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YHOO: The NFL Streaming Deal Marks Onset of a New Era

And so it begins. On Wednesday, Yahoo (YHOO) was named as the venue for the world’s first streaming NFL game viewable — for free — to anyone on any internet-connected device.

It’s not actually the first instance of the NFL streaming some games, but it is the first time the National Football League has made a game universally available at no charge outside of a network broadcast.

It’s a curiosity on the surface. But there’s much more to the Yahoo-NFL experiment than just a way of watching a football game. Perhaps without even fully recognizing it, YHOO and the NFL have jointly crossed a line that will eventually inspire a wide swath of cable television subscribers to cut the cord.

YHOO Teams Up With the NFL

YHOO-Yahoo-NFL-streamingThe matchup in question is the October 25th pairing of the Jacksonville Jaguars against the Buffalo Bills.

The game will be played in London, England, and truth be told, isn’t an especially important game for competitive or for financial reasons. That’s largely why it’s the ideal guinea pig for the NFL to let Yahoo tinker with.

The NFL didn’t just pick Yahoo out of a hat, however, to act as the streaming middleman. Yahoo was the winner of a bidding process to air the game. Though this price tag hasn’t been confirmed, CNN reports rumors that it’s at least a $10 million deal.

At stake, of course, is money. The NFL will pocket the alleged $10 million, while Yahoo presumably expects to sell at least a little more than $10 million worth of advertising during the event to cover its cost (or at least derive $10 million worth of insight and experience from streaming the NFL game).

And of all of a sudden, a revenue model that has only been on the fringe has become mainstream.

Step One of the Paradigm Shift

Truth be told, the NFL streaming this matchup is neither a game-changer for the NFL or for YHOO. The real game-changer is a willingness from both parties to tiptoe into this new model.

Previously, broadcast (airwave) networks and a couple of cable television networks were the only outlets the NFL wanted to tap into. Likewise, these television networks were the only ones that could actually do anything fruitful with these expensive events; streaming to a mass audience just wasn’t feasible.

But, with more than 500 million people accessing Yahoo via a mobile device at least once a month — now that mobile broadband is common and dependable — the math is starting to make more sense.

The experiment represents a looming threat to the networks, but they’re not the ones most at risk. The organizations that should be most alarmed are the cable television service providers like Time Warner Cable (TWC) and Comcast (CMCSA).

While cord-cutting (the cancellation of cable service in order to switch to streaming options) is nothing new to the likes of Comcast and Time Warner Cable, the threat hasn’t materialized meaningfully for either company … yet.

The No. 1 reason current cable subscribers don’t cut the cord? Sports. To watch most sporting events for free, a cable television subscription has been requisite in almost all cases, barring a separate (fee-based) subscription to a professional sports league streaming package. October’s NFL game will cross that line.

Once the line has been crossed, others will follow. Sooner or later, this type of one-off streaming broadcast could and likely will lead to an a-la-carte choice for consumers. It won’t be an overnight change, granted, but October is a step in that direction.

Giving credit where it’s due, ClearVoice’s Michael Malone summed it up best by explaining, “As soon as someone breaks rank with a la carte, it’s going to break fast.”

Yahoo just gave the television industry a good reason to break rank. 

Bottom Line for YHOO

Kudos to YHOO for securing the streaming deal with the NFL. But, of all the web portals out there, Yahoo is the least ideal one.

Putting it bluntly, Yahoo is miles away from being able to make the most of its web advertising platform; it’s even less adept at selling ads for video. A more fruitful fit for the NFL streaming broadcast would have been an outlet like AOL (AOL).

Yes, AOL.

To understand why AOL would have made more out of a streaming sports broadcast, one only has to go back in time less than three weeks to re-examine exactly why Verizon (VZ) was willing to shell out $4.4 billion for the iconic but fading dial-up name.

It wasn’t for sites like Huffington Post or TechCrunch. It was for AOL’s ad-selling platform optimized for web-based video. Verizon was likely aiming to integrate into a this programmatic ad-sales platform with a streaming-only a-la-carte television service it plans on launching later this year.

That technology, though, will work just as well via AOL on any connected device.

And who knowsAOL and Verizon could still easily become the preferred middleman for streaming sports events once it learns a few things from the Yahoo-NFL broadcast.

Whatever the case, the line has been crossed. Yahoo was the first, though it won’t be the last. A-la-carte on an individual channel basis as well as a single-event basis can work, and consumers are no longer going to be beholden to cable television companies to see major live events.

The new paradigm is finally in sight, even if it’s going to take a few more years to get all the way there — and even if YHOO isn’t going to continue leading the way.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/yhoo-streaming-nfl/.

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