When we look into the future, magic ball of sports viewing, what do we see?
Social media platforms (Facebook, Twitter) and streaming services (Netflix, Amazon) are rejoicing, while cable and broadcast channels like ESPN, FOX Sports and NBC are wallowing in their fallen greatness.
Streaming has changed the game in how viewers consume content. As of now, the effect has been minimal on sports viewing, as most fans prefer live coverage, but that is soon to change. Broadcast entities like NBC and CBS will now have to compete with a growing number of streaming services and social media platforms for sports rights. These are properties that broadcasters are ill-prepared to lose, as live sporting events offer the highest return on advertising. As simple economics teaches us, a rise in demand will raise the price. All sports leagues, conferences and organizations should benefit from the streaming development.
A great example is Amazon. Starting in week four of the NFL season, Amazon will stream Thursday Night Football after placing the winning bid for the rights in the offseason. The games will be available to Amazon Prime customers, but the NFL will maintain its “tri-cast” model by also disseminating the game on cable (NFL Network) and broadcast (NBC/CBS).
If you remember, Twitter carried ten Thursday night games last year at the price of $10 million – Amazon is paying five times that. In its bid to secure the rights this year, Amazon beat out YouTube and Facebook.
Why is it important that the NFL opens is rights to other entities?
The National Football League is growing its bidding pool for TV rights, while continuing to service their large broadcast partners. Selling Thursday Night Football rights to Twitter last year and Amazon this year, at a relatively discounted rate, allows the new streamers to test out the feasibility of streaming sporting events. As millennials and Generation Xers continue to cord cut, the NFL is lining up its new potential partners ahead of the expiration of major rights deals like Monday Night Football (2021) and Sunday Night Football (2022). When these and other contracts expire, streamers could compete against a broadcast station for the sole rights.
ESPN has seen the sign and is moving on plans to acquire a larger stake in BAMTech; a streaming service designed and owned by Major League Baseball Advanced Media. The deal will establish ESPN’s own streaming option, which is slated to include more than 10,000 live MLB, NHL and MLS games each year, separate from the games airing on their cable channels.
In a parallel development, social media platforms are sharpening their teeth for the opportunity to take a bite out of the juicy sports cash cow. Take Facebook, for instance, which has contracts to stream World Surfing League events and Major League Soccer matches. While providing quality content that promotes its Facebook Live services, the contract is an opportunity to smooth out rough spots in streaming live sport; a dry run if they hope to bid for major contracts like the NFL properties mentioned or other sports like Big Ten Football, Major League Baseball or NASCAR. Social media is slowly moving from lean-in and interact to sit back and watch platforms, as the parent companies are looking to condition consumers to rethink their platform experience.
For those in marketing and advertising, this latest development is worth monitoring. Amazon is reportedly shopping Thursday Night Football packages with 30-second commercial blocks for $2.8 million. There are great possibilities for brands to seamlessly link from the ad to Amazon to drive a purchase. There are similar opportunities for Facebook and YouTube to drive consumers straight to online purchases.
For now, Amazon, Netflix and BAMTech/ESPN are in the best position to pounce on a legitimate sports viewing rights contract (beyond a streaming-specific contract). However, I wouldn’t be surprised if Facebook or YouTube takes a chance on a mid-major basketball rights deal or similar level deal in the near future. It’s a matter of when, not if, a streaming service or social media platform will outbid for rights on sports properties.
We are only in the first quarter of the sports streaming trend. Is your company’s advertising and sponsorship strategy ready for this game changing play?