We’ve said it here a lot that cord cutting is a problem. It’s problem for networks and leagues because it cuts down on their ad revenue. It’s a problem for advertisers as they struggle to reach a new generation of consumers. Cord cutting is supposed to be the catalyst that breaks up cable bundles. We stick by those statements. But there is a caveat now, because cord cutting does not seem to be an issue for the NFL, as advertisers have already bought up $2.5 billion in inventory and don’t seem to mind 7-9 percent price increases.
Let’s try and figure out what makes the NFL Teflon to cord cutting — other than the obvious that it’s the biggest sport in the United States. There are actually a few reasons why CBS, NBC, FOX and ESPN aren’t seeing an advertising or ratings drop like what plagued NBC with the Olympics.
First and foremost, most of those channels are broadcast — with the exception of ESPN which is a cable channel — so cord cutters get those channels for free with a basic digital antenna. It isn’t as if cord cutters have limited access to games, so the market is there. Cord cutters who only have Netflix, Hulu, Amazon Prime etc. can still watch the NFL on CBS, NBC and FOX — unlike MLB, NHL and NBA that have games on Turner, FS1, NBC Sports and ESPN. With the digital antenna the NFL remains DVR proof and has no limitations on who can see its games.
Access to NFL Sunday Ticket — its version of league pass — is also extremely limited compared to the other big-four leagues. For the MLB, NHL and NBA, their league pass blacks out local games and nationally televised matchups — the NFL has the same rules — but if folks just want to watch any basketball, baseball or hockey game, they have the ability to purchase the streaming package anywhere. Fans aren’t forced into a specific game. This doesn’t even have to take into account tape delays or streaming apps for events like the Olympics, which are free.
That is not the case for the NFL. DirecTV expanded access to Sunday Ticket this year, but it’s still limited. That means cord cutters are stuck with whatever game is televised on their digital antenna — read: the NFL has a captive audience. It’s also important to note these streaming packages — all of them — don’t have advertisements. Why they don’t is a mystery; I guess the leagues don’t like ancillary revenue.
Finally, the NFL’s engagement and demographics are more attractive than any other sport right now. Everyone plays fantasy football. Everyone talks about the game on Sunday and thinks they are an expert on what the players and coaches did right or wrong. The demo isn’t aging, or catering to a specific region. NFL demographics are strong. Advertisements don’t need to be focused on a particular group, it is much more of a shotgun spray of hitting every advertising target with one shot.
So the NFL isn’t hitting a downturn in advertising because it is the NFL. It is a well-oiled business machine that generates revenues, brings in massive viewership and controls distribution. Even without daily fantasy ads — a major advertising purchaser last year — ad prices went up without competition for said spots. The NFL can go through as many controversies as it wants. It’s still bulletproof.