Any football fan looking forward to seeing the San Francisco 49ers play the Arizona Cardinals the day after Christmas will have limited options to do so. In fact, there's only going to be one way to watch that particular game. It's only going to be aired via Amazon's (NASDAQ:AMZN) Prime TV, or Amazon's property Twitch. No network broadcast or even subscription-based access to NFL games will be offering it.
One single game doesn't necessarily mark the beginning of a new trend. But all trends start out with a first small step. And consumers who've kept close tabs on sports programming of late will know it's slowly been inching toward unlikely streaming platforms -- and away from cable television -- for a few years now. The Dec. 26 game is the biggest step yet in that journey.
Streaming sports is the new norm
Were it just the Cardinals/49ers game, it might be dismissed as one of this year's quirks stemming from unusual circumstances: Namely, the pandemic.
This particular NFL game, however, won't be the only game to be streamed this season. Comcast (NASDAQ:CMCSA), the parent of NBCUniversal, will be airing a January playoff game via its nascent streaming service Peacock while also offering it through NBC stations. ViacomCBS (NASDAQ: VIA) (NASDAQ:VIAC) (NASDAQ:VIAC.A) will offer another wildcard playoff game through CBS, streaming service CBS All Access, and (of all venues) its kids-oriented channel Nickelodeon. Amazon Prime has also streamed Thursday night NFL games this season, while Fox Corp. aired them through conventional network broadcasts.
Still, the Dec. 26 matchup marks an important first in that it's completely exclusive, and does so at a time when we're hearing somewhat credible rumors that this may well become the new norm for the business. Earlier this week, Sports Business Journal suggested Amazon Prime, Walt Disney's (NYSE:DIS) ESPN+, and NBCUniversal's Peacock were all interested in procuring the rights to offer NFL Sunday Ticket, which AT&T (NYSE:T) reportedly no longer wants to promote through its DirecTV satellite cable television platform. Its current contract with the NFL to sell this service expires next year.
It's also possible AT&T would share the rights to offer this package, which delivers out-of-market football games to its users. This would certainly be a savvy move in the wake of the cord-cutting movement, particularly if shared with a streaming service. Around 1 million U.S. consumers canceled conventional cable TV service last quarter, but Leichtman Research Group says 1.5 million households added (net) new broadband service.
Cable companies desperately need sports programming
Amazon's one exclusive NFL game late this month isn't a death blow to the cable television business. It's yet another shot at the industry, though, denting what is perhaps cable TV's biggest selling point -- sports.
It's possible to quantify the broad premise. For instance, sports TV icon ESPN is able to charge higher carriage fees -- by far -- to cable companies like Comcast for access to its programming. Recent estimates suggest cable service providers must pay Walt Disney around $8 per month, per subscriber, to pass along ESPN's programming to their customers.
For perspective, most news and general entertainment/lifestyle channels cost your cable company around $1 (or less) per month. This pricing disparity ultimately points to the power of sports programming's draw.
Meanwhile, access to sports is a key reason consumers have yet to cut the cord, and a key reason so many people did cancel their cable service this year. A survey performed by Roku at the height of the COVID-19 pandemic in the middle of this year indicated 28% of U.S. consumers who cut the cord in 2020 did so because there was no live sports programming to watch. Yet, only 17% of these cord-cutters said they're signing up for cable again once live sports programming returns.
One doesn't exactly have to read between the lines here. Sports programming has been increasingly available as a streaming product, and it's decreasingly effective as a selling point for cable television providers.
Amazon's exclusive NFL game broadcast rights should serve as a wake-up call for cable companies like Comcast and Charter Communications (NASDAQ:CHTR), though. Streaming sports is going to become commonplace, and exclusives won't be out of the ordinary. Cable TV companies standing back and doing nothing but watching it happen may lose a lot more subscribers a lot sooner than they might like to believe is possible.
A broadly aimed streaming platform like Comcast's Peacock, Prime, or CBS All Access would be wise to snag at least the shared rights to NFL Sunday Ticket as the next logical step of this shift.