SBJ/Feb. 3-9, 2014/Media

Distributors concerned over NFL Now

The NFL’s high-profile move last week to create NFL Now, an over-the-top digital content network, is certain to anger the league’s existing broadcast and cable distribution partners.

Announced during last week’s run-up to Super Bowl XLVIII in New York, NFL Now will feature highlights, archival content, news, behind-the-scenes programming and other material, all delivered digitally to most streaming devices, mostly for free.

Roger Goodell announces the NFL Now network.
Photo by: AP IMAGES
League executives said they did not consult TV networks or cable operators while developing NFL Now.

Already, distributors privately have expressed concern over the product. They think over-the-top services such as NFL Now and the recently announced WWE Network, which don’t require a cable or satellite subscription to access, hold the potential to undermine the pay-TV business and mark the industry’s first step toward a la carte programming.

To that end, one distributor grumbled last week that just as soon as the NFL Network, in more than 70 million homes and one of the most expensive nationally distributed networks in the business, is approaching full distribution, the NFL is now creating this digital network and also seeking to take live Thursday night games off the linear channel.

NFL Now also represents a major source of free NFL content at a time when TV networks collectively pay more than $4 billion a year for league rights.

The NFL is not publicly concerned, in part because it has seen similar rancor over the creation of the NFL Network and NFL RedZone, only to see both grow into thriving businesses, at the same time as its network partners posted record ad revenue from higher game ratings. NFL Now will not contain any live games, and instead is designed to be a source for shorter-form content.

“This is not a substitute for NFL Network,” said Brian Rolapp, NFL Media chief operating officer. “This is entirely different. We measure our business very easily: Is consumption going up and is everyone’s pie growing? This is designed to be additive, and I believe it will be. I don’t know if [cable operators and broadcast networks] will hate it. But if they understand it, I don’t think they should hate it.”

Unlike most of the NFL’s other media extensions that are national and league-focused, NFL Now will carry a high degree of personalization based on individual users’ favorite teams. Because of that, individual team websites’ audience figures could very well take a hit in the short run. But league Commissioner Roger Goodell last week said teams are highly enthused by the arrival of the new venture and its long-term prospects.

“We believe it’s critical to innovate and provide fans new opportunities to engage with the NFL,” Goodell said.

While other media networks were essentially shut out of the formation of NFL Now, the league did engage several of its foremost corporate partners. Verizon and Microsoft are each launch partners and will aid in the deployment of the new network through smartphones, tablets and gaming consoles, and Verizon will also take on a presenting sponsorship. Gillette also has signed on as a launch partner.

Yahoo, meanwhile, will be a distribution partner of the new venture and will direct users to NFL Now from its own online and mobile properties, providing an immediate potential audience of more than 800 million people for the new network. For Yahoo, the inclusion of additional NFL content into its business represents another major sports boost following a recent deal with NBC Sports to collaborate during the Sochi Games. The NFL and Yahoo declined to specify the terms of their partnership for NFL Now, but each said the alliance will create revenue opportunities for both sides.

“We think this is a tremendous concept,” said Ken Fuchs, head of Yahoo Sports. “You take the idea here with NFL Now of high-quality video and extensive amounts of personalization, that fit right in with what we’re doing through Yahoo. The timing is perfect.”

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