Earlier this week the NFL announced it had inked a global streaming deal with Yahoo!.
When the Buffalo Bills and the Jacksonville Jaguars play in London later this year, the game will be streamed globally for free by Yahoo!. The price tag is seemingly a steal at US$20m. To put this in context, NFL screening rights cost US broadcast networks around US$7 billion each year, and a thirty second commercial slot during the Superbowl costs approximately US$4.5m.
Given a global digital deal for this game would have attracted multiple bidders (including YouTube), it seems likely Yahoo! was the NFL’s best commercial outcome.
Under the terms of the deal, the Yahoo! platform will stream the game onto all devices (including desktops and mobile), and through apps, direct on smart TVs.
I believe this news has ramifications for broadcasters, rights holders and of course the audience.
Broadcasters:
This is a milestone event – in the short to medium term this move will have minimum impact on the large US broadcasters’ audience, but in 10 years time will be considered the the beginning of the end.
Although 37% of all time and 41% of advertising spend on media is TV there is pressure on these numbers and they are falling year on year. Worryingly for broadcasters, combined time spent digitally (ie, on desktop and mobile), passed TV in 2013, driven by the inexorable increase of mobile.
In the local market Yahoo!’s move will most obviously concern Sky – the local media exclusivity that they have previously enjoyed around NFL has now ended. And whilst the NFL may not be the main purchase driver for Sky Sports consumers, this could signal the beginning of unbundling of Sky packages as sports rights holders aim for new ways to get cut through and monitise their audience.
Rights Holders
I predicted in Hollywood disruption the current stoush over local content rights would be superseded by rights holders issuing more international rights deals (instead of territorially based agreements). As both Yahoo! and the NFL will have discovered, it is easier for rights holders to negotiate with a single broadcaster, rather than having multiple contracts and distribution agreements across multiple territories.
This may though become a ‘careful what you wish for’ moment, and the rights holders will be treading carefully. The consolidation of distribution partners may drive more power to the large platforms by removing competition, ultimately creating conditions where price is driven down, meaning a reduced payment to creators.
Rights holders though can’t afford to sit still, and continue to look at options and new commercial models offered by digital. The NZRFU has taken the local lead, streaming an All Blacks test back in 2013 on YouTube out to international territories.
Audience
As with much digital innovation, consumers appear to be the winners with this move, primarily because they get access to free (albeit ad funded) content on any device in any country with seemingly no restrictions.
The evolution of these models will not though be without some short term frustrations. As content delivery fragments, discovery may not be as simple as when it comes delivered via a packaged and externally curated sport / set top box model.
This fragmentation could mean as a consumer I need an app for NFL, a subscription for English Premiership, a second subscription for PGA golf, and a standard Sky package for rugby. All of which means multiple apps and multiple billing relationships.
As the digital audience grows, so does the cost to a provider of the content rights. That in turn increases the need to deliver a commercial return on each piece of content. The price I pay may rise – BUT I will have more choice, and will not have to pay for content I don’t want (as I currently do with Sky).
However, five years out this model will look very different. It seems most likely a global platform provider such as Apple, Google (viaYouTube), Amazon or Netflix will step in. The player who can successfully bundle this content up in an easy interface and payment mechanism such as iTunes, is likely to win. Improving discovery and simplifying my billing relationships are the key drivers to this success.
Key Takeaways
There are two groups in NZ who will be watching all of this very closely – Sky TV and the NZRFU.
As providers and creators they will be actively working on strategies to defend their position and or to maximize the opportunities that digital will bring.
KS
