German handball TV demand: did it pay for the Handball-Bundesliga to move from free to pay TV?

ABSTRACT

Research question

In an increasingly segmented TV market, niche sports rights owners competing with giants such as professional football often face the question of whether it ultimately pays for them to move from a free to a pay TV distribution strategy – that is, behind a paywall. Interestingly, at present, sport management research has not provided a definitive answer to this critical question.

Research methods

In this short paper, we address this question by exploring German TV audience demand for all 404 handball games broadcast during the three most recent seasons: 2015/16, 2016/17 and 2017/18.

Results and findings

Our results suggest that, despite hopes to the contrary, moving from a primarily free TV-based distribution strategy to a largely pay TV-based approach has decreased rather than increased the audience reach of the Handball-Bundesliga. On a more general note, we observe a positive role of both game outcome uncertainty and the absence of simultaneous fixtures in shaping German TV demand for professional handball. As such, our empirical results complement the otherwise rich literature on the determinants for professional sports by providing a first look at the potential determinants of niche sports TV demand, a previously neglected topic in sport management research.

Implications

Niche sport federations have to reflect carefully on their TV marketing strategy under digital plenitude.

KEYWORDS:

• Demand
• outcome uncertainty
• handball
• niche sports
• Pay TV

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 As Boyle (2014) summarizes, the rise of both satellite TV and encryption technologies has reshaped the entire sports industry. While satellite TV overcame the shortage of transmission frequencies, and thus ultimately ended public service monopolies in many Western countries, innovative encryption technologies helped move previously free broadcasts behind a paywall.

2 The classification of a given sport into the categories ‘major’ and ‘niche’ sports might be, at least to some degree, debatable.

3 It is worth noting that an increase in the number of niche sport broadcasts might also lead to a decrease in niche sport stadium attendances (e.g. Storm et al., 2018).

4 For owners of major sports rights that have already amassed strong fan interest in their product, a windowing strategy allows successive marketing via pay TV (e.g. exclusive access to live broadcasts), general interest networks (e.g. time-delayed highlights), and special interest channels (e.g. tertiary exploitation).

5 Interestingly, as Nalbantis and Pawlowski (2017) observe, most of these studies have ‘tested factors similar to those frequently explored in the context of in-stadium attendance’ (p. 20) – i.e. economic and quality aspects, game outcome uncertainty, opportunity costs, and other aspects. In general, however, the transfer of the research designs originally developed to examine stadium attendance to the subsequent TV consumption is not without problems, since stadium attendance and TV consumption differ in a number of respects. For example, TV audiences are less likely to behave as loyal fans and are more interested in the sporting relevance and quality of sporting contests, as well as in uncertain outcomes (e.g. Baimbridge, Cameron, & Dawson, 1996; Buraimo & Simmons, 2009; Forrest et al., 2005; Mongeon & Winfree, 2012). For an excellent summary on the methodological advantages of using TV data, we refer to Forrest et al. (2005).

6 Nevertheless, as Nalbantis and Pawlowski (2017) stress, the ‘demand for televised football is [still] a relatively under-researched topic’ (p. 5).

7 On the contrary, niche sports might be even less appreciated by those who stumble upon them (Elberse, 2008; McPhee, 1963).

8 In Germany, currently only six sports associations have more members: (1) German Football Association (7.04 m); (2) German Gymnastics Federation (4.94 m); (3) German Tennis Federation (1.39 m); (4) German Shooting Federation (1.35 m); (5) German Alpine Club (1.15 m); and (6) German Athletics Federation (0.82 m).

9 In Germany, Sky Deutschland AG (2018), the pay TV market leader in Germany and Austria, recently reported a customer base of about 5.20 million paying subscribers, a figure that has more than doubled since 2009.

10 In the final analysis, however, we had to exclude seven HBL games due to missing values.

11 Of these 306 HBL games, 300 were broadcast exclusive by Sky, while six were also broadcast by the public service broadcasters.

12 We purchased these data from the Gesellschaft für Konsumforschung (GfK). In Germany, the GfK conducts representative TV ratings for the entire German TV industry. These data are based on a representative sample of 5,640 German and European Union citizen TV households, which comprises around 13,000 persons in total. To scrutinize the validity of its TV ratings, the GfK conducts both external and internal coincidental checks (Hofsümmer, 2010; Klemm, 2010).

13 The betting odds were retrieved from Tipico, an international provider of sports betting headquartered in Malta, and then transformed into win probabilities (Benz, Brandes, & Franck, 2009).

14 Given the limited number of existing observations during the first two-thirds of our sample period, i.e. the two seasons 2015/16 and 2016/17, we refrain from using an additional panel approach to increase the already high robustness of our key empirical finding; i.e. that, despite hopes to the contrary, moving from a primarily free TV-based distribution strategy to a largely pay TV-based approach has decreased rather than increased the audience reach of the Handball-Bundesliga. In fact, from those 13 HBL clubs that were neither promoted nor relegated during our period of observation, all but one HBL club, THW Kiel (36/68 games), saw less than 50 percent of their games broadcast (cf., Table 2).