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3 Reasons Facebook Inc Should Not Be Bidding on NFL Streaming Rights

By Adam Levy – Mar 9, 2016 at 1:49PM

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The leading social media network is reportedly interested in streaming Thursday Night Football.


Source: Flickr/SteelCityHobbies.

The NFL has already sold off the rights to broadcast its 18-game slate of Thursday Night Football, but the digital streaming rights are still up for grabs. Re/Code reports that Facebook (META 0.62%) tops the list of potential bidders to stream the games. Amazon.com and Verizon -- which already has the rights to stream games on smartphones -- also make the list.

While Facebook is making a big push into live video and real-time content, the NFL rights might not be the best fit for the social media company.

Shut out on its home field
Facebook's biggest strength is in smartphones. Management says that one out of every five minutes spent on smartphones involves using Facebook's flagship app, Messenger, or Instagram. Of its 1.59 billion monthly users, 90% of them access the social network through mobile, and more than half access the network exclusively through mobile.

But Verizon already holds the exclusive rights to stream NFL games on smartphones, locking Facebook out of this important space..

Amazon is comparatively well-equipped to stream NFL games on non-mobile devices. Consumers are used to streaming content from Amazon on tablets and set-top boxes like the Fire TV. Since those are the rights up for grabs, the e-commerce leader stands a better chance of reaching a large audience compared with Facebook.

Lost its last matchup
Facebook has teamed up with the NFL in the past. In the last few weeks of the 2014 season, the company partnered with the NFL to show game highlights, including advertisements for Verizon.

When the 2015 season rolled around, the NFL didn't renew its contract with Facebook, despite doing so with other social media companies. That would imply the early tests with Facebook were not promising enough to pursue further. While live streaming a game offers more natural revenue opportunities with consistent breaks in the action, it's not clear Facebook users are all that interested in NFL content.

The company says it has 650 million sports fans, and it recently launched a new feature called Sports Stadium just ahead of the Super Bowl to cater to them. Sports Stadium saw a significant amount of traffic during the big game, so much that Facebook couldn't keep up and the feature lagged the actual gameplay.

Better options available in free agency
The biggest reason for Facebook to forgo the NFL rights actually has nothing to do with logistics or execution. The company may simply be better off spending its money elsewhere.

The streaming rights to individual games have gone for as much as $20 million in the past. And while Facebook has the cash to spend -- $18.4 billion at last count -- it would be better off spending resources on content with a longer lifespan.

The company is reportedly courting celebrities to live-broadcast themselves using Facebook's newest video feature, offering some of them cash advances as an incentive. Facebook could use more cash to attract talent from competing platforms like YouTube. Such content has the added benefit of being replayable, so Facebook users could watch it multiple times, unlike NFL games.

Extra points
If Facebook does win the rights to Thursday Night Football, there's no guarantee that it will see a positive return on its investment, as there are several obstacles in the way. Nonetheless, it would add to Facebook's new focus on real-time content and help draw attention to Sports Stadium. Facebook might not have to turn a profit on the NFL rights if the games have a long-lasting impact on its live streaming video and sports ecosystems. Still, the safer play is to look elsewhere for video content.

Adam Levy owns shares of Amazon.com. The Motley Fool owns shares of and recommends Amazon.com and Facebook. The Motley Fool recommends Verizon Communications. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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