A Blog by Jonathan Low


Apr 6, 2016

And the Last Shall Be First? How Twitter Beat Amazon, Verizon With Low Bid for NFL Streaming Rights

Why would the National Football League, America's media dominatrix, sell video streaming rights to the lowest bidder, who also happens to be an enterprise many believe is on its last legs?

No, the NFL is not stupid. It's actually re-selling media inventory it has already sold in other formats - broadcast and mobile - to the CBS and NBC networks and to Verizon. This enables the NFL to keep the various digital, broadcast and mobile players competing with each other so that none gains too much power in the battle for football viewing rights.

Meanwhile Major League Baseball appears to be propping up yet another also-ran, Yahoo, by permitting it to stream one free game a day. Why cannibalize the insanely successful mlb.com? Because Yahoo, despite its desperation as a business proposition, still attracts millions of sports-minded fans thanks to its stats and extensive coverage. Again, a league looking to find ways to keep its suppliers on their digital heels while it attracts more eyeballs for advertisers to think about.

All of which suggests that digital enterprises will be harder to kill or acquire inexpensively than their more tangible forebears, and that their intangible assets are far more attractive than GAAP accounting of their value may suggest. JL

Peter Kafka reports in Re/code:

CBS and NBC have their own digital rights. So Twitter will be rebroadcasting the CBS and NBC feeds of the games, and will have the rights to sell a small portion of the ads associated with each game.Further generating more revenue for the NFL — is the fact that Verizon already owns the mobile rights to NFL games. Which means that the NFL gets more money for the same games it has already sold a couple of times.
Surprise finish to the fight for NFL streaming rights: They’re going to Twitter.
The social media company beat out heavyweights including Amazon and Verizon for global rights to stream the Thursday night games the league will host next fall, according to people familiar with the bidding.
The win gives Twitter the ability to show the games to users around the world, without requiring them to sign in to the service. The company hopes that can help kick-start its slowing user growth and provide new and returning Twitter users with a feature they’ll be able to instantly appreciate.
Twitter will also be able to stream the games via its apps on platforms like Xbox game consoles, and the NFL says it is exploring ways to let Twitter stream the games via its syndication partners, including Google and Yahoo.
A press release from the NFL spells out a few more details: Twitter will stream 10 of next fall’s 16 Thursday night games — the same 10 games CBS and NBC will broadcast. The NFL network will carry the remaining six games.
While the NFL and Twitter haven’t disclosed the price for the package, people familiar with the bidding said Twitter paid less than $10 million for the entire 10-game package, while rival bids topped $15 million. Those numbers are a fraction of the $450 million CBS and NBC collectively paid for the rights to broadcast the Thursday games. (A note from Twitter’s Investor Relations Twitter account notes that the company had already baked the cost of the deal into their 2016 guidance.)
One big reason for the disparity is that CBS and NBC have their own digital rights, and they will own most of the digital ad inventory in their games, people familiar with the deal say. So Twitter will be rebroadcasting the CBS and NBC feeds of the games, and will have the rights to sell a small portion of the ads associated with each game.
Further complicating the picture — and generating more revenue for the NFL — is the fact that Verizon already owns the mobile rights to NFL games, and that deal isn’t going away.
All of which means that the NFL has constructed a deal where it gets more money for the same games it has already sold a couple of times. “This is about driving incremental consumption,” said Brian Rolapp, the NFL executive who oversees the league’s media deals and operations.
Last year, Yahoo paid around $20 million to stream a single regular season game, an event the NFL described as a test.
The fact that Amazon didn’t land the NFL games is somewhat surprising given that the company has shown a propensity to pay up for digital media assets it really wants. In 2014, the company bought Twitch, the video game livestreaming startup, which had been slated to sell to YouTube. Last year it paid $250 million to hire the former hosts of BBC’s “Top Gear” to create a new show for its video service.
Sources said Amazon’s plan was to show the games to all viewers, instead of limiting the streams to its Amazon Prime subscribers.
Verizon has also shown a big appetite for digital media by acquiring AOL for more than $4 billion and launching Go90, a mobile video service. Facebook announced last week that it didn’t want to pursue the games, after previously signaling that it did.
One thing that Twitter played up in its pitch is the company’s global scale. While the company ended last year with 320 million active users, it has long argued that it reaches many more people than that. Twitter said it reached a “total audience,” which includes people who visit Twitter properties but aren’t logged into the service, of 800 million in Q4 of 2015.
Also worth noting: Twitter CFO Anthony Noto’s resume includes a stint as the NFL’s CFO.
In an interview with Re/code, Noto talked up the youth of its user base, as well as its international reach. “We have a young-skewing audience, and they’re obviously mobile,” Noto said. And while Twitter’s ability to generate revenue directly from the games will be limited, Noto thinks it will help the service recruit and retain new users, as well as those who have used the service in the past but aren’t currently logged in. “This is a great, great product for logged-out users,” he said.
The fact that NFL games are now available on multiple platforms but with different access rules — free on Twitter, paid via Verizon’s mobile app , etc. — might baffle some would-be viewers who don’t follow this stuff day-to-day. But Rolapp doesn’t see it that way. “I’m not overly worried about confusing the viewer,” he said. “It will actually be hard to miss.”
Last year, Twitter and the NFL signed a two-year deal to distribute highlights and other clips on the service.


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