We’ve all been excited to look at our phone and see a notification bubble on the Facebook app – only to open it and find out that person that you’ve never talked to is “Now live on Facebook.” Social Media companies have been working on perfecting this idea of live streaming and it isn’t so that we can all seamlessly share live content to all our friends. There’s a larger battle brewing in the world of social media & digital business and it has to do with live streaming, sports, and a whole lot of cash.
In 2016 Twitter spent $10 million on the digital rights to 10 NFL Thursday Night Football games that were already available on traditional TV broadcasting networks like NBC, CBS, and NFL Network. There are conflicting reports on just how well Twitter came out after this deal but I’m sure that they when they had made that deal they had hoped it would be a huge money maker and launch them as the first movers in the live sports streaming space. Did it work? No, but they tried and they’ll continue to try.
According to a Broadcasting & Cable interview with a Barclays financial analyst, it’s estimated that Twitter made $50 million in revenue from their NFL deal. If that’s so, Twitter had a nice cash flow as they capitalized on their investment. In January, they came out publicly and said that they were looking forward to continuing their deal with the NFL and expanding their live broadcasts beyond Thursday night football games. Twitter tried to get out ahead and popularize these types of broadcasts; airing more than 800 hours of live-streaming content in the first quarter of 2017 alone. These streams included, but were not limited to, sports, news and other entertainments. Most popularly? The Grammys.
Twitter’s live stream of The Grammys blew any NFL game that it live streamed out of the water. With 5.1 million people watching, the only event with more popular live stream Twitter numbers was the Presidential Inauguration in January. According to the CFO in February, Twitter planned to continue to amp up their live streams in 2017 by double its current amount as well as expanding its coverage world-wide to sports and other lesser known events.
For a company that is desperately trying to prove to the world that it has a sustainable way to generate revenue, this all seems like a dream come true for Jack Dorsey. And then…the world got another valuable lesson that being the first mover could end up meaning nothing.
Last week, the NFL signed a new contract to live-stream Thursday Night Football and it wasn’t with Twitter. It was with Amazon and it was for $50 million and it is almost identical to the deal that Twitter signed last year.
Question: How can Twitter compete with a bid like that? Answer: They can’t.
The NFL, and others, are more likely to sign the most lucrative deal that will give them the most exposure and although Twitter’s live-streaming services were successful – they don’t give the NFL the kind of reach that it was hoping for. This fact is one of the reasons that Twitter is going to have a huge time keeping up with companies like Amazon and Facebook who are trying to get this type of content on their platforms. While neither of those two giants had a deal of the Twitter-NFL magnitude until recently, they’re going to completely dominate this market because they want to. The reach and wallet size of companies of this size are unmatchable for Twitter. Amazon plans to make their NFL Thursday Night games exclusive to Prime subscribers only and Facebook continues to grow at a rate that Twitter seemingly cannot keep up with.
For the longest time sports leagues, and other live events, had limited options on how they could go about selling their broadcasting rights. Traditional TV was the main option to make the most money and grow the popularity of the sport. NFL Thursday Night Football games are an extremely small sample size but is it possible that social media could disrupt sport viewing as we know it?
After the NFL deal with Amazon was announced, Fortune published an article “Tech Could Take Over All of the Sports You Watch.” That small sample size of TNF games? According to some, that’s exactly the point – it’s an experiment. The NFL and the sporting world along with tech companies, like Twitter and Amazon and Facebook, have all been investigating the possibility of technology platforms becoming the primary distributors for live content and broadcasting rights. The two things that tech companies have to do? Prove they have a strategy to maximize event revenue and maximize the reach of the content.
With the NFL traditional broadcasting rights expiring in 2023, technology companies can develop a long term strategy to disrupt one of the most lucrative industries in the television market. Are these tech giants willing and able to do this? Are traditional TV broadcast networks like NBC and CBS willing to evolve into digital spaces to potentially compete with Amazon and Facebook?
I have no clue but I know I’ll be watching more closely to see just how popular live-streamed sporting events start to become on social media.
(Side note: I just imagined not watching The Masters on CBS with Jim Nantz and a little part of me cried.)