The NFL is using its digital deals as a draft combine for its next TV rights pact.
In 2022, the NFL’s legacy TV contracts with CBS, ESPN, Fox and NBC all are set to expire. That gives the league four years to decide whether to return with the same team of distributors or to scout out new prospects — including going entirely in-house.
And over the last 5 years, the NFL has hosted a lot of tryouts with technology companies. On the surface those deals can be considered money grabs. It got Yahoo, Twitter and Amazon to pay to stream games that the NFL is already being paid to air on TV. And it got Facebook, Snapchat and YouTube to pay it for highlight clips and original programs that could be watched elsewhere, including the NFL’s own properties.
But the NFL is grabbing more than money through these digital deals. It’s also picking up a better look at its future options, which it can convert into bargaining chips in those upcoming negotiations.
A simplistic view would have the NFL either renew its existing TV deals but for more money or replace one or more of the TV networks with a digital analog, such as by moving Monday Night Football’s TV broadcast from ESPN to the NFL Network and selling the digital stream to YouTube. Or the NFL could opt to puzzle together a new distribution model pieced together from its digital experiments
“You have to ask yourself “are television audiences declining?” Yes, they are declining. But you have to be sure that the massive televisions audiences are [accounted for] and you have to make sure [mobile providers] can protect that,” NFL’s president, digital media and NFL Network, Mary Ann Turcke told VideoInk.
When it comes to highlight reels and game recaps, the NFL has been pretty liberal. In the past it might have only been the TV networks with access to game clips, but over the past few years the league has sold the clips’ digital rights to Twitter and Facebook and YouTube and Snapchat, getting each different platform to pay for the same content.
“Everyone’s trying to get at the margins of sports through non-live programming,” said Jon Weinbach, Executive Producer and Executive Vice President at Mandalay Sports Media. “But no one is really spending much on that space,” which is why clips and shoulder series are a side hustle compared to the NFL’s obvious cash cow: game broadcasts.
To date the NFL has experimented with a few different ways of digitally distributing games. Verizon has made in-market mobile-only streams available to its wireless customers, and AT&T’s DirecTV bundles digital broadcasts of out-of-market games to paying subscribers. It’s also partnered with its live-rights holders on over-the-top streaming.
“[We’re] supporting our broadcast television partners who are also getting into the digital ecosystem with TV everywhere and authentication — that’s a really important part of the puzzle. Their goals are quite congruent with ours — more people watching football. It’s nice to support those partners, for sure, in their streaming efforts,” adds Turcke.
Still, Yahoo, Twitter and Amazon have each tried their hands at streaming regular-season games on desktop, mobile and over-the-top TV, while Facebook and YouTube have tried but failed to get in on the act. These digital distributors are seen as the usurpers to the TV networks. And, if the NFL opts to go over the top when its current deals expire, that decision will likely lead to a straight-up trade like waiving ESPN and signing Amazon.
But maybe equating a TV network with a digital platform isn’t the right model.
As much as a digital platform like YouTube can rival a TV network, it also resembles the TV service on which that network resides. That semblance has shown in some of the digital deals that the NFL has previously done. When Thursday Night Football games air on Amazon, the e-commerce giant isn’t responsible for putting together the broadcast; it is simply carrying CBS’s or NBC’s production for Prime Video subscribers, in the same way that Comcast or DirecTV do for their paid-TV services’ subscribers.
That parallel could open the NFL to upend its rights model entirely. Instead of pitting TV networks against digital platforms during the next round of renewals, the NFL could choose to split them into separate deals: production deals with the TV networks and distribution deals with the digital platforms.
Here’s a hypothetical for how this could play out. The NFL signs a deal with ESPN to continue producing Monday Night Football broadcasts. But instead of ESPN only airing the games on its own TV network and streaming services, ESPN also makes the rounds to various digital platforms to sell them on simulcasting the games. The NFL would still be involved in these secondary distribution deals, taking a slice in exchange for helping ESPN to grow the revenue pie. And the digital platforms would be able to sell some ads against the games, with a share of that revenue also going to the league and TV network.
This mixed model isn’t as tidy as the traditional archetype. The cross-platform distribution could lead to cannibalization in both viewership and ad sales. And TV providers could see this as undercutting and therefore look to cut ESPN’s carriage fees. And the digital platforms may buck at the notion of non-exclusivity, leading them to similarly shortchange the network and league.
Of course there is another alternative. The NFL could call an audible and call its own number.
Instead of pressuring the TV networks or digital platforms to pay up for the rights to its game broadcasts, the league could pick them up itself. Taking a page from the WWE’s playbook, the league could roll out its own OTT service. It already has some on-camera and behind-the-camera talent for its NFL Network; it could hire executives to produce every single game. Then it could have fans pay it directly to watch games, likely packaged into different tiers and potentially including some custom channels a la DirectTV’s Red Zone. “People are willing to watch live games on their computers and on their phones, but right now, the leagues are in a holding pattern because the legacy deals are locked in,” added Weinbach.
If NFL moves everything in-house, it would be quite a Hail Mary with even more potential pitfalls than the mixed production-distribution model. And while Hail Mary passes often lead to dropped balls, they also result in the most spectacular touchdowns.