The Case for Buying GCN From Warner Bros Discovery
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This is an op-ed written by Rameez Tase, co-founder and President of Antenna, a market intelligence firm focused on streaming. He’s also an avid cyclist, so I suppose when you mix those two things together, one might say he’s a subject matter expert on cycling-focused streaming platforms. When Rameez and I started talking about GCN, I knew that we had to turn it into a piece because it so perfectly fits my thesis on the future being niche media. I hope you enjoy it as much as I did.
Global Cycling Network (GCN) announced on Wednesday that it was shutting down its GCN+ app, the leading Streaming service for live bike racing, while its YouTube and other social channels would continue to be operated.
GCN is currently owned by Warner Bros Discovery. Discovery first took a stake in the group as far back as 2017, adding to its ownership through to 2019 for a total of £40 million, at which point the media giant became the majority shareholder. The total buyout now places a £70 million value on Play Sports Group.
With GCN+ shutting down, the options to view this content become more limited. European fans will be able to access the content via WBD-owned Eurosport and, ostensibly, U.S. fans will have access via WBD-owned Max (though the future is still very unclear for U.S. fans).
Why does any of this matter?
For the right group, I believe there is significant upside potential. I believe that the current structure dramatically undervalues GCN and the associated media rights it owns. This is one of the most engaged and highest spending niches in the world; I spend $5-10K per year on bikes and, amongst the GCN audience, I bet I’m not so far from the norm. Monetizing such an audience via a bundled general entertainment service dramatically undervalued this audience. It is almost impossible to overestimate the lifetime value of a highly engaged audience niche with truly differentiated IP.
I bet the right investment & operating group could turn this into the fastest growing, most profitable, and most defensible media asset on the market — and here’s how I’d start.
(Disclaimer: There’s a lot that’s hidden to me. What’s for sale, and what’s not? What portion of the Media Rights are available? At what cost? Who’s been laid off. If you have any information, reach out, I’d love to learn more.)
1. Grow GCN Social Channels and Convert Users to GCN+ App
GCN, which is part of the Play Sports Network, has more than 8.8 million YouTube Subscribers across its network of Channels. The top videos get millions of views each. The Main Channel content is primarily scripted editorial series such as bike maintenance tips, fitness program suggestions, and so on. They have also created channels about the most popular forms of cycling: road, mountain, triathlon, e-bikes. There’s also a Racing Channel that’s primarily filled with race highlights on the back of the Media Rights they own that were previously distributed on their GCN+ App.
|Global Cycling Network||3,170,000|
|Global Mountain Bike Network||1,960,000|
|Global Triatholon Network||878,000|
|GCN in Spanish||471,000|
|Electric Mountain Bike Network||246,000|
|GCN in Italian||219,000|
|GCN in German||166,000|
|GCN in France||147,000|
The YouTube Channels are GCN’s heritage, and a major strength. They have produced high quality content, that is engineered specifically for YouTube, at an impressive pace. It’s hard to believe that one can improve on this; but I think there are a couple clear opportunities, starting with growth.
GCN has primarily focused on building up TV anchor style personalities on its main channels. This has been great but it has two primary limitations. . First, it puts the onus for production squarely on GCN. And, second, it limits GCN to the Anglocentric voice it has built (GCN was founded in Bath, UK after all).
Going forward, I would launch a creator network in conjunction with the leading influencers in the space. Not only would this instantly grow their audience and reach but also it would expand their footprint to additional formats of cycling — and, we’ll get to this in a little bit, allow them to extend even more ad inventory to potential sponsors. For example, to tap into the American criterium and gravel markets, consider NorCal Cycling (177K YT Subscribers) and The Vegan Cyclist (239K YT Subscribers). Or, to go deeper on equipment and gear reviews, how about Cade Media (266K YT Subscribers).
And why stop at professional content creators? We could also do deals with prominent cyclists as well. Cycling does not pay well: at the very top level, World Tour rider minimum salaries are ~$50K / year. That means all of them have another job and, for most, its social media influencer.
Why would these folks want to join the GCN empire? Much the same reason as many of the top journalists still choose to work for The New York Times instead of starting their own Substack. While it sounds sexy, being a media entrepreneur can often be grueling, especially for a content creator who isn’t interested in fundraising, advertising, growth tactics, and all the operational work that takes time from the creative work. Further, some of these folks have actual full-time jobs; turning their side hustle into their profession is, in some cases, their life’s dream.
Why would this be so great for GCN? GCN could extend its advertiser proposition to an even larger audience network, and one that offers touch points to an even more diverse audience, both in terms of forms of cycling, and in terms of geographies. And it’s not just about more ad impressions; as part of these deals, GCN could also compel its partners to promote the GCN+ app on their channels.
And, of course, there are a host of conversion tactics that are obvious improvements, with the goal of converting folks to the GCN+ Subscription but, for the sake of time, we’ll skip those for now. PS: GCN+ also would need to build a smart TV app!
2. Ramp Up Advertising
GCN clearly does have a healthy endemic sponsorship practice but the bottom line is, with a large audience of people who spend thousands of dollars in the category each year, it is highly likely that they can be much more aggressive on this point.
The majority of GCN’s YouTube content is what they call “service” based: training tips, equipment reviews, and so on. This is the perfect type of content for endemic advertising. They seem to have a meaty list of sponsors, mainly through product placement, but are likely under monetizing their audience. Each editorial series could be sponsored with much more obvious branding than today, which would command a premium. In addition, with the creator network above, GCN could extend these deals to a much larger audience. All in all, they do pretty well here, though.
- Pinarello Bikes
- Zipp Wheels
- Topeak Tools
- Canyon Bikes
There is a huge untapped opportunity for non-endemic brands who want to use cycling as a wedge to tell an important story; whether it’s tourism, environmentalism, urbanism, or health & wellness. The new niche golf digital media brand No Laying Up has shown how elevated brandable series on tourism can be for sports like golf & cycling.
Advertising should not be limited to the YouTube Channel. From my experience, in-race GCN+ advertising is extremely minimal. But audiences are completely used to watching ads within live sporting events, even those which they pay for, with the exception of PPV fight sports, where a single fight can cost $100.
One of the biggest races on GCN+ this year was Milano San Remo, where Dutch star Mathieu Van der Poel won in a blazing fast time of six hours and twenty five minutes. You’re telling me that there is no room for advertising to this audience during that broadcast?
3. Aggregate Top Live Cycling Media Rights and Renegotiate Rights Deals
Unlike major American sports, most cycling fans are just fans of the sport. Some only watch the Tour de France and many watch all of the top races. Yet the rights to these top races are fragmented around a series of unrelated distributors. This creates a big problem: the cost bar for a consumer to get a critical mass of all rights is very high, dissuading audiences from tuning in.
In the U.S., rights are split between:
- GCN+. Races like Milano San Remo. $50 / yr.
- FloBikes. Races like Tour of Flanders. $150 / yr.
- Peacock. The Tour de France and Vuelta a España. $60 / yr.
In the U.S., I’d venture to guess that none of the counterparties place a particularly high value on their rights given the relative lack of popularity of the sport. In Europe, things may get trickier — but let’s say WBD-owned Eurosport is willing to do a deal for simulcast rights. If you could pull this off, you’d be a one stop shop for 100% of the live sports for a niche, highly engaged audience. With a full calendar of races, retention would be ~100%, especially with smaller forms of cycling like Cyclocross and Track contributing to a nearly year-round season.
In any event, within mega-services like Max, these rights are likely to be under monetized. There are people paying $50 + $150 + $60 = $260 / year just to watch a critical mass of their favorite sport. The entire Max catalog is $10 / month (or $100 / year). What’s good for Warner Bros. Discovery is not necessarily what’s good for GCN.
The secondary benefit of aggregating these rights deals is that there is a single media partner, which instantly changes the market dynamics. When you’re the only game in town, you have a lot more leverage which can push the cost of rights down. Unlike major American sports, I highly doubt that the UCI, or any other centralized cycling body, can choose its media partners so strategically — it’s just too fragmented.
For example, ASO owns the Tour de France and a host of other key races but the list of races they don’t own far outstrips the list of races they do. On the other hand, folks are trying to unify these rights: just this month we learned about a project named “One Cycling” which aims to create a super league, of sorts, and is rumored to have the support of several top teams as well as Saudi Arabia’s PIF.
If you can pull this off, you’re left with a much larger, lower churn service with programming that costs less than it previously did to populate the service with.
4. Increase Price
This one is obvious. Once you’ve aggregated rights that previously required three separate subscriptions, a price increase is more than justified. For reference, the NFL’s premium tier of NFL+, which offers access to all games, mobile only, including NFL Red Zone, is currently priced at $100 / year (2x GCN+). FloBikes, which currently does not have a critical mass of all races either, is currently priced at $150 / year (3x GCN+).
Based on the intrinsic value that GCN+ provides its fans, and other data I’ve seen on price increases, I’d expect a ~100% price increase to be “no problem”. At Antenna we observed that, at least in the immediate aftermath of price increases (i.e. the 3 months following), most services were better off when comparing the impact of Subscriber loss vs. ARPU increase. While this does not factor in potential long-term effects, it does show that there is no mass casualty event following most price increases.
5. Introduce a Superfan Tier for the “1,000 True Fans”
I’m becoming a broken record on this topic: there are many people who spend thousands of dollars a year on bikes. Why not introduce a GCN++ membership tier that offers exclusive access to many of the most coveted prizes for cycling fans. GCN seems to do a great business selling GCN-branded merchandise, and a small business on affiliate linking via their YouTube channel — but what I propose is much more impactful. A few examples:
- Partner with Duvine Cycling to offer discounted bike tours
- Partner with The Pro’s Closet to offer pre-access to exclusive used bike inventory
- Partner with Competitive Cyclist to offer discounts to high end parts & accessories
- Partner with Fanatics to offer exclusive athlete-collaboration merchandise
In the minds of a GCN++ superfan, they may be paying $100 / year for GCN+, and another $500 / year for GCN++, just for the chance to spend thousands more on the exclusive perks — but they’d be receiving more than enough value (by way of exclusive offers and discounts on big purchases) to justify that additional membership fee. .
As a metaphor: Real Madrid’s superfan tier, known as the Madridista program, costs $150 / year for membership. One of the key benefits is access to Real Madrid game ticket presales. So you’re paying $150 / year for the opportunity to spend many hundreds more. Now that’s a business. There are other metaphors as well. Chase’s Sapphire Reserve card carries a $550 annual fee — but you get many benefits like a $300 annual Uber credit. The concept of paying a membership for monetary or non-monetary benefits isn’t new, it’s just new to most media companies.
This is something that no large media company who owns these rights could or would do. It’s exclusively something out of the niche / vertical media playbook. And, given the top 10% of GCN fans likely spend pushing $100K / year on bikes, I believe that playbook is much more suited to the task.
6. Collect 1P Data Religiously
I’m not sure to what extent the company has focused on this to date but its CRM could be incredibly valuable given the LTV of its audience. As a start:
- Collect emails of 100% of paid Subscribers
- Append behavioral and demographic information to better describe the value of their audience
- Within local guidelines, use that data to personalize marketing efforts at similar users
- Conduct regular behavioral surveys within app
- Consider leveraging CRM as a lead gen revenue line item
Based on all of this, I am convinced this could become an incredibly successful vertical brand with a little bit of love. I suspect the reason that it’s not going in this direction is that (a) large media company incentives & approaches to the problem are inherently opposed to the vertical brand playbook and (b) the economics simply don’t work without these improvements.
But, for a buyer who is empowered to pursue this playbook, it’s possible to simultaneously increase growth, increase revenue, improve unit economics and diversify the brand — a pretty rosy prospect.
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