as the streaming industry expands with new companies entering the market, platforms are strving to stand out. Multiple streaming giants have tried to acquire the rights to different live sports broadcasts as they try to draw fans to their platforms.
Now, the launch of NFL+ has shaken up the industry once again and could leave out live sports as a growth tactic for streamers.
A lost asset
The National Football League launched its own streaming service, NFL+, on July 25, giving subscribers access to hundreds of games a year for $4.99 a month, exclusively on mobiles and tablets. The service comes as multiple streaming companies are fighting over the rights to add live sports to their platforms.
just this year, apple (NASDAQ: AAPL) secured the rights to stream Friday Night Baseball and all Major League Soccer games on Apple TV+. Amazon‘s (NASDAQ: AMZN) Prime Video is now home to Thursday Night Football in a deal worth $11 billion. Disney (NYSE: DIS) is also in the fight with its sports streamer ESPN+, which offers subscribers a variety of live sports like UFC matches, golf content, tennis, and more.
Some of the biggest names in streaming have homed in on live sports in the hope of drawing subscribers, but their efforts could be in vain if more sports leagues launch their own platforms with competitive pricing.
At about $5 a month, NFL+ has made it easy for football fans to add yet another streaming platform, and it has also created competition for any companies that get the rights to stream NFL games through a TV. For instance, Amazon may have Thursday Night Football, but consumers could still be inclined to subscribe to NFL+ to ensure they don’t miss out on any other games. And if the most prominent sporting league in the US has decided to stream its content independently, it could push other leagues to do the same, leaving fewer sports available for streaming giants to add to their content catalogs.
The majority of fans tend to favor a few select sports rather than keeping up with many, making league-specific platforms optimal for consumers. Rather than paying for an expensive cable package or even a service like ESPN+ with access to dozens of sports that subscribers don’t necessarily watch, consumers can save money by only paying for the content they want.
Along with NFL+, Formula 1, the increasingly popular motorsports series, has launched the streaming service F1 TV, offering subscriptions for as low as $2.99 a month. If other leagues stuck to pricing similar to NFL+ and F1 TV, consumers could choose specific leagues to subscribe to, potentially having access to two or more platforms for a competitively low price.
Moreover, while ESPN+ will increase the cost of its memberships by 43%, from $6.99 a month to $9.99 in August, because of added content and licensing deals, league-specific streaming services are unlikely to have many price hikes. Services such as NFL+ don’t need to worry about content creation or expensive licensing agreements since their subscribers are most interested in keeping up with the live games, which leagues own. Without the price increases and losses in content that some streaming services suffer, subscriber retention and satisfaction for NFL+ should be higher.
The one caveat to NFL+ is that its content can only be viewed on mobile and tablet devices, although this is not the case with F1 TV. While this could be a deal-breaker for many NFL fans, giving a leg up to the competition, consumers are increasingly spending more time on portable devices rather than watching TV. In 2014, media researchers Frank N. Magid Associates found that 60% of Americans aged 8 to 64 preferred watching TV on a computer or smartphone. Then, in 2019, eMarketer found that the average American adult spends more time on a phone or tablet each day than watching TV.
As mobile streaming technology has developed further since the studies were done, there’s a good chance consumers are continuing to choose handheld devices over a TV. Regardless, NFL+’s content and competitive price still have the ability to steal subscribers from any companies eyeing the TV streaming rights to NFL games. Time will tell whether the NFL’s strategy of targeting mobile and tablet users will pay off.
A new focus
As NFL+ and F1 TV have begun a trend of low-priced, league-specific streaming services, companies such as Amazon, Apple, and Disney will need an alternative plan for gaining subscribers. Fortunately, despite removing a potentially lucrative avenue for growth, the rise of sport-specific streamers does not pose a significant threat to most services. League-specific platforms can be low-priced, making them easily stackable with other subscriptions.
Streaming investors will want to note the success of NFL+ as it develops to better understand how its launch affects the market and if it prompts other leagues to offer similar services.
10 stocks we like better than Amazon
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisorhas tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Amazon wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of July 27, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.