Thursday Night Football streaming rights up for grabs, but are they worth the cost?

The National Football League is currently accepting bids for the rights to stream Thursday Night Football games. It’s reportedly down to four contestants, but the investment necessary to obtain them might not make the return lucrative enough for any of the bidders.

Before breaking down the bidding war for the 2017-18 season’s Thursday Night Football streaming rights, it’s necessary to understand the brief history of this deal.

Prior to the 2016-17 NFL season, Twitter won the negotiations. For a modest fee of $10 million (television broadcasters like CBS and FOX pay much, much more), Twitter was the only entity granted the famous express written consent of the NFL to disseminate its premier product, live football games, in digital form on Thursday nights.

In exchange for that investment, Twitter got a similarly modest boost to its business. Twitter told its shareholders that it got 3.5 million viewers for each game on average, but proper context is necessary to understand that number. Twitter counts every user who initiates the stream at any point during the game as a viewer, regardless of how long they keep the stream active. If the audience was measured like a television audience, which breaks it down to how many people were watching the stream at any given time during the game, it’s only a few hundred thousand viewers. That sucks for Twitter because of how its business model works.

Companies like Twitter make their money off advertisements. The standard logic is that popular content like NFL games will draw oodles of eyes to the platform, allowing the streaming rights holder to charge a premium price for those ads which are set to run during those games. In order to charge those premiums, however, potential advertisers want proof that paying that price will get their products/services in front of millions of eyes.

When most of the audience logs on, sees that the game is between the Jacksonville Jaguars and Tennessee Titans and decides they would rather consume some other media, the numbers showing a robust and consistent viewership don’t support Twitter’s sales pitch to advertisers. Thus the aforementioned modest return on a modest investment.

Now in the off-season approaching the 2017-18 season, Twitter and its three nemeses from last year’s rights contests are engaged in the same process again. Facebook, Amazon and YouTube are all attempting to keep Twitter from nailing the streaming down for a second consecutive season, but all should be a year wiser. That makes this year’s negotiations more difficult to prognosticate.

The 2017 version of the Thursday Night streaming rights auction

There are two more reasons why these streaming rights aren’t worth a king’s ransom.

The first is that there is actually nothing proprietary about the rights to stream these games. Any person with access to electricity, a television, and an antenna capable of picking up the local NBC or CBS broadcast can watch the game that way. Additionally, cable and satellite subscribers whose packages contain the NFL Network can view the contests there. As if that isn’t enough to eat into the value of these rights, Verizon customers can watch the games on their mobile devices.

The secondary reason which hinders the value of the rights is that the NFL restricts the ad space that the streaming partner can sell during the broadcast. Most of that real estate is understandably reserved for the television partners, who pay much more for the TV rights.

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Despite this, the NFL will probably ask for an increase on last season’s $10 million price tag, because, why not? The question for the bidders is, at what point does the price of acquiring those rights make the return on investment unpalatable?

One of these four companies is going to end up with the rights to stream Thursday Night Football games next season. Depending on the price, however, they might end up regretting it.