Why There Won’t Be a Live-Streaming Sports Revolution Anytime Soon

The ability to live stream sports has been around for years. Today you can easily go to the website of a television network like ESPN or NBC, sign in with your cable subscription, and stream sports on your computer.[note]This is, of course, assuming the game isn’t blacklisted.[/note]

Last week’s Thursday Night Football game, however, was different. It was on Twitter—and you didn’t even need an account to watch. Using an over-the-top service such as Apple TV, Amazon Fire, or Xbox One, you could watch an NFL game on your TV, no cable required.

Earlier this year, Twitter paid a reported $10 million for the global rights to live stream 10 of the NFL’s Thursday Night Football games. Twitter also penned a live-streaming deal with the NBA in July that will have the social media platform broadcast exclusive original content created by the league. (Though that deal does not include games.) And a few months ago, Twitter live streamed Wimbledon, though that amounted to little more than a test run compared to the giant that is the NFL.

Clearly, the platform is trying to bring the appeal of live sports—one of TV’s few remaining advantages over digital video—online. But is Twitter’s latest effort the beginning of a new era for live sports, or much ado about nothing?

The live-streaming experiment

Mark Donnigan, the vice president of marketing at Beamr, a compression software for live streaming, believes the deals are more a temporary trend to win a smaller war for digital video, rather than a full-scale transition of live sports to social platforms.

“New media platforms are using these content deals as a way to create buzz or further establish their own video efforts,” Donnigan told me. “In that context, all of these deals are just one-offs.”

It’s not the first time a digital platform has licensed broadcasting rights to sporting events. Last year, Yahoo live streamed a Thursday Night Football game that was played in London, which turned out to be little more than a gimmick, and brought in extremely poor ratings relative to a typical NFL game. Twitter hasn’t fared much better: An average of only 243,000 people were watching the stream last week, compared to 15.4 million who watched the televised version on CBS and NFL Network.

Although Twitter may be live streaming some NFL games this year for free, “it’s not sustainable to have the NFL on Twitter,” Donnigan said. “If someone is a real football fan, it’s impossible to watch games on Twitter or Yahoo. If you’re a real fan, then you have to have a paid TV subscription.” If you’re a Jets fans, for example, and caught that game against the Bills on Twitter, you won’t catch another of their games this season on the free live stream.

Donnigan thinks traditional TV won’t lose its grip on live sports for a long time, despite the hype surrounding cord-cutting and moves made by platforms like Facebook and Twitter. “It all just comes down to dollars, cents, and lawyers,” he said.

Those who own the broadcasting rights (sports teams and the leagues) have longterm contracts—and relationships with networks—that have been in place for decades. Since the start of the 2014 NFL season, when the most recent deal was signed, regular season games have been broadcast on five networks: CBS, Fox, NBC, ESPN, and the NFL Network. The current contract lasts until 2022, and the networks will pay $39.6 billion for the broadcast rights over that period.

Sports programming in 2014–2015 generated $8.47 billion in sales for CBS, Fox, NBC, and ABC (ESPN), according to Kantar Media estimates. That’s 37 percent of the Big Four’s overall ad revenue for the period.

In other words, Twitter and other platforms vying for live sports content on their social platforms will have to cough up serious cash to compete with the established TV networks.

And that may be part of the plan for the NFL. In a recent Fast Company profile of the company’s live-streaming ambitions, John Ourand, a media reporter for Sports Business Journal, made the point that the league may be using Twitter as a way to create an even more competitive bidding war when the contracts are up. He said the NFL is “trying to give these digital companies a taste of the power of NFL programming. They’re hoping they’ll become addicted to it and come back.”

Overall, it did appear that people who used Twitter to stream the game came away with a positive experience. Social networks can offer some unique features to the viewing experience: People watching the game on Twitter were able to follow a live comments feed next to the video player.

An even more coherent experience between Twitter—where people often live tweet sporting events—and the games themselves could be an entertaining user experience that traditional TV would have a hard time matching.

Investing in technology

Even if TV networks should be safe in the short term, they aren’t complacent to let technology companies get the upper hand when it comes to live-streaming. The networks are already preparing for a time when more people watch sports through apps than a cable box.

An eMarketer report from late 2015 predicts that U.S. household subscribers to cable and satellite services will drop below 100 million by the end of 2016. There will be 5.5 million cord-cutters in 2016, increasing to a projected 8.4 million by 2019. That means traditional TV companies need to invest in live-streaming technology or risk falling behind.

Last month, Disney paid $1 billion for a 33 percent stake in Major League Baseball’s BAMTech streaming-media unit, and with it announced that ESPN is planning to launch a new subscription streaming service. (Disney owns both ESPN and ABC.) The direct-to-consumer service will feature content from both BAMTech and ESPN, and is set to launch by the end of 2016 with live regional, national, and international sporting events.

But subscribers will only get access to original programming for less popular sports like rugby, cricket, and tennis. Nothing that appears on the ESPN cable network will also be available to stream through the service.

The investment in BAMTech gives the company a foothold in live-streaming services and, critically, gives Disney the option to undercut cable providers by offering ESPN direct to consumers if the market shifts.

“Our primary priority as a company is to work on making sure that the (pay-TV) package is healthy because it creates value for our company,” Disney chairman and CEO Bog Iger told CNBC last month. “If the business model that is supporting these great media properties starts to fray in any significant way, we have the ability to pivot quickly and put out a direct-to-consumer product to potentially replace it or supplant it. … It’s our hope that doesn’t happen, but this certainly puts us in a great position should it happen.”

Will we soon be watching the Super Bowl on Twitter on Apple TV? Who knows? One thing we do know, however, is that the the giants of TV won’t take a knee so easily.