Last week’s Super Bowl was a huge ratings success: just over 102 million viewers watched the Chiefs beat the 49ers. That made it the 10th most-watched Super Bowl of all time, and the 11th most-watched TV show ever.
But if you think this signals that broadcast TV is doing fine, you’re wrong. Now, most of us realize that fewer and fewer people are watching broadcast television, and the stats show it. In 2013 there were over a hundred million households with a traditional cable or satellite TV subscription. Today it’s around 85 million, and sinking fast. ESPN, according to Rich Greenfield, is losing its subscribers at the fastest pace in history, accelerating from 1% to 4.5% in the past year alone.
Those are bad stats, for sure, but it’s much worse than you think. In fact, 2022 may be the year that broadcast TV as we know it dies.
Why? Well, simply put, the NFL is one of the only bright spots keeping it alive. Out of the top 50 telecasts on broadcast television this year, 47 were NFL games!
And in 2022, all that comes to an end, because that’s the year most of the NFL’s current media deals are set to expire.
Today ESPN, Fox, NBC, CBS and AT&T pay the NFL a collective $5 billion per year for broadcast rights. These contracts tend to be renegotiated roughly every seven years, and their rates tend to almost double every time.
But wait, you say. Sure, the fees may be exorbitant, but if they are so important, won’t the networks just pay up?
The thing is, the networks now have competitors. Traditional TV is losing viewers to streaming media services. And by 2022, there will be all sorts of big digital media companies interested in showing NFL games: Apple, Google, Hulu, Facebook, Disney, DAZN. Disney+, for example, already has 29 million subscribers. These new companies are flush with cash, and their money is just as good as the network money!
While the NFL already has done some limited deals with Facebook, Twitter, Yahoo, Amazon, Snapchat and Twitch, in 2022, there is a good chance the NFL could sign a significant and exclusive deal with a streaming media service. These sorts of deals are already happening with other sports around the world.
Broadcast television’s biggest argument against the streaming services is that it’s the only place to go for “live content” like sports and breaking news events. That argument is starting to fall apart. All the major news networks are developing streaming platforms, and thanks to the success of companies like DAZN (a Zuora customer) hundreds of millions of people are turning to streaming services for live sports.
But I think there is another not-so-crazy idea: in 2022, the NFL could launch their own streaming service.
Whoa, you might ask, why would they want to do that?! After all, today the NFL makes $5 billion dollars a year by letting other companies handle the distribution. That’s a pretty sweet deal.
But here’s the thing: right now the NFL makes a ton of money, but doesn’t know anything about its fans. Why is that important? Here’s what Disney CEO Bob Iger said a few years ago, before the launch of Disney+:
“It’s one thing to be as fortunate as we are to have Disney, ABC, ESPN, Pixar, Marvel, ‘Star Wars’, and Lucasfilm. But in today’s world, it’s almost not enough to have all that stuff unless you have access to your consumer who, because of technology, is providing you with incredible data to provide the consumer with a more customized and personalized experience that can be monetized better.”
It’s crazy — the NFL has a rabid fanbase that in many ways they are totally neglecting. Does the NFL know if you like to watch games at stadiums, or bars, or at home? Does it know if you like to play fantasy football? Does it know which team you support? Does it even know who you are?
The future won’t be about monetizing live content, it will be about monetizing fan relationships. Today, you have an Amazon ID. You have a Google ID. If you are one of those 29 million people, for the first time ever, you now have a Disney ID. That’s how you interact with those brands.
What could your NFL ID look like? I predict that in 2022, NFL fans will know. And when that happens, the top 50 shows propping up broadcast TV are going to disappear. The NFL won’t be there in full force to single-handedly prop up a legacy ad-based business model anymore. In 2022, it all collapses.
For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.
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