Last football season marked the first time the NFL sold the rights to stream an entire game for free over the top. The buyer was Yahoo (YHOO), the game was played in London, and the grand experiment generally went off without a hitch, though some debated the level of success in the aftermath of the stream. Yahoo, parent company of Yahoo Finance, said 15.2 million people tuned in to the stream at least once, and that an average 2.35 million people were watching at any moment.
Now the NFL has decided that one good turn deserves another, or many more: The league is selling streaming rights to its Thursday Night Football (TNF) games as an additional digital package, separate from the TV deals it announced in February. (On TV, CBS will show five of the TNF games, NBC will show five, and NFL Network will show eight.) The NFL has also said it will sell streaming rights to all three of next season's London games. That's 21 games total. It will likely sell the Thursday Night games as a separate package from the Sunday morning London games, but it could give them all to a single provider if the price is right.
The process has prompted a slew of reports about various companies showing interest, from more traditional cable giants like Verizon (VZ) to tech companies like Apple (AAPL), Google (GOOGL), and Amazon (AMZN). This month, Facebook (FB) reportedly jumped in as well. And this week, in an interview with Variety, VP of partnerships Dan Rose confirmed Facebook's interest.
Each of the interested parties brings a different audience to the table, and has a different reason why streaming NFL games would appeal to it. The question now becomes which one will cough up the most for the rights. All the NFL has said on the matter is this, in its announcement last month of the final Thursday Night Football deals: "The NFL is in active discussions with prospective digital partners for OTT [over-the-top] streaming rights to Thursday Night Football. A deal announcement is expected in the near future.”
Nothing is stopping the NFL from having multiple streaming partners, just as it has multiple cable partners. Sources tell Yahoo Finance that any number of combinations is possible: The league could divvy up the TNF games, selling some to one partner and some to another; it could sell all the TNF games to one company but divide up the London games; it could even add some of the rare Saturday games that happen late in the season. Sources also say there are companies in talks with the NFL that have not yet been named in the press—it's easy to imagine, say, ESPN being in the mix, or Twitter, which has implemented a rash of new features in the last year as Wall Street has pressured it to grow its user base. The league can end up with any mix it likes.
In other words, the NFL holds all the power in these negotiations. Live sports, especially NFL games, are for many people the last remaining good reason to pay for cable television. More than any other pro league, the NFL has held off on offering any real digital-only options for fans, thanks to the long-held relationships it has with broadcast partners. But it's finally showing signs of flexibility on the digital front. Offering up to 21 games over the top is a major step by the league, and streaming those games would be a major coup for any digital platform. It's why Yahoo reportedly spent somewhere between $17 million and $20 million for just one game. Critics said it overpaid, but the NFL could likely score nearly three times that amount for a package of the three London games. The NFL had no comment for this story; Yahoo Finance also reached out to all of the companies for comment.
Here's why paying up for the games makes sense for the interested players named so far.
It makes perfect sense for Facebook to jump into the NFL streaming race, based on its recent product launches. Just before the Super Bowl, Facebook launched Sports Stadium, a live sports chat feature that targets Twitter's territory and also indicates Facebook has an interest in being a sports hub. Facebook has shown its ambition, lately, in becoming more of a place for live content: It launched live video streaming, streamed a live show with LeBron James, and has announced its intention to pay celebrities for live streams. Showing NFL games would also presumably bring in new advertisers eager to reach the eyeballs of cord-cutters. Facebook has an advantage of being so big -- 1.5 billion people have Facebook and use it each month -- that it wouldn't be asking viewers to to go to a site they don't regularly use.
It's hard to argue that Yahoo's stream last season of a Jacksonville Jaguars-Buffalo Bills game from London wasn't a hit for the company. It brought the brand to the fore again as the first to stream a game for free. And while some criticized the web giant for setting the game to auto-play on its homepage, 15.2 million people is 15.2 million people, and in an interview with Fortune after the game, NFL executive Hans Schroeder said that "somebody had to watch for 3 seconds before it triggers and counted. So if people came on to the Yahoo homepage and were looking for a link or a news story, chances are they didn’t count." It makes sense that Yahoo would want to bid again to stream—it could take the lessons it learned the first time and fix any bugs—but the package may end up being too expensive for the company.
For the same reasons Yahoo would want the games, Google is an obvious possibility. The company launched its YouTube Red service last year, which charges a fee to access YouTube without ads. That might be the place for the NFL livestream should Google pursue the deal. As of last year, Google gets about 100 billion searches every month, so if it makes the livestream available through its home page on game days, it would benefit from a huge number of visitors who didn't come to the site for the game, but might stick around for it.
As the retailer has seen success with its Prime subscription service and its Original Series line, it's easy to picture CEO Jeff Bezos shelling out for NFL games and then offering them only to Prime users to goose subscriptions.
It already has the rights to NFL games on mobile—a Verizon customer can watch the local-market game on a Verizon phone for free (though that deal expires at the end of next season). So it makes sense that Verizon would consider shelling out extra to stream games on the Web and on connected devices, instead of just on cell phones. It would likely still limit the stream to Verizon subscribers. Like Amazon, it could tout the games as a selling point to get more cellular customers to switch over. And Verizon's acquisition of AOL is another domino that shows the company's interest in content investments.
CBS has the TV rights to five TNF games next season. This month, CEO Les Moonves said that CBS is in talks to stream those games on its All Access app. CBS already has the rights to stream its Sunday and Thursday games, but not on All Access -- only on the Internet. Last year, it exercised that right with seven games, offering them for free online. Even if CBS does get to stream its five TNF games on its All Access app, the NFL can still sell the right to stream those same games to a digital partner like Google or Facebook.
Initially, Apple was reportedly interested in the deal—NFL games could bring many more to its Apple TV service. But the latest reports suggest Apple is no longer interested. Still, never say never: Netflix, too, has long insisted that it doesn't plan to offer live content or sports, but as the market for this content heats up, there is no technology company that would definitively stay out of the fracas.
What's the timetable for a decision? The NFL had originally said it hoped to announce a streaming partner for Thursday Night Football the same day it announced the final cable deals, but in the end, it did not finalize a deal in time. The new date when the league is expected to announce which company won the streaming rights is March 20-22, during the NFL owner meetings in Florida.
UPDATE, Mar. 20: A source tells Yahoo Finance that Twitter is also involved in the discussions.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.