Borrowing a trick from old media companies, Twitter is splurging for the rights to show NFL games to an audience of millions. To make its bet pay off, the company must use its time in the NFL's spotlight to lure more newcomers to Twitter.
In the NFL's infinite quest to squeeze as much money as possible from large men in tight pants , it has been auctioning off the rights to show football games on TV and -- in a still novel development for pro football -- on the Web.
As my Bloomberg News colleagues were first to report on Tuesday, Twitter emerged as the NFL's chosen spot for live Web streaming of 10 Thursday night games starting this fall after other interested companies like Facebook, Amazon and Verizon fell away. This means perhaps a couple million people will surge to Twitter each week to catch their favorite teams or to see Eli Manning's sad face for three hours.
Twitter is making a relatively small bet in the neighborhood of $10 million -- or something like 3 percent of its operating cash flow for last year -- for the NFL streaming rights. But for the investment to pay off, Twitter has to be focused on using the Klieg lights of NFL games to sell more people on why they should use and love Twitter.
Twitter executive Adam Bain tweeted Tuesday that his company will be able to sell some of the advertising spots on the NFL Webcasts. That will be great for Twitter to increase its revenue and to cement the company's relationship with high-value marketing clients. But Twitter's problem has never been in the ad sales department, where the company is doing just peachy. Twitter's problem is not enough fresh faces are signing up and sticking with Twitter regularly, and it's not clear how the new NFL deal helps it there.
Having a captive audience for three hours each Thursday is an alluring opportunity to turn many of those NFL viewers into loyal Twitter users. But Twitter must find smart ways in that weekly surge to hook people on its service. Otherwise that audience jolt won't do the company any long-term good. Building a bigger audience is CEO Jack Dorsey's top priority, and everything Twitter does must further that goal.
The trouble is Twitter has a spotty track record of using sports to lure new users, even while Twitter remains a great place for sports fans to trash talk one another and catch highlights from games. Remember Twitter's effort to make itself a hub for water cooler conversation around the Olympics? No? Exactly. It flopped.
The NFL and Twitter dropped a couple hints about how Twitter plans to stress its benefits to a new crop of NFL fans. In the news release about the Thursday night Webcasts, the NFL said there would be game highlights and "pre-game Periscope broadcasts from players and teams, giving fans an immersive experience."
It's not entirely clear how that would be much different from an existing collaboration between Twitter and the NFL that already results in tweets, photos and Web video from locker rooms and the field turning up on Twitter. All that NFL related content on Twitter hasn't been enough to lift Twitter's user numbers.
Fortunately for Twitter, the cost of its NFL bet is a drop in the bucket compared with what the TV poobahs are paying. CBS and NBC each agreed to pay about $225 million a year for the TV rights to Thursday NFL games over the next two football seasons, or about $45 million a pop for five games. Yahoo paid about $17 million to show a rather dull October match-up between the Bills and the Jaguars that started at breakfast time on Sunday for people on the East Coast. Re/code reported Twitter will pay less than $10 million in total to the NFL for the Web streaming rights.
That's not exactly chump change for a company whose cash from operations was $383 million last year, but it's a relatively cheap ticket for a chance to sit in the NFL owners' skybox. Now Twitter better make sure to take advantage of its time in the cushy seats.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
(Adds footnote in penultimate paragraph with details about Twitter's deal.)
I love football. As a Cincinnati Bengals fan, every season ends in heartbreak.
Or maybe fewer. The NFL has said Thursday night football games on CBS and the NFL Network cable channel averaged 13 million viewers last year. No doubt a fraction of that audience will opt to watch the games on the Web as opposed to TV.
Slate's Will Oremus said Twitter offered less money than other bidders for the NFL streaming rights, but Twitter was more willing to agree to the NFL's terms, including allowing the TV partners to control the majority of the ad spots online.
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