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For YouTube, Christmas came a few days early at the end of last year, as it landed one of the biggest rights packages in North American sport.
After much speculation, the National Football League (NFL) finally confirmed in December that it had agreed a deal with Google for Sunday Ticket. It means YouTube TV and YouTube Primetime Channels will replace DirecTV as the exclusive home of the NFL’s out-of-market Sunday regular season games from the start of this season, with CNBC reporting that the contract is worth US$2 billion annually over seven years.
The findings of a study published last October suggest that this was the most popular outcome for fans, with 35 per cent of those surveyed by The Streamable picking YouTube as their preferred destination for the package. Still, the deal marks YouTube’s biggest sports rights acquisition to date and, having reportedly fended off competition from the likes of Amazon and Apple, it now needs to deliver on expectations.
While the challenge of broadcasting live games will be new for the platform, the NFL and YouTube have long partnered on providing fans with other content around the game. Jon Cruz, YouTube’s global head of sports partnerships, believes that longstanding relationship should make the expanded collaboration work smoothly.
“There’s this assumption that we now have Sunday Ticket, we’re going to build a broader NFL partnership on top of that,” says Cruz, speaking at last month’s SportsPro OTT Summit USA in New York. “I actually think it’s the reverse. It’s all of the years we’ve invested to get to this place that has allowed us to kind of prop up Sunday Ticket as opposed to the other way around.
“We talk to our partners about initiatives broad and narrow all the time. The key is figuring out just from a first principal standpoint, are we aligned on our vision of the future in a certain area? Are we aligned on what we’re looking to collectively accomplish?
“Sometimes it comes together faster, sometimes it doesn’t, and then once you’re aligned on the broader principle, then it just becomes a trade-off and compromise exercise to figure out whether it’s a new original show we want to do with the NFL or something as broad as Sunday Ticket.”
The Sunday Ticket package is YouTube’s biggest sports rights acquisition to date
As for the discussions with the NFL itself, getting a mutual understanding of how the games were going to be accessible and appear to fans was crucial.
“With Sunday Ticket in particular, the exercise was largely rooted in a couple of things,” Cruz continues. “One, obviously, the incumbent has had that property on its platform since its existence, so I think both fans, the league, media, everybody had a very specific understanding of what Sunday Ticket looked like.
“At YouTube, we’re actually going to have Sunday Ticket available on YouTube TV and also on YouTube Primetime channels. But when we kicked off the Sunday Ticket discussions, Primetime Channels hadn’t even launched. We just launched that product in Q4 in the US, and there will be a fast follow internationally.
“So a lot of the conversation was largely making sure we had the right shared understanding of what the optimal fan experience would be, how Sunday Ticket retains a premium price point position and also how it’s additive to the national games and the broadcast partnerships that the NFL has in place.”
Bidding for the ‘most comprehensive NFL offering’
For Cruz and his team, creating additional value for the user was the first priority when deliberating a potential bid for Sunday Ticket.
“The first thing we have to look at is whether this does or doesn’t make sense for the user,” he begins. “Our users across both the YouTube main app and YouTube TV love sports, we have hundreds of millions of users who come to YouTube everyday to watch sports content, so we knew that behaviour was there.
“Similarly, we know there’s strong viewership and interest in NFL content across YouTube TV. So we really started with the user and asked: ‘Does this make sense for the users on our platform?’ We thought that answer was a resounding yes.
“And given the popularity and success that the NFL specifically has had on our platform, we were really excited about bringing together what we felt was the most comprehensive NFL offering available, both from a live game standpoint and a video-on-demand (VOD) standpoint.
“When you look at that user value proposition, I think that piece really excited us.”
The NFL’s content attracts strong interest already on YouTube TV
The other main driver behind YouTube’s bid was how Sunday Ticket could support the company’s ambitions for both its ad-supported and subscription services.
“Our connected TV business remains a top priority,” Cruz continues. “Today we have roughly 700 million hours of content. And this is not on YouTube TV, this is just standard YouTube VOD content that is viewed on connected TVs. YouTube TV as a subscription service in the US has five million plus subscribers, so we’ve made good headway there, but there’s still a lot for us to do.
“So much of consumption in the living room and on connected TV happens off of YouTube. So we understand that we need to accelerate efforts there. With having both the YouTube TV business and bringing Primetime Channels onto the main app, we felt that Sunday Ticket could be a really helpful anchor tenant.
“In and of itself it doesn’t solve all consumption issues, but we felt it was something that we could build around and that we can make successful and broaden the tent for.”
Another benefit of distributing Sunday Ticket is also the potential to open up new revenue streams for YouTube, allowing it to move away from relying on subscriptions and ads.
“We’ve spent a very long time building a very strong ad-supported business on the YouTube main app,” Cruz says. “We recently launched Shorts monetisation to allow for the monetisation of vertical video.
“One of the things that Sunday Ticket provides that I think really excites us is the opportunity to monetise in a number of ways. Most live sports offerings are supported via a mix of subscription and ads. It can be a challenge to make any premium property work on a single revenue stream.
“So when you look at a Sunday Ticket, you look at YouTube’s broader aspirations and priorities, and you look at the revenue diversity that comes from subscription and ads. I think we have even broader aspirations as we think about commerce and other ways to monetise, so it felt like there were enough pieces there for us to really wrap our arms around.”
Giving users a choice
While Cruz hopes YouTube TV’s subscriber base grows thanks to the addition of Sunday Ticket, he also stresses the need to provide fans with choice from a subscription standpoint.
Earlier this month, it was revealed that YouTube TV base plan subscribers can expect to pay US$349 a year for Sunday Ticket or US$389 with the RedZone whiparound show included, while the cost on Primetime Channels will rise to US$449 annually and US$489 with RedZone.
“Obviously YouTube TV has a strong subscriber base already,” he says. “But I think one of the expectations is that fans will come over.
“As a Dallas Cowboys fan living in San Francisco, Sunday Ticket is a non-negotiable for me. So I need it in order to watch Cowboys games. We expect those folks to come over, but we did want to ensure that they had choice.
“Our hope and expectation is that many fans will want both the YouTube TV base package, so they can watch Monday Night Football on ESPN, Sunday afternoon games on Fox and CBS etc., they’ll want that plus Sunday Ticket. I think we’ll see a decent cohort that exhibits that behaviour.
“But if you have a fan who isn’t ready to make the full jump over to YouTube, or maybe they like the double play they’re currently getting from their current provider, we’re fine with that. We’ve created a Primetime Channel offering that will allow those types of fans who get their base package from another party to be able to subscribe via Primetime Channels.
“So as we think about this strategically, there is incremental value from those subscribers coming over into the YouTube TV ecosystem. And obviously as we look to really accelerate and help Primetime Channels grow, we couldn’t think of a more attractive property to partner with on that.”
Creating choice for NFL fans is a priority for Cruz and his team
Balancing interactivity with expectations
The deal with the NFL will also see will also see chosen YouTube creators gain access to weekly games and tentpole events, working with the league to create additional Shorts content for its official channel. In addition, a new NFL International show will launch on the NFL’s YouTube channel and the league will form a global creator content programme, all of which should help boost the NFL’s YouTube following, which currently stands at more than 11 million.
Even if getting creators involved doesn’t lead to a wave of paid subscriptions, Cruz insists that their role in widening the appeal of YouTube’s sports content will be invaluable for the platform.
“We are looking at this holistically,” he says. “So we expect creators, really the lifeblood of YouTube, to really come in and not only support Sunday Ticket but really help us message and introduce the property to new fans.
“Not every fan is going to be able to take out a credit card and pay for the premium subscription price. But we want to make sure that young fans, fans in different economic positions, all have touchpoints that allow them to engage with the NFL and quite frankly the broader ecosystem of sports content on YouTube.”
While there will also be opportunities to increase interactivity for fans watching the NFL on YouTube, Cruz also cautions against going too far, understanding that diehard fans will simply use the platform as a means to watch their favourite team.
“We want to be really thoughtful about the experience we’re delivering,” he notes. “We know that sports fans in general and NFL fans specifically have certain expectations about the way a game is presented and how it’s offered.
“We want to make sure that we’re meeting the user desire to have interactivity on YouTube, we’re meeting our own aspirations in ensuring that our streams feel like YouTube, but we don’t want things to necessarily feel disruptive.
“So creators will be woven into the experience in a number of ways. But we also want to balance that with the expectation of a core NFL fan who just may want to watch a game.”
🗣 'The goal is to build that relationship with fans' – global head of sports partnerships Jon Cruz explains how YouTube's PPV and Primetime channels can help connect with audiences and offer multiple options for rights holders #OTTUSA23 #SportsBiz pic.twitter.com/fw7yNosB5H
— SportsPro (@SportsPro) March 14, 2023
Can YouTube’s infrastructure handle other sports?
When asked if the framework for Sunday Ticket would be transferable, Cruz is confident YouTube has the building blocks in place to broadcast other live sports and in other countries.
“YouTube TV is a domestic US product, I expect it to stay that way, at least for the foreseeable future, so let’s put that to the side,” he says.
“But as we think about live sports and monetisation opportunities more broadly, all of that should scale. Our Primetime Channels platform, which Sunday Ticket will kind of sit on top of, is going to be made available in five or six additional international markets this year, and a fast follow with a broader push beginning in 2024.
“So that ecosystem should be more than scalable. Our live dynamic ad insertion product, the ability to put ad pods within a YouTube live stream, that’s beginning to scale and roll out to a number of geographies and a number of folks will be able to tap into that.“
Cruz also revealed that YouTube was already trialling other subscription and monetisation options, as it looks to bolster the proposition it can offer viewers and rights holders going forward.
“We have a pay-per-view (PPV) product that’s in an early beta [phase] right now,” he says. “I think for us the goal has been to build that daily behaviour and relationship with fans so they come back to YouTube for highlights, for their favourite sports content.
“Then for rights holders, we want to provide options. So if you want to monetise through a mix of ads and subscription, you can. If you prefer more reach and you want to just have a purely ad-supported experience, you can. If you have a massive tentpole, but not a full slate of programming, you can tap into pay-per-view.
“I think where YouTube is providing the most value is by building the tooling and the platform. And then our partners are going to be much smarter about the right way to monetise and the right way to engage with their fanbases.”
