The price bomb oozes politics – VG


Premier League gets more expensive: The price bomb oozes politics

Liverpool won the Premier League last season. The struggle for rights is fierce and costly. Now TV 2 is increasing the price to customers. Photo: AFP / Scanpix

The billion-dollar industry Premier League makes a living from milking micro-economies, but TV 2’s price aggression is probably about significantly more than the fact that rights cost so much. Here is probably a thick layer of self-interest.

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It is interesting to register which communication line TV 2 chose, as it became known that the price to Canal Digital’s customers for TV 2 Premium rises by 40 per cent in the middle of a rights period.

The channel talks a lot about how expensive football rights have become, but little about the underlying factors in a TV market with a fierce battle for customers.

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But there is every reason to assume that there is also a lot of politics behind pricing.

Going forward, the football experience will therefore cost Canal Digital customers NOK 699 a month, instead of the already rigid NOK 499. It is stated that this is due to a surcharge in the terms and conditions from TV 2.

The price shock obviously creates both debate and reactions, but so far key information is missing to be able to analyze the situation properly.

A key question: How much of this boom is a real consequence of rights costs, and what in reality is so much about TV 2’s strategy of positioning itself?

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We can only become wiser about this when the total price situation around Premier League access is available for the last part of the rights period.

We know that the channel’s own product, TV 2 Sumo, will also increase in price. But a very important point, which so far is unanswered, is how large the mark-up will be here, compared with what is required of Canal Digital and other suppliers.

We will return to this dimension, but first a little about the big picture:

TV 2 is of course right that rights cost so it sings after. No one should doubt that the channel has gone to great lengths to show Liverpool and Manchester City’s stars, in addition to trying to create enthusiasm around Burnley and West Bromwich. Thus, it is in the cards that it will be expensive for you and me to join in the fun.

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The business model that has created such an inflated football economy is based on the fact that each of us thinks that the product is so great that our willingness to pay can be stretched and stretched. Because so many people around the globe are pocketing pig money, or paying whites out of their eyes for an official football kit for the pod, young men can rake in millions every single week. Sympathetic? Not especially. But at the same time an extreme consequence of an ability to thin a demand to the extreme.

The question is where the pain threshold goes for how much consumers can be milked, and over 8000 kroner a year will obviously make some people drop out. But seen through TV 2 eyes, it may well be that this is perceived as answering the bill, even if the totals get a kink. For the channel, it can be just as important to get a higher share away from the traditional suppliers and into your own TV2 umbrella by choosing sumo, even if it costs the total. This will be able to build loyalty, and in the modern media market it is economics to control their own customers instead of buying the product through others.

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That is why it is so interesting to see if we get a lasting gap between what the Premier League via TV 2 Sumo and the same package through others will end up costing. It will be unusually unsurprising if a clear plan emerges to gain better control over PL customers in the time remaining of the rights period. Optimal for TV 2 will then be whether these have adopted habits they want to keep through other parts of the offer, at the same time as it will make the situation more demanding for the next right holder when the Premier League goes on.

We live in a time where TV habits are changing drastically, and where the battle for customers and the crowns is intensifying. And although TV 2 is probably right that the last PL period has cost them dearly to secure, there is still a good deal more than what has been communicated that is behind the price shock that became known this week.

But in any case, what happens is nitrite for the useful dairy cow. Namely the fans.

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