The NFL’s selection of Twitter as the streaming video platform for its Thursday night football games gives the league access to younger audiences while providing a much-needed boost to the social media company that has fallen out of favor on Wall Street.
The deal announced Tuesday supplies Twitter the most highly desirable video content in the country; ratings for NFL games outdraw nearly all other TV programming in an increasingly crowded and fragmented marketplace.
In return, the league will get a platform that can deliver a global audience and the ability to connect with a generation of young viewers who are getting their TV entertainment from Internet-connected devices.
“Twitter offers up to the NFL worldwide digital distribution, tens of millions of millennials and social media buzz,” said TV sports consultant Lee Berke. “The NFL offers up a track record of driving the growth of every media technology over the past 50 years, from broadcast TV to satellite to broadband.”
Terms of the deal were not disclosed, but people familiar with the discussions said the rights fee is around $10 million for the 2016 season. That’s small change compared with the billions paid each year by the NFL’s TV partners and less than the $20 million that Yahoo paid for the exclusive rights to stream a single game last season.
The NFL described the deal as “exclusive,” but that applies to Twitter being the only free online video streaming platform for 10 Thursday night games. CBS and NBC have the broadcast rights to the package — each paying $225 million for five telecasts — which can be streamed by the cable companies that carry them. NFL Network carries the games on cable as well, while Verizon will continue to offer streamed games to its mobile customers.
The NFL likes Twitter — which bid less than Verizon or Amazon on the package — because it will give its content easily accessible exposure to cord cutters or “cord nevers” who are not currently using video subscriptions to get television. Twitter has been an audience driver for big TV events. Fans sampling a game online may move to a bigger screen if a particularly exciting contest pulls them in.
Twitter’s worldwide reach also fits into the NFL’s long-range goal to expand internationally. About 80% of Twitter users are outside the U.S.
If the NFL is a streaming hit on Twitter, it will demonstrate the value of the games on a digital platform and probably encourage more aggressive bids for future rights packages.
Twitter and the NFL have been business partners for several years, with the league bringing highlight videos and advertisers to the service. But securing the rights to stream entire games is a significant victory for Twitter that could help reshape the battered perception of the company among the investment community.
Flat-lining user growth, widespread executive turnover and an unclear product strategy have concerned analysts and investors, contributing to a 70% decline in Twitter’s share price over the last year. Chief Executive Jack Dorsey’s return to the company last fall has sparked some optimism, and that solidified with Tuesday’s announcement.
“This says more about Twitter than the NFL,” said Scott Kessler, an analyst at S&P Capital IQ. “It says, notwithstanding the decline of the stock price and the negative swirl around the company, the reality is Twitter remains a big, global platform for real-time broadcasts and communication. As much as people criticize it, its leadership and its direction, a considerable amount of important things are going on and being communicated on Twitter.”
Analysts who follow Twitter said it’s difficult to estimate how many users and advertisers will flock to the service because of the NFL games. The company touted that the games would be available to its 320 million monthly users as well as non-users via mobile apps, computers, Internet-connected televisions and streaming media devices.
Twitter will stream the national TV commercials that air on the televised Thursday broadcasts and have about 15 spots to sell on its own.
But even if Twitter doesn’t directly make money off the deal, the promotional value is worth the small expense of $10 million for a company with about $3.5 billion in cash and equivalents, said Brian Wieser, an analyst at Pivotal Research.
“It’s a marketing activity more than anything,” Wieser said. “It reinforces their position as the fourth most important player in digital advertising,” after Google, Facebook and Verizon/AOL.
Wieser added that the new NFL agreement could help Twitter’s Periscope, an app for recording, sharing and viewing live video, attract new users. Though revenue prospects for Periscope are far from certain, analysts view it as an exciting technology frontier and the NFL has agreed to run pre-game coverage on the app.