Last week, National Football League fans heard their wind chimes flutter in a brief gust of wind. Entertainment lovers thought they felt a couple drops of rain. Tech-sector observers saw the barometer fall.
And that was it.
When the NFL announced that Yahoo had acquired global streaming rights to a single regular-season game, millions of people who love football, watch television and use the Internet didn't even notice. Many of those who did notice didn't care. And perhaps they were right to put it out of mind--maybe that's the last we hear of the NFL partnering with tech companies for years to come.
Or maybe, just maybe, the deal foreshadows a coming media storm that could radically alter sports, TV and technology forever.
The game itself couldn't be less significant, or more perfect: A mid-season snoozer between the Buffalo Bills and Jacksonville Jaguars, kicking off at 9:30 ET on a Sunday morning. The two home TV markets (second- and third-smallest in the NFL, per StationIndex.com) will still get the game over the air—so only NFL diehards will be waking up early and directing their phones, tablets and computers to Yahoo.
Internationally, those who don't or can't pay for the NFL's GamePass international streaming service will finally be able to tune in to a live match at a reasonable hour. As part of the NFL's International Series, this game holds particular interest for those audiences. It should be a great test of global demand, not to mention Yahoo's ability to deliver.
Unlike the game, however, the deal itself is fraught with long-term significance, raising a number of serious questions: Why hold this game back from traditional broadcast partners to stream it "over the top," in industry parlance? Why choose Yahoo as a partner?
More importantly, what does this potentially mean for the future of NFL viewing, subscription TV, and the tech sector?
"Huge changes are coming to this market," Dave Warner, proprietor of WhatYouPayForSports.com told VICE Sports, "and streaming will grow as a result."
For decades, the NFL and its network partners have enjoyed a lucrative, symbiotic relationship, the same relationship driving economic growth across all sports. The league sells games to the networks. The networks use those games to sell advertising, and also to charge cable and satellite providers more money to carry their programming. That money funnels back into the next round of NFL broadcast rights negotiations, and the overall pie keeps getting bigger.
Everyone wins—except for pay TV subscribers whose monthly bills continue to rise and rise, even if they never watch NFL games in the first place.
On-demand and live-streaming TV options threaten this business model by allowing viewers to cut their cable and satellite subscriptions, abandon bundled network programming and instead pay just for the shows they want to watch. And this isn't just theoretical. Over the last half decade, members of the 18-to-34 demographic coveted by advertisers have forsaken pay TV at astonishing, accelerating rates.
Per the New York Post's Claire Atkinson, the number of young adults watching traditional prime-time TV has fallen by nearly 20 percent over the last four years. Meanwhile, the subscription-streaming market grew by 22 percent in 2014 alone. A generation of viewers is moving to streaming, the same way a generation of listeners abandoned albums and CDs for individual song downloads. Advertising dollars are sure to follow. If the NFL wants to keep growing its revenue base, it has to make its product available to those cord-cutters and cable-nevers, too—and that means cutting streaming deals like the one with Yahoo.
In the near-term, however, the league already sold most of its inventory to its traditional partners—and at very handsome rates.
"The NFL can't unbundle if the networks won't do it with them," Janko Roettgers told VICE Sports. Roettgers, Senior Silicon Valley correspondent for Variety, sees very little opportunity for the NFL to grow into the streaming space, at least in the short run. "The current network partnerships have been very lucrative for the NFL, so they won't give up on them that easily—and they also can't, given that most rights are locked up for at least another five years. The only immediate hope for the NFL to reach these new viewers are new TV services that offer skinnier or more flexible bundles."
Some of these services, like SlingTV, have already tried serving up major sports in the U.S. Sling attempted to simulcast 2015's Final Four semifinals, only to get swamped by demand. Similar troubles befell ESPN's WatchESPN service during the 2014 FIFA World Cup. According to Warner, the stakes in this deal are much higher for Yahoo than the NFL. If the viewing experience is poor, Yahoo will be widely criticized, and the traditional NFL audience will barely notice.
On the other hand, the possible upside for both entities is huge.
"If that platform can handle the stress," Warner said, "Yahoo comes out smelling like a rose." Per Re/Code's Peter Kafka, Yahoo paid at least $20 million for the rights to stream just this one insignificant game—a "drop in the bucket," Warner said, compared to the NFL's billions. Yahoo will then stream it globally for free, earning back only ad revenue off the CBS-produced feed. It's this commitment to free streaming, The Wall Street Journal's Yoree Koh reported, that sealed Yahoo's win over Twitter and others. For a company struggling to find its post-search-engine future, live NFL football is a glorious get.
"In the end," Roettgers said, "Yahoo's NFL deal may be more symbolic: The company is trying to prove it can play with the big guys in the video space, which may help it to get some ad dollars for even some of its lesser-known projects. It's a good marketing investment." The deal could also lend credibility and traffic to Yahoo's in-house NFL editorial.
Depending on how well Yahoo's feed is received, and how big the audience is, Roettgers' "big guys" could open their massive vaults. The NFL engaged Google, Apple and Amazon in the bidding for the Yahoo game, per Variety's Todd Spangler, and Roettgers sees the 2016 renewal of CBS's Thursday Night Football slate as the first real opportunity for the tech giants to usurp the NFL's current partners.
Ultimately, that could be game-changing.
According to The Wall Street Journal's Joe Flint, CBS upped its $275 million bid for 2014's Thursday Night Football slate to $300 million in 2015. If Apple decides its needs exclusive NFL football as the centerpiece for their long-rumored TV service, the world's most successful teach company has nearly $200 billion in cash on hand, plenty to trump CBS. In fact, Apple could buy and sell CBS many times over—an idea that CBS head Les Moonves has already expressed excitement about.
The best-case scenario for the NFL? Apple blows out the price curve for league content in 2016, leading to eye-popping Silicon Valley deals at the end of the decade, just as a shift to streaming hits a critical mass and the NFL's current deals with CBS, FOX, ESPN and DirecTV all expire.
Warner isn't sure that will happen. At least not quickly.
"I suspect this [Yahoo-style streaming deal with a tech company] is once-a-year thing at best," he said. "For other games in their regular time slots, the NFL will probably just stick with existing partners that already do streaming, like ESPN and NBC. WatchESPN is still tied to cable right now, but if Sling TV and Apple's TV service move enough people off cable, we might see that change in the far future."
"I don't think much if anything will change for the next five years," Roettgers said. "After that, all bets are off. But five years is like five decades for internet TV, so ask me again in 2019."
As time and technology march forward, it's hard to imagine that the NFL's massive rights deals with old-school broadcast conglomerates—the envy of every other American sports league—will continue into perpetuity. Already, the NFL's competitors are moving quickly to establish their own streaming services. The NBA just announced single-game and single-team streaming packages for next year, according to Ira Boudway of Bloomberg Business, unbundling its NBA League Pass product and putting pay-TV carriers on the defensive. Major League Baseball led the way with MLB.tv for out-of-market viewers, and according to John Ourand and Eric Fisher of SportsBusiness Journal they're working hard to expand it into local markets where regional broadcasters hold TV rights. An NBA-like unbundling could end-around these providers entirely.
As for the NFL? "DirecTV already offers NFL Sunday Ticket as a streaming service," Warner said, "but only to apartment-dwellers whose lease prevents them from having satellite TV." The league also offers the GamePass streaming product to fans outside the U.S. Technically, everything already is in place for the NFL to go over-the-top, either directly or with a partner. One its traditional current deals expire, widespread streaming and on-demand games could become a reality—or not, depending on the media market, currently in so much flux it's impossible to tell who, exactly, will be bidding for football in the 2020s. Will Google, Apple and Amazon really jump in? Will independent TV networks and satellite providers like CBS and DirecTV still be competitive—or will they be snatched up beforehand by tech giants, as NBC was by Comcast?
With live sports as the biggest driver of appointment eyeballs, and the NFL's position as the king of American sports, Silicon Valley bidding wars for global live streaming rights could dwarf previous auctions. On the other hand, sports fans getting used to watching basketball, baseball, hockey and soccer wherever and whenever they want could quit waiting all week for Sunday rights—leaving the NFL's pull on those coveted young viewers greatly weakened.
Many football fans didn't even notice the Yahoo deal happened at all, and few will fret about this unenticing game disappearing from the Sunday slate. Yet its ripple effects could eventually change how we watch football forever—and in turn, the NFL itself. Sometimes a breeze is just a breeze. Sometimes, it's the start of a storm.