There was a time when people were all up in arms about sports moving off of free or broadcast TV on to “cable,” and how that move would dissipate interest in sports (those people also forgot that for decades not every game of a home team was even on TV, and things like blackout rules kept fans from watching in many cases a majority of your favorite local teams games). I was actually working at one of the fledgling cable services, SportsChannel, the day the Yankees moved their games off of “free TV” and on to cable, and was also there a little over a year; later when a pay service…also SportsChannel, became the first to get the rights to a full season of a league…in that case it was the NHL…and will all the hand wringing the world didn’t come to an end…we adjusted.
We have moved on from that discussion to the large scale streaming opportunities that now arise and will continue to grow as the consumer gets more used to receiving…and paying for…segments of live broadcast games that he/she/they want. The latest being YouTube’s deal with the NFL.
What does it mean? Well it could mean a great deal, and not just for the NFL and other leagues who are looking to segment their broadcast deals and make the opportunity and revenue pie bigger, not just taking the same pie and making the slices smaller. The revenue has to come from new sources…be they gambling, digital currency, foreign investment, new categories like CBD (one to watch by the way) and elsewhere.
So “Sunday Ticket” and YouTube TV for at least the next seven years (footnote, we are probably dropping cable for YouTube TV for about $64 per month soon, sorry Cablevision and XFINITY).
Some reasons for the significance.
First, YouTube has been seeding the market with partnerships on the awareness side for consumers for several years, sponsoring everything from the World Series to the NBA Finals (as they were being broadcast on potential rights competitors like ESPN).
The core of the YouTube business…not the broadcast side, but the content side, has done well for decades thank you, and younger, not thirtysomething, consumers have grown up around the YouTube brand, so education for that demo is already done.
Factor in that ten years ago, almost 100 million Americans had cable or satellite TV. That is forecast to be cut in half by 2025. To get YouTube TV, all you need is internet access and a device. It’s just far easier as a user experience.
The NFL will make at least $500 million per year from this than from DirecTV’s rights fee. That means each team would be due an average of $412 million per year in TV fees, up from $250 million per team per year under the old TV deals, and with players getting 48.5 percent of most team revenue, the rights deals will raise the salary cap $78 million per team. That makes everyone happier and will help fans across the league enjoy their free spending local teams even more.
Then there are also international rights as teams build out local partnerships and the NFL keeps upping the ante of a 17 game season in Germany, Mexico, the UK and maybe into the Netherlands and Japan and some other locales before too long. That is also new deal flow money, probably coming from streaming, that will enhance the pie as well. And all these Tv media deals have opt outs or expirations after 2029, so every media deal now is seeding the market for what can becoming down the road.
Better user experience. Nickelodeon’s NFL, megacasts, multilingual broadcasts, Helmetcam, announcer cam, enhanced stats packages…who knows what YouTube TV will bring to enhance the season long package, but it should be robust and innovative to draw the $300 and upwards as an add on. However as Peter King pointed out, how far are we from an out of market say, jets fan in Miami getting just jets games, or enhancing the red zone into a full two minute drill alert, or for a custom feed for just when your favorite pash rusher, say Quinan Williams, is in the game.
It won’t be that far off and the rush to draw subscribers will be tantamount.
So as we close the year, watch YouTubeTV (pun intended) and Amazon, and Apple (hello NBA, NWSL and others with rights coming up). The days of dialing in just one game, at one time, and being passive in a viewing experience are over, the customized, high revenue experiences are just kicking off.
