A game between two low-rate NFL teams was played last Sunday in London. As Jarryd Hayne wasn’t involved it didn’t get much coverage in Australia. But I bet the bigwigs at the Aussie TV networks were paying attention.
The game - won by the Jacksonville Jaguars over the Buffalo Bills 34-31 if you really want to know - was the first ever NFL game to be live-streamed for free on the internet. Yahoo! Inc. (NASDAQ:YHOO) reportedly paid $20 million for the rights.
NFL sources have said it resulted in 33.6 million streams and an average stream per minute of 2.36 million viewers. An average NFL game on American TV typically has more than 10 million viewers per minute.
Rumours have it that Yahoo had to cut 30-second advertising rates from as much as $200,000 per spot to as little as $50,000. It secured about 30 advertisers for the live stream and promised over 3 million views in America. If the 2.36 million is a good guide then they might have fallen short of this mark. Nothing to see hear then for the CEOs of Seven, Nine and Ten?
Not quite. There’s an inevitability about live-streaming that early experiments like this understate. People are changing decades old habits, moving away from TV to something more flexible and accessible. It has been alleged that Google/Alphabet (NASDAQ:GOOGL) and Netflix (NASDAQ:NFLX) were allegedly sniffing around the latest negotiations for NRL and AFL sporting rights. No doubt this transition was at the front of their minds.
Exclusive sporting content is a breadwinner for TV networks because it has a grip on the broadcast rights. For fans that want to watch a game there are few other options. ESPN, the most lucrative asset housed in the giant Disney (NYSE:DIS) umbrella, is a good example.
Whether Yahoo considers the experiment a success or not, we can be sure future live streams will be at the expense of traditional broadcasters like Nine Entertainment (ASX:NEC) and News Corp (ASX:NWS) owned Foxtel.
As for sports administrators, they’d love to get names like Google into the bidding fray. With a vast cash balance of more than $60 billion, why not take a few games away from the traditional networks at the right price? They may even find that a model like America’s Major League Baseball (MLB) would make sense, where the NRL or AFL retain the rights to some games and stream them over their own subscription service.
Whatever happens, the result is less exclusive sports content to attract advertisers’ dollars for the broadcasters. Either that or paying far more to keep the content they are used to.
Like vinyl records, cassettes and CDs – remember them? - the television broadcasters are fighting a losing battle. Before long they may not have much left than news and current affair shows talking about dodgy builders and more reality TV. For investors and viewers alike, it’s not a pretty picture.