Microsoft (NASDAQ:MSFT) will launch a new version of its NFL app for the Xbox One before the new season starts next month. The app, which is part of the $400 million deal Microsoft signed with the NFL last May, will also be available for Windows 8 devices.
The core of the app is NFL Now, a personalized highlight and analysis channel customized with the viewers' favorite teams and fantasy leagues. Users who sign up for a premium subscription can also stream classic games, documentaries, and shows. Those who also have a cable subscription to NFL Network and NFL RedZone can stream those services to the Xbox One, while DirecTV Sunday Ticket subscribers can gain full access through the console. If users sign up for Sunday Ticket's full online subscription, they also gain access to DirecTV's own Red Zone and new Fantasy Zone channels.
That's certainly a hefty package for football fans, but NFL Now is already available for PCs, mobile devices, and Apple TV. Sunday Ticket is available on PCs, mobile devices, and Sony's PS3 and PS4.
So what make Microsoft's NFL app so special, and will the new football season boost sales of the Xbox One, which continues lagging behind Sony's PS4 and Nintendo's Wii U with 5 million units sold?
The business of fantasy football
The top highlight of the new Xbox One NFL app is fantasy football integration, which initially includes fantasy leagues at NFL.com, but will eventually include ESPN and possibly Yahoo! and CBS leagues. The app has a "Snap" mode that streams the plays made by a user's fantasy players.
If the user is playing a video game, the Xbox sends a notification of the play into the game. The user can then hold down the Xbox button, and a replay instantly "snaps" to the side of the screen -- producing a seamless transition between fantasy sports and video gaming.
Fantasy football is a huge business. The Fantasy Sports Trade Association estimates that 41 million Americans and Canadians have combined to spend $3.64 billion on league, transaction, and other fees over the past 12 months. By comparison, the NFL generates roughly $10 billion in annual revenue.
Since fantasy football is interactive, similar to the "coach" mode in NFL video games, it makes sense for Microsoft to promote the Xbox One as a fantasy football hub for gamers who also love football.
But will football fans buy an Xbox One?
While that seems like a sound business strategy, it doesn't address the Xbox One's core weaknesses -- its lack of exclusive games when compared to the PS4 and Wii U.
In fact, a big NFL app is just an extension of Microsoft's original attempt to turn the Xbox One into an all-in-one computer for the living room. That misguided strategy resulted in the Kinect being stripped from the system to match the PS4's price, and the closure of Xbox Entertainment Studios, which was intended to create original programming for the console. Microsoft promised to focus more on games during E3, but it failed to impress hardcore gamers who were still waiting for the next Halo or Gears of War.
Regardless of those mistakes, Microsoft is pushing hard to tie together video games, NFL games, and fantasy football before the season starts. It will also launch an NFL-themed bundle, which includes Electronic Arts' (NASDAQ: EA) Madden NFL 15 for free, later this month. But the key question is -- will football fans really buy a $400 console to do what can easily be done on PCs and mobile devices?
To answer that question, we can look back at sales of NFL titles on the Xbox 360 and Xbox One to gauge how many Xbox owners are also NFL fans.
The most popular football video game on the Xbox 360 was EA's Madden NFL 10, which ranked No. 59 in sales, with 2.8 million units sold. The top 10 Xbox 360 titles are dominated by four names -- Kinect Adventures, Call of Duty, Halo, and GTA V.
The best-selling football game on Xbox One is EA's Madden NFL 25, which comes in at No. 11, with weak sales of 570,000 units. The top Xbox One title is currently EA's Titanfall, which has sold more than 2 million copies. Those numbers don't indicate a big overlap between hardcore NFL fans and hardcore gamers.
The Foolish takeaway
Microsoft's NFL app for the Xbox One is certainly a great, streamlined tool for diehard NFL fans. The app will be a dream come true for hardcore gamers who love Titanfall as much as fantasy football. Unfortunately, none of those facts will lead to higher hardware sales for the console.
There's no real incentive for NFL fans to buy an Xbox One to use the app if the same features can be accessed on other devices. The same goes for the Windows 8 version -- it's great, but fans will likely stay with a simpler app for iOS or Android.
In conclusion, Microsoft's $400 million deal with the NFL will definitely help it gain exposure with product placements for the Surface, which will be used to track player stats with RFID tags, as well as heavy advertising. But investors and gamers shouldn't expect the new NFL season to help the Xbox One gain much ground against the PS4 or Wii U.