Verizon’s $2.25 billion NFL deal is a bet on advertising

Verizon re-upped its NFL deal on terms that many industry observers have claimed are better for the NFL than for Verizon. It has signed a five year pact with the football league this week for $2.25 billion – more than double what it paid for its existing contract.

The problem is that Verizon appears to be getting less bang for its buck this time around. Under the new deal, which comes into effect in January 2018, Verizon has lost its coveted exclusive mobile rights for select games. Instead, Verizon will be streaming Sunday, Monday and Thursday night games, along with jointly-produced original content, across its digital properties, including Yahoo and Yahoo Sports, Oath properties, and its mobile app Go90. And while those games will be available on mobile devices, none of the games will be exclusive to Verizon nor its wireless network. Instead, anyone will be able to stream them – though Verizon might offer the games data-free for its own wireless customers.

Verizon first secured exclusive mobile rights to Sunday Night Football games back in 2010. In the interim, the move has been considered a savvy media play for the wireless carrier, executed a few years before the mobile video surge we’re witnessing now.

But a lot has changed since 2012. As mobile video consumption has exploded, so too have smart TVs and live streaming – and perhaps more importantly, Verizon’s ambitions in digital advertising. Verizon acquired both Yahoo and AOL since 2012, two important Web players that have built up extensive digital advertising networks. Verizon claims its digital properties reach over 200 million monthly viewers, including the elusive Millennials. Verizon is now looking for ways to leverage those ad networks and audience reach along with its treasure-chest of data collected from its 140 million wireless subscribers.

The NFL, meanwhile, is suffering audience declines for the second season in a row. The league has been desperate to attract viewership from Millennials, who may be the first generation of viewers that seem uninterested in the sport since its inception.

And the NFL’s broadcast-centric licensing models haven’t aged well in a world of unprecedented consumer choice and audience fragmentation. In response, the NFL has begun “experimenting” with digital distribution and live streaming, and have awarded many of those experiments, such as Yahoo, Twitter, and Amazon, with high prices and non-exclusive rights. In other words, it’s unclear if Verizon even had a shot at extending its exclusive mobile streaming rights.

Instead, Verizon-owned Yahoo will stream the national games to potentially millions more viewers across carriers, all while raking in advertising revenue.
And with the new deal, Verizon has gained an important foot in the door of connected TV advertising, which is currently the fastest growing digital advertising sector – even if it is also the smallest. Under the deal, Verizon will be able to offer live streams of the national games across connected TVs via Yahoo and Yahoo Sports apps.