Alphabet's (GOOGL -1.10%) (GOOG -0.96%) YouTube is among the biggest streaming operators in the world. The platform claims 2.6 billion monthly active users and serves up over 1 billion hours of content each day. And while YouTube has long played host to a plethora of videos like cute animal clips and makeup tutorials, there are signs it could soon get into the world of live sports.
According to a recent report from The New York Times, YouTube has joined a bidding war for National Football League Sunday Ticket -- a premium streaming package that lets users enjoy live out-of-market games. The NFL is purportedly seeking more than $2.5 billion for the annual rights and is also said to be courting offers from Apple and Amazon. Of course, while Alphabet has deep pockets, so do its competitors. Still, whichever streamer ultimately wins the bid, this is an opportune time for YouTube to become a player in live sports broadcasting.
YouTube already has sports
YouTube is not new to sports. Broadcasters like FOX Sports and CBS Sports HQ, along with organizations such as the National Basketball Association and Ultimate Fighting Championship, all leverage their official YouTube channels to post video highlights, announcements, interviews, and more. Indeed, YouTube's dedicated Sports hub -- which boasts over 75 million subscribers -- gathers together much of this content and recommends it to subscribers. But to date, YouTube as a destination for real-time sports coverage is more of a mixed bag.
Typically speaking, traditional TV networks dominate the world of live sports. They pay large sums of money to control what fans can watch and how they can watch it. For example, NBCUniversal spent $2.7 billion to lock up the rights to Premier League soccer through 2028, thus preventing live matches from appearing on third-party platforms such as YouTube. Of course, there are exceptions to all -- golf upstart LIV Golf uses its YouTube channel to self-broadcast tournaments -- but the Alphabet-owned video service rarely acts as a direct partner.
Live sports are the next big thing in streaming
For any streamer looking to bolster its subscriber numbers, exclusive live sports coverage is a smart approach. The most recent NBA Finals drew in an average of 12.4 million viewers for each of the six games, while the Union of European Football Associations (UEFA) Euro 2020 soccer tournament attracted a total of 87 million U.S. viewers across the month-long event. Still, despite these numbers, some of the biggest names in streaming have yet to capitalize.
Disney has ESPN+, but the company has so far stopped short of offering a fully featured ESPN streamer. Elsewhere, Netflix reportedly tried to spark its sports ambitions by chasing Formula 1 rights, but the company was ultimately unsuccessful. Still, other streamers have made inroads.
Apple TV+ has some Major League Baseball games, and the company recently secured multi-year rights for Major League Soccer. Amazon operates as an NBA League Pass partner in several markets, and starting this year, it will be the exclusive home for NFL Thursday Night Football. Elsewhere, Paramount+ carries UEFA Champions League games, and Peacock is home to WWE programming in the U.S.
Live sports could bolster YouTube Premium
YouTube Premium is the platform's $12 per month subscription offering. The first iteration of the service launched in 2015 as somewhat of an ad-free Spotify competitor that also featured exclusive access to YouTube Originals (highly polished shows typically centered on well-known YouTubers). However, in the years since, YouTube has arguably reduced the value of the service: YouTube Premium viewers still have access to YouTube Music and they don't see any ads, but YouTube Originals are now available to all users -- regardless of whether they're on the ad-free plan or not.
Despite what YouTube Premium customers do (or don't) get, analysts say the service has about 25 million customers. Experts also suggest YouTube Premium will grow by 3 million subscribers over the next few years. With this in mind, it's workable that live sports could be a value-add for YouTube Premium, and maybe even drive more growth. After all, 75 million YouTube Sports hub followers certainly points to the potential.
As far as whether YouTube gets its hands on NFL Sunday Ticket, that shouldn't necessarily dictate the streamer's live sports ambitions going forward. Indeed, while the NFL certainly appeals to millions, by some estimates there are 5 billion soccer fans around the globe. With this in mind, market watchers would do well to monitor YouTube as broadcast rights for the many soccer leagues of the world come up for renewal. If the platform made a bid for one of those it would certainly position itself as a contender in the next phase of the streaming wars.