Diversification is key to a successful strategic investment plan. Companies can’t have too many eggs in one basket because if they only invest in one place and it fails, that only leads to further issues. The NFL has spread out its TV rights deal — mostly because one network wouldn’t dare pay the total TV rights amount — and is now spreading out its digital investment. The NFL announced a multi-year renewal with YouTube yesterday for full historic games and highlights.
This means that the NFL is selling what is essentially old content to YouTube and its parent company Google. There still won’t be any live streaming of games because those rights belong to Twitter, but increasing content on YouTube will be a good test run.
As the NFL and other sports expand their digital footprint, it is always a good idea to have a test run. This way the NFL knows the partner has the capability to execute on whatever inventory it gives to the partner and the partner can get an idea of what type of viewership numbers it can receive. If the NFL can show Google and YouTube that even old games and highlights produce a high numbers of hits and views, then it gets Google and YouTube more excited for NFL content. This could lead to a bidding war between companies, driving up the price of digital and streaming content.
Diversification of partners helps the NFL in a other ways. There’s the idea market knowledge and chance at bringing it higher bidders, but it also lets the NFL exactly what companies it wants to deal with in the future. Protecting the shield is important and a inferior digital partner is not an option.
The NFL is trying to stretch as much revenue as possible out of its content. Just like they diversified their TV rights to be able to partner with almost every major TV network, they are casting a wider net in digital as well. In the coming years, companies such as Amazon, Google, Facebook, Apple and Twitter will all be vying for digital rights, and the NFL can spread out their content to their strategic end.
Michael Colangelo is Managing Editor of The Fields of Green and Assistant Director at the USC Sports Business Institute.