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MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year

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Tech

Twitter and the NFL: Smart Growth Strategy or Hail Mary Pass?

By
Mathew Ingram
Mathew Ingram
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By
Mathew Ingram
Mathew Ingram
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April 5, 2016, 1:19 PM ET
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Speculation has been swirling for months about who would win the bid for digital streaming rights to NFL’s Thursday night football lineup. Would it be Amazon? Yahoo? Facebook? But it was none of those—instead, Twitter announced on Tuesday that it will stream the NFL’s Thursday games during the 2016 season.

This news was received on Twitter (TWTR) with a combination of bewilderment and excitement, depending on where you looked. Some sports fans clearly relish the idea of being able to combine a love of football with live Twitter conversation—something that the service does well around major sporting events.

There’s no question that sports is a big driver of engagement, which is something Twitter badly needs. But not everyone was ecstatic at the idea of an entire football game being streamed through the service. It’s not clear how exactly this will work either. Will it be just through Periscope, the platform’s streaming video service? Or will there be clips and GIFs distributed through Twitter’s Moments curation feature? Or all of the above?

https://twitter.com/tristanwalker/status/717356718771085312

In addition to the games themselves, the deal also includes pre-game broadcasts from players and teams on Twitter’s Periscope streaming service, and additional behind-the-scenes material, according to a news release.

Sports fans and Twitter may go together, but it’s still a bit of a stretch to see how a service that is fundamentally designed to distribute short bursts of content works with a three-hour program like a football game. Many users are accustomed to Twitter being the second screen for a sporting event, not the primary screen.

From the NFL’s perspective, it’s probably better to have all of that official content on Twitter instead of the millions of GIFs and clips that show up on the platform without the league’s consent. The NFL is likely also hoping to appeal to new fans who spend most of their time online instead of watching on cable TV.

https://twitter.com/WhatTheBit/status/717330330949038080

For its part, Twitter’s desire to do an NFL deal was driven by two major strategic factors: One, it needs to boost its user base and its engagement levels, and sports drives a huge amount of interest (it’s also popular with advertisers). “This should be favorable for Twitter in terms of creating a product that will encourage people to show up and use it,” Pivotal Research analyst Brian Wieser told Bloomberg.

Number two, Facebook (FB) and Snapchat are currently lapping the field when it comes to streaming video. Both of them are racking up more than 8 billion video views a day, according to recent estimates. If it is to have any hope of playing in the same league, Twitter needs to up its game substantially, and the NFL helps it do that.

Watch: This is how many documents are in the Panama Papers leak

Facebook CEO Mark Zuckerberg has said that video is his service’s future, and is reportedly obsessed with Facebook Live, which recently opened up to all users. This is a massive shot across the bow for Twitter, since CEO Jack Dorsey has said that the future of the company is about live events and news. “Watching a live event unfold is the fastest way to understand the power of Twitter,” he said on the company’s recent earnings call.

What’s interesting about Twitter’s interest in the NFL rights is that Facebook recently removed itself from the bidding because it wasn’t happy with the NFL’s traditional advertising model, according to a Bloomberg report. The social network prefers its videos and streaming events to be advertising free, apparently.

https://twitter.com/jkozuch/status/717341113074466816

It’s unclear how much Twitter paid for the NFL deal. Re/code says it was $10 million, less than other bidders such as Amazon offered. If true, that’s a good sign for Twitter because it means the NFL wants to be there. And it gives Twitter a chance to promote its 800 million or so “logged out” users, since the NFL streams will be available to anyone regardless of whether they sign in.

The rights are also not exclusive, which makes them cheaper—CBS and NBC also have the right to stream those games online, which they paid $450 million for. In effect, Twitter bought the right to re-broadcast the games CBS and NBC are already carrying.

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What seems obvious is that the NFL deal is just the first step in bringing live events of all kinds to Twitter. Chief financial officer Anthony Noto said as much to CNN, saying the NFL arrangement was “one element of a much larger strategy,” and that the company is exploring similar opportunities with a variety of partners to bring “the best elements of live sports, live news and politics, and live entertainment” to the service.

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