the cable and satellite companies got money from subscribers and most of us didn’t really understand how the ESPN business model worked even as we watched the games in our homes.

The lesson of ESPN was pretty straightforward — if you pay the sports leagues more money, they will move their games off broadcast television and put them on cable instead. It’s all about the money, stupid.

Now ESPN is facing substantial challenges as the cable and satellite subscriptions, the lifeblood of ESPN’s business, begin to decline — the company has gone from over 100 million subscribers to around 85 million in the past several years — and as a result ESPN will face substantial challenges about which assets it can afford to buy going forward. The same virtuous circle — growing subscribers leads to growing quality of content and increased revenue — can now work in reverse in a not so virtuous circle — falling subscribers leads to lessening quality of content and decreased revenue. Only I suspect the decline will be much faster than the climb because every business cycle is much more accelerated now.

So who stands to step into the void created by ESPN’s decline?

The same man ESPN just fired — former ESPN president John Skipper, who was hired this year to run DAZN.


DAZN picked the man who used to run ESPN to help hasten ESPN’s demise. Amazingly, it’s possible that Skipper stepped off of one rocket ship beginning its descent to climb aboard another rocket ship just beginning its ascent. Why would DAZN pick Skipper?

Because he’s negotiated a ton of deals with leagues across the country and he has the relationships to get these deals done. Remember, it’s about the money, stupid. If Skipper has the money, the leagues will have games to sell him.

So, you might be thinking, okay, what if I agree with you that there’s an opportunity for streaming services to work, why will DAZN be the winner?

Because it’s expensive, really expensive to buy up all these assets and start the Netflix of sports. Most companies aren’t willing to lose billions of dollars on a big gamble like this. They have shareholders to answer to. What’s more, most media companies are aligned to the existing cable ecosystem, it’s how they made all of their money. They can’t suddenly adopt a new business model because it would destroy their old business model. (Which may be dying anyway, but to most business executives it’s always better to die slowly than to risk everything and potentially die rapidly).

So DAZN has to be willing to invest billions before they make a dollar. But then, if all went will, they might make tens of billions of dollars.


If DAZN can sign up enough subscribers to convince Wall Street their business is the future then the money spigot will really pour out in their favor.

That’s the story of Netflix.

Right now Netflix is worth $120 billion.


Because Wall Street understands something, it’s hard to create a subscription business with over 100 million worldwide consumers. But once you do it, eventually the economies of scale start to work in your favor, you have a steady revenue stream to continue to create killer, must have content, which is harder and harder for other companies to compete with. And it takes a lot of time and energy to sign up that many subscribers, meaning you have created a huge moat surrounding your business.

Since the launch of “House of Cards,” Netflix has fundamentally upset every equation in the media and content business. Netflix was why Disney bought the Fox assets and a big reason why AT&T bought Time Warner too. Legacy media businesses, which grew fat and wealthy thanks to the cable and satellite bundle, realized, too late, that Netflix, the upstart pipsqueak company they sold old shows to, had stolen a march on them by going direct to streaming.

Its gamble paid off, it turned out there really was gold in those streaming hills.

Digital was the future and Netflix had signed up millions and millions of subscribers before these bigger companies realized what was coming.

Now those media companies are racing to create their own streaming offerings but the primary challenge they face is their existing media business models make most of their money off the legacy cable businesses. Whereas Netflix puts its best content on Netflix, the legacy cable companies put their best content on in movie theaters — think Star Wars, Marvel or Pixar films — or on TV — think Game of Thrones on HBO. In order for Disney+, for instance, to really work and drive massive subscriptions, the new Star Wars movie would have to debut on the service, not in the movie theater.

Right now Disney is fighting a two fronted business war with Netflix — they have to maintain their cable and movie businesses while simultaneously launching a streaming service. In my opinion, Netflix will win that battle. Because Netflix’s only reason for existing is to stream content into homes.

But Netflix hasn’t happened yet in sports.

ESPN and the other sports TV networks, to this point, are mostly fighting a war with others in the world of TV. What happens when ESPN suddenly gets a big time competitor like DAZN?

Potentially, you get a repeat of what happened with Netflix in the field of entertainment.

We’ve all written and talked a great deal about the question of whether Facebook, Amazon, Apple or Google might aggressively move into sports, but so far none of these companies have made a substantial foray into the sports TV business. That’s because sports is expensive and hard to monetize without focusing a great deal of resources on buying up the assets. (I’ve written why I think Amazon could be poised to compete in this space — and I’d encourage you to read this piece — but so far they haven’t done it).

In order to win in sports streaming, your business may well need to just be sports streaming.

Until DAZN no one has had that business model with big dollars behind it.

The result has been that pretty much all sports rights have remained distributed over television networks and there are no real DAZN competitors, at least, again, not on the scale of the Canelo Alverez and MLB buys.

Yes, ESPN+ exists, but it’s a pale approximation of ESPN, airing games that aren’t good enough to air on ESPN, ESPN2, ESPNU or any other ESPN network. In other words, ESPN+ is the leftover sporting events. Right now ESPN says they have a million subscribers, but ESPN+ is likely losing a hundred million dollars or more a year and it’s difficult to foresee why ESPN would suddenly start bidding to put top sporting events on its digital offerings since that would undercut the far larger business it already has on television.

In other words, ESPN isn’t going to take Monday Night Football or the College Football Playoff off ESPN and put it on ESPN+ and make everyone stream it.  No, if you want those games you need a cable or satellite subscription or you need to subscribe to a digital bundle tier offered by several companies. That is, ESPN+ isn’t competing with DAZN.

Yet other than ESPN+ there has been no major digital exclusive distributor to challenge the existing sports TV network hegemony. And certainly there has been no company in America to sweep into the business and buy up an attractive asset for a bundle of money.

Until DAZN.

Launched in 2016 in Austria, Germany, Japan, and Switzerland DAZN isn’t just making moves in America, they are spending big on sports all over the world. They don’t want to be ESPN in America, they want to be the worldwide Netflix of sports.

In 2017 they swept into Canada and in 2018 they arrived in America and Italy. Next year they will launch in Brazil and Spain.

They are sweeping up sports rights and delivering them digitally across the globe.

This is a major, big incredible wager on the future of sports streaming being placed by DAZN and yet I bet, for the vast majority of you, none of you have even realized what they are attempting.

So will they succeed?

That’s really a question of how many subscribers they can acquire when they place big bets like the Canelo Alvarez bet. I’m sure they aren’t close to profitable, but Netflix still doesn’t make very much money. Neither does Amazon, not as a percentage of revenue, anyway.

What DAZN is trying to establish, I’d bet, is that they can sign up millions of subscribers and then tap the capital markets and tell their story to the American and world investor. Would you buy stock in a company whose pitch was they were poised to become the worldwide leader in streaming sports, the Netflix of sports?

I probably would because I believe the business is ripe for success.

And do you know what DAZN would do with investor money? They’d buy more sports rights, outspending their rivals in traditional television over the next decade or so until they climbed to the top of the sports marketplace just like Netflix did in the entertainment marketplace.

Along the way, just like ESPN did with cable, they’d benefit from the virtuous circle, as their revenue grew the quality of their games would grow leading their revenue to continue to grow far into the future as the quality of their games got better and better, making every sports fan have to pay $9.99 a month for their content. (The biggest threat, honestly, to DAZN isn’t from the existing sports marketplace, it’s that the leagues and teams might start streaming their own events themselves. But, again, that’s expensive and puts the leagues into the production and distribution business directly. Maybe it happens one day, but more likely they take none of the risk on sign ups or subscriptions and just cash guaranteed checks instead.)

If DAZN succeeded, do you know what one of the wildest ironies would be?

John Skipper, the man fired by ESPN, the woke warrior in chief, could actually end up destroying ESPN’s business.

Getting fired by ESPN could be the greatest thing that ever happened to him.

And you thought Tiger Woods’s comeback was incredible? This would be just as wild from a sports media perspective.

Will it happen?

I have no idea.

But starting Saturday night DAZN’s big bet on Canelo Alvarez will begin to let us know how viable their business model is in America.

Back when I was a kid growing up in Nashville, I was fascinated by new businesses and whenever one would open near our house and we’d go try it out, I’d ask my dad whether he thought the new business would work.

My dad, who once said no one would ever pay $1 for a hamburger so he refused to buy Shoney’s stock even though the first Shoney’s opened up across the street from him, would always dodge my question and simply say, “Well, they just got (insert dollars here) of our money.”

The lesson from my dad’s failure to predict everyone else’s hamburger decision? Rather than try and focus on what everyone else might do, focus on what worked for you.

So, for now, that’s what I’ll do.

And, well, DAZN just got $10 of my money.

Will many others of you be the same?

Time will tell, but I’ll be damned if I don’t admire the big swing from Len Blavatnik and DAZN. At a time when many sports businesses are trying to bunt to get on base, he’s not just swinging for the fences and trying to hit a home run, he’s calling his shot, Babe Ruth style, with every big deal he signs.

He’s betting the revolution will not be televised, it will be streamed.

Written by Clay Travis

OutKick founder, host and author. He's presently banned from appearing on both CNN and ESPN because he’s too honest for both.