Today Peter Kafka at All Things D reported that Google might be buying the “NFL Sunday Ticket” live broadcasting rights away from DirecTV.
I think it’s unlikely that Google will go for it and win the bid unless they plan to launch a true cable subscription package on YouTube — content bundling is still king when it comes to have the capital to subsidize a live sport rights purchase.
It could also be a defensive move against Netflix. As in, “Let’s get this so they Netflix doesn’t”. But in the process Google would have to waste hundreds of millions a year as I don’t believe that an a la carte NFL package for let’s say $20/month would return the $1.5 billion/year rights and production expense that this is likely to cost. Advertising is neither is the answer to fund this content purchase.
Netflix, on the other hand, should add live sport. Simply as an additional $29/month Netflix Sport package.
This would mean that sport fans will have to pay Netflix the $7.99/month and the $29/month. It would raise Netflix’s average revenue per user, grow their subscriber base and improve their retention. It will come down to a few simple questions to be answered in a spreadsheet full of assumptions being worked on at Netflix HQ — How many of their 20 million subscribers will buy the additional $30/month Sport package — How many new subscribers will join Netflix ? — Can they finance it for the first few loss making years?
Being the next live cable operator while trying to beat HBO at their own game is not going to be easy.
The good news is that the technology is ready for mass adoption — ChromeCast, XBox, PlayStation, Apple TV, Roku and the connected TVs are here along with good enough broadband connections to broadcast live sport in cable quality HD.
In summary, content package subscription business models will remain king. Will Netflix be able to fight the $90/month average revenue per use DirecTV enjoys from their 20 million subscribers ? Let’s see, they will for sure try — if not now, sometime soon.
