Twitter Wins NFL Deal; Facebook Still Has the Edge
Congratulations are in order for Twitter (NYSE:TWTR). The company recently announced it had won the digital rights to National Football League games, paying what Bloomberg reports as a “bargain price.” In the article, “a person familiar with the deal” disclosed the deal is for 10 Thursday night games for $10 million, putting the per game cost at $1 million.
The win was a coup for Twitter. Needless to say, the struggling social-media site was not considered a favorite to win these rights… or even a strong competitor. Technology website Re/code earlier reported a short list of interested competitors uncovered by industry insiders and Twitter was not among those mentioned. In a clear departure from Roger Goodell’s monetization-driven reign, the NFL confirmed it did not take the highest bidder on the table. It should be noted Twitter chief financial officer, Anthony Noto, held the same position for the NFL under Goodell before leaving in 2010, perhaps putting the company at an advantage in the bidding process from a partnership standpoint.
While it’s unclear who the highest bidder was, it’s possible Facebook (NASDAQ:FB) was the unlucky suitor. Re/code’s report considered Facebook among the list of potential rights suitors. Also, Facebook’s vice president of partnerships, Dan Rose, admitted the company was bidding for the rights in an interview with Variety. Don’t worry about Facebook, the company is continuing to build its live-streaming services.
Facebook is continuing to grow live content. Will Twitter lose out?
According to another article from Re/code, Facebook CEO Mark Zuckerberg is “obsessed” with live-streaming and plans to make it a top priority. That obsession is starting to pay dividends. On the fourth-quarter earnings call, Zuckerberg noted 100 million hours of video were being watched daily. Facebook’s big plan to grow that figure? Making live videos front and center on its mobile app, replacing the Messenger icon with a new Live icon.
Facebook’s move could be to the detriment of Twitter. The company has struggled in the wake of its IPO as slowing monthly active user, or MAU, growth has weighed on returns. The NFL deal was seen as a way to reinvigorate MAU growth, but Facebook is apparently looking to more forcefully compete against Twitter’s live-video streaming Periscope. As of now, it’s unclear how Twitter plans to live-stream NFL games, but Periscope is currently the most-capable outlet for uploading live-streaming content on Twitter’s service.
Last year, Twitter purchased Periscope for an estimated $55 million, while the NFL deal is purportedly $10 million this year and will most likely increase yearly. In the end, a one-year NFL rights deal may increase MAUs in the short run, but Periscope was designed to be a long-term driver of MAU growth and engagement. Facebook benefits from its built-in MAU base of 1.6 billion users while Twitter only has 305 million non-SMS MAUs. Facebook’s sheer size should allow it to grow live-streaming hours more effectively than 10 NFL games will for Twitter.
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Jamal Carnette has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.