Could Facebook Be About To Get Into Premium Video Content?

Last Thursday Variety reported that Facebook is considering  bidding for the NFL streaming rights for Thursday night games. The National Football league is auctioning off the digital rights to stream 18 regular season games on OTT services (Non-Traditional-internet based video streaming services.) However, mobile rights are exempt from the offering as they are already held by Verizon Wireless for streaming on its ad-funded Go90 mobile video service. If Facebook is really serious about acquiring these rights then it would be a watershed moment in the social-media platform’s development and represent the first significant step in its evolution into becoming a media platform. Up until now Facebook has relied upon third parties to upload content to its platform which it then monetizes through demographically targeted advertising. If it acquires the digital OTT rights to these games it will become a content owner in the traditional media sense, and this will have significant implications for how content is utilized on the social networking site.

Why Sports Broadcasting Is So Important To Video Content

The bedrock of the pay-TV industry is sports broadcasting. It allows media companies to monetize both scarcity (live big event TV) and the willingness of fans to pay premium prices for viewing their favorite sports teams in action. In the US market the Disney–owned sports network ESPN both inflates pay-TV package cost for consumers and allows for the subsidization of the niche channels. The biggest and most valuable of US sports is American Football. To illustrate just how much money goes into securing these TV rights, last month the NFL sold the TV rights to 10 Thursday night games to NBC and CBS. Each secured the rights to exclusively televise five games and stream the matches on their own video streaming platforms for $225 million each.

Free to Air Networks monetize these marque premium product offerings through premium ad pricing (it’s not uncommon for 30 second ad spots to go for $200,000 each). In addition CBS is in discussions with the NFL to extend its exclusive TV coverage to its own SVOD (Subscription Video On Demand Service) CBS All Access.

Unfortunately for Facebook, the fact that the digital rights on offer exclude mobile distribution, means that it is no longer a premium content proposition for the platform as 80% of Facebook’s Ad-revenues now come from mobile advertising. The chances of this therefore being Facebook’s first foray into content purchasing therefore seem remote.

Facebook Is Ideally Placed To Disrupt Pay-TV

However the very fact that Facebook are considering the possibility of evolving into a media rights holding business, underlines the new thinking underway at the technology giant. While it is still unlikely that Facebook will make the expensive decision to invest in exclusive premium content, their willingness to court celebrities with rumoured six figure sums for vlogging on their Live feature underlines their renewed interest in generating original content for the video services on the network.

If Facebook do decide to start buying up traditional TV content, then they are optimally placed to become the largest disruptive influence on the traditional TV industry. Facebook estimates that it has 650 million sports fans among its members-a potential premium video audience over six times the size of the entire pay-TV subscriber audience in the US. With the proliferation of SVOD services fragmenting the TV viewing experience of pay-TV, a social platform of Facebook’s size offers one of the few ways to consolidate video content on one platform for TV networks. And with pay-TV audiences continuing to hemorrhage subscribers (see MIDiA’s February report on how streaming video and cord-cutting are reshaping the US pay-TV landscape) the future of TV viewing is up for grabs.