The Big Game is now upon us, yet another, more gruesome gladiator battle is going on behind the scenes – the fight for the NFL’s broadcasting rights. 

The current rights agreements are set to expire in 2022, opening up the field to stand-off between traditional TV outlets and streaming service rivals. 

Sport is King

In the world of TV ratings, live sports are king. If that’s true, then the NFL is the emperor of all the land. Of the top 100 most-watched TV broadcasts of 2020, seventy-one of those broadcasts were single NFL events– in fact, the only TV events that could knock the NFL out of the top five were the presidential and vice-presidential debates. Of the top fifty most watched broadcasts, two thirds were NFL games, while only one scripted TV program even appeared on the top 50 list. 

What does that mean in viewers? The top ticket, Sunday afternoon football, averages close to 23 million viewers every Sunday – about the same number of people that watched the 2020 Academy Awards. NBC’s Sunday Night Football comes in a not too distant second, averaging 16.7 million viewers (and eclipsing any other show in primetime). 

In order to remain competitive against streaming services and VOD, traditional media needs to renew their NFL licensing agreement.  As Rich Greenfield, a media analyst at LightShed put it in a CBS article: “Live sports is the most important Jenga block holding up the entire legacy media ecosystem.”

Which means negotiations for the future broadcasting rights are likely to be quite tense – and lucrative.

The Bounty

Currently, the NFL makes just under $8 billion a year for the broadcast rights held by ESPN, Fox, CBS, NBC and DirecTV.  Yet the New York Post estimates the NFL’s payout for the next ten years of licensing to be around $100 billion.

While it’s obviously in their best interests to keep NFL broadcast rights, the financial side is a bit sketchy. An extra $2 billion a year might not be so difficult to swing for Comcast-backed NBC, but with dwindling numbers of pay-TV subscribers smaller channels like Fox might find it difficult to keep their stake. Compared to the 2019 season, ratings were actually down 7%, forcing networks to discount even pre-contracted advertising rates due to disappointing viewership. 

“TV networks are feeling the strains of disappointing NFL ratings, as they are forced to restructure deals with advertisers to make up for the smaller audience, ” the Wall Street Journal reported at the end of 2020.

It will be a difficult task for media companies to figure out how to afford the NFL’s higher price tag with shrinking ad rates as viewers move away from traditional pay-TV models, and may allow for streaming services to get a foot in the door. 

Streaming

Amazon has already been edging its way onto the field via digital-simulcast packages that allow them to stream games globally while they’re simultaneously broadcast on TV in the US. Amazon’s license to simulcast Thursday Night Football was renewed last April for three more seasons, at an increased rate from their previous $65 million annual fee. 

Then, last October, Amazon made streaming history by acquiring the rights to the NFL’s wildcard playoff game on January 10th. Amazon streamed globally, while in the US the game was aired on CBS and Nickelodeon (more on that to come.)

Grooming a new generation

One of the more obvious downsides of social media and smartphone prevalence is our ever-shortening attention spans. This change is even more prevalent in the younger generations, who’ve grown up with technology at their fingertips. It’s become a new challenge for media outlets to figure out how to get kids to stay interested during a three hour sports game, in the hopes of turning them into future fans. 

“Millennials don’t watch TV, they don’t have TVs or subscribe to cable. So we have to bring that audience in,” explained Robert Kraft, principal owner of the New England Patriots in an interview with The Street. 

Yet according to a McKinsey Report, “Overall reach for sports on TV hasn’t declined; ratings have dropped because fans are watching fewer and shorter sessions.”

Tech platforms are at an advantage over traditional media on this one. According to the same report, “millennial sports fans report using streaming websites and apps (for example, NBCSports.com, Twitter, and WatchESPN) almost twice as much as [the previous generation].” 

Tech platforms also have more options to enhance the viewing experience – by layering interactive media over the broadcast, focusing the action on a single star player, or even streaming in virtual reality

Yet as the recent Saints v. Bears game showed, traditional media isn’t out of the running by any means. 

The wildcard round playoff game, which was played on January 10th, was aired simultaneously on CBS and on its for-kids sister channel, Nickelodeon, in an attempt to convert kids into football fans. To keep the game interesting, special effects were added, from hamburger hats and googly-eyes on the players, to digital slime cannons to celebrate touchdowns.

The game was a success. According to the New York Times, it was also a move made to impress league execs ahead of the new contract negotiations. “Viewership for the N.F.L. would increase, along with the opportunity to capture a new generation of football fans.” A potential key move for the future of the sport – and those who broadcast it. 

While grooming new fans is a long-term move, it could give more traditional media outlets a leg up against streaming services in the short term. Especially now that sports gambling has finally hit the scene.

It's a Gamble

One of the biggest downfalls of streaming services is their instability in the face of numbers. While cable TV can handle any number of viewers that turn on their set, streaming platforms have a history of failing with too big an influx (remember the Disney + blackout?).

Latency, lag time and other short delays can be an issue with streaming, something the normal viewer could probably live with. Now that sports gambling is legal however, those few second delays can make a huge difference to the bottom line. 

Until streaming services have enough server power to eradicate the lag time, it’s unlikely that the NFL will be handing over exclusive broadcast rights. In fact, some analysts predict no change at all to the current licensing lineup.

Change is Yet to Come

Will there be big changes? Maybe not this time around. Sports Business Journal’s John Ourand thinks everything is going to stay just about the same.

“Everybody I’m talking to says … there aren’t really any big surprises. All the main players are going to stick around and keep what they have. The only new wrinkle is what happens with Thursday night. Fox doesn’t want it. NBC doesn’t want it. CBS doesn’t want it.”

So streaming may get a touchdown in after all. With Amazon already simulcasting Thursday Night football, it’s possible that Thursday nights might end up exclusively on the NFL Network and Amazon Prime. 

Yet when asked whether Ourand “would put money on CBS keeping the Sunday afternoon AFC package, Fox keeping the Sunday afternoon NFC package, NBC keeping the Sunday night package and ESPN keeping Monday Night Football.”

“Yeah, I would bet a lot of money on that,” said Ourand, “and I don’t bet.”