09:51 (GMT +7) - Monday 13/07/2020


the victor the spoils?

Released at: 05:53, 09/07/2014

the victor the spoils?

$10 million may seem like a fair price to secure the broadcasting rights to the World Cup in football-mad Vietnam, but broadcasters have so far been reluctant to open their wallets.

by Nam Tien

“Goooaaaaaall” the crowd at the Lan Anh Club in Ho Chi Minh City screamed when Brazil netted their second goal to clinch the World Cup Final against Germany in 2002. Around the country, from cafés to pubs and from plains to plateaus, millions of other people, young and old and in between, also screamed in celebration. Vietnamese love their football.

No reliable figures have been put together to accurately determine the number of people who watch the World Cup in Vietnam when it comes around every four years. According to expert estimates though, the figure for the 2002 tournament was probably some 40 million, or more than half of the country’s population at that time. No other event attracts such an extraordinary level of interest and the huge numbers present opportunities to those with business acumen. Not only the country’s football fans are eagerly awaiting the start of this year’s World Cup in Brazil in June but also its enterprises, many of who are offering attractive services and promotions to take advantage of the month of games.

Football cafés are already preparing, buying more tables, chairs, and televisions to entice customers to come and watch. Even electronic stores are getting into the game, offering discounts of 30 to 50 per cent on TVs and lesser discounts on other items, as well as holding lucky draws with prizes including motor cars and holidays. The “World Cup Cyclone” is also sweeping through industries seemingly not related to football at all, like food and drinks, telecom and even banking.

Broadcasting rights per game, by tournament ($)

The one who would appear to benefit the most is not TV manufacturers and retailers or football cafés but the broadcaster that holds the rights. The World Cup 2002 was a boon for Vietnam Television (VTV), with each advertisement during the games, and especially the final, going for thousands of dollars a time. Businesses saw the benefit of approaching such a huge audience and willingly parted with the necessary cash to advertise. And this hold true in Vietnam of other football tournaments. During the 2011 European Champions League final, the advertisement for “Kangaroo - the leading water filter in Vietnam” was screened so often that people quickly tired of it, yet it nonetheless helped an unknown company reach a wide audience of potential new customers and strong sales have continued to this day.

Price for watching World Cup 2014 on TV ($)

Not all advertisements during football matches are successful, but most enterprises are keen to try their luck. Broadcasters know this well, but with the rights for the World Cup costing $10 million there’s also an element of risk involved.

Sky-high rights

In recent years the cost of securing football broadcasting rights in Vietnam has become more expensive every time a contract is signed. VTV parted with $450,000 for a season of the English Premier League (EPL) in the early 2000s, but when it came time to renegotiate the deal in 2004 the price had gone up to $600,000 a season. Then, in 2007, VTC (Vietnam Television Corporation) won the rights for the next three seasons, from 2007 to 2010, for approximately $4 million. The distribution of the rights was then taken over by another entity, MP & Silva, and now stand somewhere between $16 million and $19 million. With the contract for broadcasting in Vietnam set to expire, the rights for the next three seasons are expected to fetch $40 million a season.

Given such figures it isn’t difficult to understand why MP & Silva “confidently” set the price for securing the rights to broadcast this year’s World Cup - the most watched sporting event in Vietnam - at $10 million, or nearly four times the $2.7 million paid for the 2010 tournament. But $10 million may not be as attractive as MP & Silva believes. While VSTV (Vietnam Satellite Digital Television) was willing to spend $40 million to acquire the broadcasting rights for the EPL, the price tag for the World Cup has made broadcasters think twice. A solid business plan can be built around holding the EPL rights, as the competition runs for nearly nine months a year and the deal is for three years. Most of the matches start between 8pm and 11pm - prime time for football fans and hence advertisers.

The World Cup, meanwhile, only lasts a month and this time around, in Brazil, games start 11pm, 2am, 5am and sometimes at 8am, which is certain to have some effect on advertising revenue. FIFA also insists that games are also broadcast free-to-air, so the tournament reaches as many people as possible, meaning that the holder of the rights will have to come to some sort of arrangement with VTV and won’t be able to rely on increased subscriber numbers and fees to fund the deal and make a profit.

To buy or not to buy?

Indeed, most broadcasters have baulked at paying $10 million. VSTV, owner of K+ cable TV and customers of MP & Silva since 2010, confirmed that it will not bid for the World Cup rights. “This is not what we are aiming for,” said Mr Cao Van Liet, General Director of K+. “The Euro and the World Cup are not priorities in K+’s business strategy.” Mr Vu Quang Huy, Deputy Director of VTC, said that his company will also not bid for the rights because of the high price. But if another partner was interested in sharing the rights, VTC would be willing to come to an agreement over an exchange of content production.

With the two parties that have, in the past, paid the most for football broadcasting rights apparently standing on the sidelines, many are wondering whether some unexpected new player may appear in the game. The most likely in such a scenario is the Viettel Group, with its strong financial resources and a need to promote its new TV services. On March 5, however, Viettel flatly denied they would bid for the World Cup, saying that profits simply can’t be guaranteed.

Football fans may therefore have to rely on the national broadcaster, VTV, who has to date been relatively silent on the matter. One of its executive said recently that, as the national broadcaster and with funds at its disposal, it would be quite natural for it to acquire the World Cup rights. But it’s indicated that it would only be willing to part with $2 million or $3 million at the most.

To pick up the rights for the World Cup in Vietnam, MP & Silva outlaid $7 million and if it can’t pass the rights on to a broadcaster in Vietnam it can’t simply take them elsewhere. Although the World Cup is touted as the pinnacle of the football world, Vietnamese fans are already more than satiated by access to European leagues and European tournaments, so a price war was never really a possibility as viewer numbers could never be guaranteed. It seems that MP & Silva has severely miscalculated in believing that Vietnamese broadcasters would scramble to jump on board and gladly pay the $10 million it sought.

If MP & Silva can’t find any takers and refuses to lower its price, the matter will then rely on FIFA making arrangements for the rights to be sold at a lower price but not to the detriment of MP& Silva. A similar situation was seen in the UK in 2001, when the government and FIFA had to work with Kirch, who held the rights to the World Cup 2002. The parties eventually agreed on a reasonable price and viewers watched the tournament free-to-air. But it remains to be seen whether MP & Silva will be similarly amenable.

What seems more likely is that MP & Silva will split the tournament rights into individual matches, with some games being broadcast free-to-air on VTV and key games being only available on Pay TV. Under such an arrangement it would dodge the terms FIFA imposes about free-to-air broadcasts and turn a profit. It’s been done before. In Singapore, for example, fans only have four games broadcast free-to-air and must pay $90 for the entire 64 games on Pay TV. Fans in Hong Kong and Malaysia are slightly luckier, with 22 and 32 games, respectively, being broadcast free-to-air.

The World Cup kicks-off in about two months. Vietnamese broadcasters may be confident that a deal can be reached as the tournament approaches, but MP & Silva is no minor-league player and no doubt has some tactics in mind to secure a good deal in the country.

User comment (0)

Send comment