The news many football fans feared was confirmed yesterday: you will have to sign up to Optus to watch the English Premier League from next season.
It'll cost $15 a month for Optus postpaid mobile and broadband customers, or free for subscribers who spend more than $85 a month on a plan.
EPL fans are furious with forums and social media overflowing with rage. Some say it's worse than the stranglehold Foxtel has on Game of Thrones.
To earn the right to this opprobrium, Optus spent an astonishing amount of money, buying the Australian rights for $US150 million ($A200m) over three years.
For perspective, Fox Sports and SBS paid $A160 million over four years for the rights to Australia's national soccer competition, the A-League.
To understand how Optus were able to outbid Australia's largest sports network for the rights, you need to understand how the EPL rights process works.
The EPL TV rights are offered via a blind auction, so no one knows who else is bidding or how much. And the EPL, like most football organisations are obsessed with money, so it's literally just the highest bidder wins. Other sports will look at strategic issues such as reach and the competition's exposure, but they're very minor considerations for EPL rights.
That means just about anyone with the cash can bid for the rights, whether broadcaster or not. Just like Optus, the UK's BT Telecom paid big money for rights to the national football league.
In the UK, the rights are split up into seven packages based on when matches are played, so a broadcaster could bid for any number of them. Because Australia is a much smaller market, it's a case of all-or-nothing, and the EPL then allows the local rights holder to on-sell those rights. That's what Optus has done with the SBS, selling them for one game a week for free-to-air TV broadcast.
A three-way battle
Three players were believed to be serious contenders in the Australian auction - Optus, Foxtel and the Al Jazeera-owned BeIN SPORTS. Foxtel and BeIN were expected. Optus was a complete wildcard.
It's not known how much BeIN offered, but it was less than Foxtel, which is believed to have been only a fraction more than the $US45 million it paid for the previous 3 seasons of EPL rights. This means Optus outbid Foxtel by as much as $US100 million and the EPL laughed all the way to the bank. It's also more than both the Super Rugby and A-League rights.
For a broadcaster, spending any more made no financial sense, but for Optus who was using it to make money in other ways, it was willing to pay more than anyone else.
Foxtel losing the rights isn't likely to hurt the cable TV provider's subscriber numbers that much, as the majority of its sport subscribers are there for NRL and AFL. Where it might cause some difficulty though is between its two owners Telstra and News Corp.
The battle between the telcos is another strategic fight adding to the problems facing traditional media. Optus has just under 10 million Australia mobile customers, compared to Telstra's 16.7 million and this deal now pushes them into an area, mobile sports rights, previously dominated by Telstra.
But it's also worth that around 37% of mobile customers at Optus - 3.7 million - are prepaid, and therefore ineligible for the EPL access. To watch, they'd need to convert to a long-term contract, something the company is undoubtedly banking on. Having too many prepaid customers is the company's Achilles heel (Telstra's prepaid numbers are roughly the same, but with nearly 70% more contracts on the books).
In the meantime, the fact that that News Corp-owned Fox Sports lost those rights to Optus, which may now steal Telstra customers, creates a very interesting dynamic between the parent companies, because the deal sideswipes the News-Telstra joint venture Foxtel.
Despite bolstering its content offerings, Optus and its parent business, Singtel, are not interested in becoming broadcasters. Their focus is on upping the average revenue per user (ARPU) and locking people into long 24-month contracts. Now they've targeted a very passionate and loyal niche to do it.
Roy Morgan estimates that 1.7 million Australians watched the EPL last year. Foxtel can take some consolation in the fact that the A-League attracted around 2.1 million in 2015.
Locking in fans
There's a good reason why EPL fans are feeling a little incensed about the Optus deal. Because you need to be part of a postpaid service to watch, that means a 24-month contract on either a mobile service or home broadband. Prepaid customer? Forget about it.
The biggest impact is in the home broadband market. The NBN has levelled the playing field for service delivery, and there's a huge profit margin in fixed broadband, so both Optus and Telstra are eager to create a point of difference for customers.
If Optus can attract loyal EPL fans, they have them for at least two years. Watching that third year of the deal means signing up for another two years once that contract ends.
The way they've priced it is designed to increase the ARPU for each customer.
Optus is so committed to raising its ARPU, it is releasing a mini set-top box costing $5 a month for mobile customers who want to watch matches on TV.
The company's latest fiscal report has the ARPU at $44 per month, up 3% on 12 months ago. They're chasing Telstra
The EPL is being offered for $15 a month, and free to anyone on a contract over $85. They're hoping that offer will push customers looking mobile and broadband plans around the $70 price bracket up to the next level. It also encourages people to sign up to Optus' Yes TV by Fetch service, which is included in broadband plans above $90.
The company has BT Telecom as its role model. After pinching 38 games from pay-TV broadcaster BSkyB in 2012, the telco came back in 2015 to snare 42 more. It's obviously working.
After paying what many see as over the odds, it's now up to Optus to make the Australian rights work hard for them.