Bill King is a senior writer for Sports Business Journal and has honed his journalistic skills over the course of three decades. He's more than able to ferret out the details of a story.

So . . . What does King have to say about the economics of DAZN's business model in the United States?

"Ask DAZN executives about numbers and they're very candid in telling you nothing," King answers.

DAZN's finances are shrouded in secrecy. It's a privately held corporation and exempt from most financial reporting requirements. It appears to be doing well in some countries but struggling in the United States.

DAZN has been funded largely by Len Blavatnik, a Ukranian-born billionaire who has both UK and US citizenship and, according to the Bloomberg Billionaires Index, is worth approximately $25 billion.

In September 2018, Perform Group (which Blavatnik controlled) was divided into two divisions (1) DAZN Group for consumer content operations; and (2) Perform Content for business-to-business sports data services. Perform Content was then sold to Vista Equity Partners (with DAZN retaining a small equity stake) in an effort to help DAZN fund the acquisition of live sports rights.

In today's cord-cutting world, consumers make choices regarding what to buy. There's Netflix, Amazon Prime, AppleTV, CBS All Access, YouTube TV, Hulu, Disney+, ESPN+, HBO Max (in 2020), and myriad other outlets. In sum, DAZN is one of many streaming services vying for viewer dollars. And boxing fans are becoming more selective in what they watch, let alone buy. It's not just the investment of $4.99 or $9.99 or $15.99 a month. It's the investment of time at a time when there's an overflow of product.

Within this environment, DAZN isn't getting enough subscribers. Its sales pitch is simple: If a boxing fan is willing to spent $79.95 for one pay-per-view fight, he or she should be willing to spend $19.99 for a full month or, better yet, $99.99 for a full year of DAZN.

One industry source says that an early DAZN financial model anticipated that the streaming service could have as many as 3.5 million subscribers in the United States by the end of 2019. Another well-placed source says that DAZN now has roughly eight million subscribers worldwide and approximately 800,000 of these are in the United States.

This 800,000 number is less than the estimated number of buys engendered by HBO Pay-Per-View for Canelo-Golovkin I (1,300,000), Canelo-Golovkin II (1,000,000), and Canelo-Cotto (900,000).

Also, the 800,000 subscribers number reflects a significant bump that came about as a consequence of DAZN's costly, high profile, end of year schedule. DAZN is starting off 2020 with less of a bang. And the network's retention rate among subscribers has been less than desired.

Many people who watch streaming video stagger their subscriptions. They subscribe, binge for a month, let their subscription lapse, and move on to another channel. Live sports doesn't lend itself to binge watching. But that doesn't mean viewers aren't selective in what they pay for. Many of them ask, "If Canelo fights twice a year, why should I subscribe for twelve months?"

DAZN has telecast three Canelo Alvarez fights: against Rocky Fielding on December 15, 2018, Danny Jacobs on May 4, 2019, and Sergey Kovalez on November 2, 2019. The retention rate for viewers who signed up for DAZN at the time of each of these fights has risen from fight to fight. DAZN ends 2019 with approximately twenty percent of its subscribers on an annual plan.

Canelo has moved the needle for DAZN. So did the December 7 rematch between Andy Ruiz and Anthony Joshua, which was DAZN's most-watched show in the United States to date. Canelo-Kovalev was the second most-watched. Canelo-Jacobs and the November 9 confrontation between KSI and Logan Paul were third and fourth depending on how the numbers are calculated (i.e. streams vs. unique accounts, with or without next-day viewing, etc). Nothing else DAZN has streamed so far has broken out of the pack.

Here, it should be noted that three of DAZN's top four shows for 2019 were streamed in the final two months of the year, an indication that the network finished strong. That said; If ESPN's third or fourth-most-watched football game of the year was a pick-up game in which the opposing quarterbacks were Justin Bieber and PewDiePie, it would be a problem.

Meanwhile, in mid-December, it was announced that Mikey Garcia had signed with Matchroom and would be fighting on DAZN on February 29 against Jessie Vargas. The agreement with Garcia is for one fight with matching rights on his next bout. DAZN hopes that Mikey will appeal to Hispanic viewers who subscribed to see Canelo Alvarez and Andy Ruiz on the network. But Garcia comes with a high price tag. And some viewers were less than enthused by what they perceived as a lackluster effort on his part against Errol Spence last March.

DAZN's first two main events in 2020 - Jaime Munguia vs. Spike O'Sullivan on January 11 and Demetrius Andrade vs. Luke Keeler on January 30 - are perceived mismatches that won't move the needle in the right direction. A fight between YouTubers Jake Paul and AnEsonGib has been added to the January 30 undercard along with Tevin Farmer vs Jojo Diaz and Danny Roman vs. Murodjon Akhmadaliev.

Meanwhile, it should be noted that Canelo and Golovkin were recruited by DAZN independently of Matchroom. And Ruiz is a Premier Boxing Champions fighter. With regard to Anthony Joshua, DAZN will find out how many viewers he can draw in the United States without Ruiz if and when he fights Kubrat Pulev and Oleksandr Usyk in 2020.

Advertising might be a source of revenue down the road for DAZN. But to sell advertising, a network needs viewers. DAZN sold a Vaseline sponsorship for Ruiz-Joshua 2, but it's hard to believe that it generated much revenue for either DAZN or Vaseline. Not many viewers are likely to have seen the Vaseline corner-cam in action and said to themselves, "I'm going out after the fight to buy some Vaseline."



It's common for a company to go into a business knowing that it will lose money while establishing itself. On July 8, 2019, Bloomberg.com reported that DAZN had lost $627 million worldwide in 2018. One can put a smile face on this number by noting that the negative cash flow for Netflix in 2019 is estimated at $3.5 billion. But Netflix has built a colossus. And at the moment, the DAZN brand in and of itself is worth relatively little.

Appearing with Perform Group CEO Simon Denyer and John Skipper in New York on May 18, 2018, to announce the launch of DAZN in America, Eddie Hearn declared, "We’ve got a team of people behind us who have a bottomless pit of money who will back us to the heavens.”

That pit no longer seems bottomless. Midway through 2019, there was industry talk that Len Blavatnik was unwilling to put any more of his own money into DAZN. On October 24, Bloomberg.com reported that Goldman Sachs was trying to raise $500 million in private investment on DAZN's behalf. In November, the ante was upped to one billion dollars.

Skipper came in with the idea that he could make DAZN the ESPN of streaming video. The network's plans were summarized by executive vice president for North America Joe Markowski who, in October, told Sports Business Journal, “Our strategy in the United States is to use boxing as an entry point to establish ourselves in the market, make a lot of noise, and generate a transactional relationship with a large audience of boxing fans. If we’re successful in doing that in the next twelve to eighteen months, we will put ourselves in a fantastic position to make aggressive plays for a domestic top-three rights package when they come back to market.”

But can DAZN get to that point? It's current business model appears to be flawed in several respects.

First, like Premier Boxing Champions several years ago, DAZN seems to have overestimated the size of the market for boxing in the United States. Most of the people who watch boxing today are longtime supporters. There are relatively few crossover fans, and the number of hardcore boxing fans is relatively small. Also, many fans who follow specific fighters don't follow boxing as a whole. ESPN+, which debuted in April 2018, has met with modest success. But boxing hasn't been a significant driver for subscriptions.

Look at it this way. On June 1, 2019, Andy Ruiz knocked out Anthony Joshua at Madison Square Garden to claim three of the four major heavyweight championship belts. Ruiz was the first Mexican-American to ascend to the heavyweight throne. Years ago, he would have been elevated to superstar status. But most sports fans in the United States (let alone members of the general public) wouldn't recognized Ruiz if he was standing on line in front of them at McDonald's.

Also, DAZN is selling a product (boxing) that appeals to an older demographic on a platform (streaming video) that's utilized primarily by young people. It's not a good fit. As John Skipper acknowledged in an October 7, 2019, interview with SportsPro, "We’re now engaged with the consumer who, as you know, may or may not understand exactly what kind of broadband connection they have, may not understand that they’re getting buffering because too many people in their neighborhood are overtaxing the last hundred feet of connection. If you’ve got a pay-TV subscription and you’ve been used to getting all this content by putting on channel 83 and suddenly you’ve got to download an app; you’ve got to educate people as to how to do it and why ultimately it’s better value and a better product.”

And most significantly, DAZN lacks the platform it needs to generate subscription buys, build its fighters, and promote its fights.

ESPN and FOX promote across multiple platforms. FOX is a major broadcast network with a huge built-in marketing machine. ESPN is wired into the brain of every sports fan in America and has the entire ESPN empire to advance its boxing franchise when it chooses to utilize it. Fights on both of these networks and their pay-per-view offerings benefit from shoulder programming, free promotional spots, and the like.

Showtime permeated the boxing market long ago, offers viewers a lot more than boxing and, in some instances, benefits from synergy with CBS.

DAZN has DAZN. It can't arrange for Canelo Alvarez to be interviewed on television during halftime of a National Football League game. There's no "Ray Donovan" or "Billions" to bolster DAZN subscription buys. Someone who's channel-surfing might come across boxing on FOX, ESPN, or Showtime. A viewer who's flipping from channel to channel doesn't make his way to DAZN.

"It makes things more difficult for us," Skipper acknowledges to BoxingScene.com. "That's reality. We've spent tens of millions of dollars on marketing in the United States. But it's impossible to deny that this puts us at a disadvantage."

Boxing fans are aware of DAZN. Casual sports fans aren't. There were people who heard Canelo Alvarez was fighting on November 2 and were interested in watching the fight but had never heard of DAZN and couldn't find it. Michael Buffer - the best ring announcer ever and the voice of big fights for decades - has all but disappeared on DAZN.

Canelo Alvarez and Gennady Golovkin were built on HBO. How do you build fighter recognition on a streaming video network? How can you create a star? Devin Haney will be an interesting test case for DAZN's ability to build a fighter into a commercial attraction. He's enormously talented and willing to go in tough. But most casual boxing fans - let alone most sports fans - don't know who he is.

In the end, the bottom line will be the bottom line. DAZN can exist worldwide without a platform in the United States. It can cut back significantly on its ambitions and exist in the U.S. as a niche streaming sports service. Or it can adapt its business model, find a way to balance its budget, and become a longterm bigtime player in America.

Some observers have speculated that DAZN might move to a hybrid business model pursuant to which its most attractive fights (such as Canelo Alvarez outings) would require a one-year subscription to watch or be on pay-per-view with a reduced rate for DAZN subscribers. By way of analogy; ESPN+ subscribers have access to a great deal of UFC content. But the biggest UFC events are on pay-per-view with a discount for ESPN+ subscribers.

"DAZN has no plans for that," Skipper says. "But we're constantly running models to see what we might do."

One thing DAZN might do - and is planning to do - is move into online sports betting.

A 2018 United States Supreme Court decision opened the way for sports betting in all fifty states. It's now legal or about to become legal in nineteen states with a dozen more states certain to follow in the next five years.

DAZN has built and is constantly improving upon an interactive platform that can be used to support various kinds of exchanges with its subscribers in real time. Sunjay Mathews joined DAZN in June 2018 and has been head of legal, North America for the company since November 2018. Prior to that, he was corporate counsel for FanDuel. Also, DAZN partnered with MGM Bet for a brief sports betting segment on its stream of Ruiz-Joshua 2.

"We're in discussions with several companies about allowing viewers to place bets online while sporting events on DAZN are in progress," Skipper acknowledges.

Over the next decade, in-game betting is likely to produce a new world order in the gaming industry. But first, there will be a period of disorder. The sports gambling business is brutal. It isn't an automatic win. Moreover, insofar as DAZN's positioning is concerned, FOX already has an online sports betting website called FOX Bet. There are rumblings that ESPN and William Hill USA are moving toward a joint venture. Most online sports betting sites don't require a subscription fee. And fans bet on football more than any other sport, Bets on baseball are minimal. Bets on boxing are negligible.

"We'd like to use the interactive platform we're building in a way that betting becomes an auxiliary revenue stream," Skipper says. "But we don't anticipate being the house. That's a line we don't want to cross. Subscriptions will continue to be our primary source of revenue. And we hope that advertising, which is nascent for us right now in the United States, will be our second most important revenue stream. We don't anticipate revenue from gambling approaching those numbers."

In the end then, fans should enjoy DAZN's boxing program while it lasts and hope that it lasts longer.

DAZN is swimming in red ink in the United States. Its current business model appears to be unsustainable. But a thought in closing:

Amazon went public in 1997. For years, there were economic analysts who wrote that the company didn't have a sustainable business model. It was losing money year after year. Critics surmised that not enough people would buy things online to make Amazon profitable because buyers want to see a product and hold it in their hand before they buy it. After Amazon expanded its inventory beyond books, the criticism grew louder. The company didn't report a full-year profit until 2004. As late as 2012, it was losing money. But the company stayed focused on longterm growth. Sales revenue totaled $14.8 billion in 2007. In 2018, that number was $232.8 billion. Meanwhile, Amazon stock has risen from $1.73 a share in 1997 to $1,789 a share as of Christmas 2019.

"Our ambition level at DAZN is high," Skipper says.

This is Part Two of a two-part series. Part One can be found at https://www.boxingscene.com/whats-happening-with-dazn-part-one--145676

Thomas Hauser's email address is thomashauserwriter@gmail.com. His most recent book – A Dangerous Journey: Another Year Inside Boxing – was published by the University of Arkansas Press. In 2004, the Boxing Writers Association of America honored Hauser with the Nat Fleischer Award for career excellence in boxing journalism. On June 14, 2020, he will be inducted into the International Boxing Hall of Fame.