The National Football League’s new television rights deals will put more games on streaming platforms, a development that could have impacts on advertising and affiliate revenue for its partners.
The biggest change in the new set of deals was Amazon getting exclusive national rights to the Thursday Night Football franchise.
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Analyst Peter Supino of Sanford C. Bernstein said that Amazon’s willingness to pay a reported $1 billion a year for NFL rights “is a historic step which should sack any remaining hopes that broadcasters would always be the best buyer of banner sports rights.”
Supino notes that having NFL games will also boost Amazon’s video advertising business.
Amazon has been steadily gaining yards versus Google and Facebook by offering product-search ads and was growing in in the connected-TV space with its IMDb TV streaming service.
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“Exclusive sports right now creates a compelling multi-pronged offer for advertisers,” Supino said.
Amazon could pick up between $200 million and $500 million in ad revenue from its NFL games.
Citing figures from Standard Media Index, Supino said Thursday Night Football 30-second spots sold last season for between $300,000 and $500,000. If Amazon sold between 40 and 50 spots per game, that would generate $200 million to $400 million.
Also including branded ads on the Amazon home page could bring revenue up to $500 million, Supino notes, and Amazon would also likely expect to see a rise in Amazon Prime membership, reduce churn and cross-sell services across its suite of ad products.
Kutgun Maral of RBC Capital Markets noted that by putting games on additional platforms, the NFL was embracing alternative broadcasts like ESPN’s Megacasts and the playoff game ViacomCBS put on Nickelodeon designed to appeal to younger viewers. That could increase viewer engagement, he said.
However the increase in streaming “will accelerate headwinds across pay TV subscriber trends, negotiating leverage with MVPDs and advertising trends,” Maral said.
Michael Nathanson of MoffettNathanson Research noted that while all of the broadcasters have expanded streaming rights, it looks like Comcast NBCUniversal and ViacomCBS are in the biggest rush to make games available on streaming outlets Peacock and Paramount Plus, respectively.
“The divergence of strategies will be interesting to see over the near-term when ViacomCBS and NBCU networks (and their non-owned and operated affiliates) come up for MVPD renewals. Why buy the cow when the milk is nearly free,” Nathanson said.
Nathanson said that other than the NFL, which saw huge gains in rights fees in signing new 11-year contracts, the biggest winner in the new deals might have been Disney.
“The company ended up improving its package with more games (that comes with significant incremental advertising revenue) as well as higher quality through its flex schedule optionality,” Nathanson said.
“We forecast ESPN to pay an average of $800 million more per year in return for the new rights to two Super Bowls, a new divisional playoff game, flex scheduling, exclusive ABC Monday Night Football and Saturday games for a total of 23 games (vs. 17 currently). This ended up $300 million more than we had expected but also includes the all-important ability to stream all games on ESPN Plus."
