Twitch, Overwatch Agree to Biggest Deal in Esports History

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Twitch (AMZN) and the Overwatch League (OWL) have agreed upon a 2-year media rights deal worth at least $90 million dollars (the biggest deal in esports history); enabling the live-streaming video platform to broadcast all league matches, starting with the first match of the inaugural season tonight at 7p EST. Twitch will be the exclusive worldwide (minus China) digital provider of the league, broadcasting all regular-season, playoff and championship matches in 3 different languages (English, Chinese, French). To drive viewership and engagement, the league and its broadcast partner will introduce a program that rewards the league’s biggest fans and give them a chance to root on their favorite gamers/teams with OWL “cheermotes”.

Howie Long-Short: ATVI shares are up 480% (from $11.52 in ‘13) over the last 5 years (to $66.19 at Tuesday’s close), while most reporting a Q3 record $1.9 billion for revenue generated (+17% YOY) and raising full-year revenue guidance from $6.4 billion to $6.68 billion ($2.08/share), in early November. CEO Robert Kotick has tried to temper expectations for the Overwatch League saying, “the first season is really about building a solid foundation”; but news that the company has recently launched a consumer products division (which will sell OWL skins) combined with the newly signed broadcast deal, would seem to raise the bar.

Fan Marino: The league has announced 12 franchises (2 6-team divisions), with Patriots owner Bob Kraft, Mets COO Jeff Wilpin, Rams owners Stan & Josh Kroenke, Sacramento Kings co-owners Andy Miller/Mark Mastrov, Texas Rangers co-owner Neil Liebman and the CEO of Comcast Spectacor (owns Flyers) Dave Scott are among the pro sports owners that have purchased (or made an investment into) teams. Owners paid $20 million for the rights to participate in the new league.

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Exclusive: Mia Khalifa Talks Twitch, John Wall All-Star Campaign (Part 2)

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In December, Twitch.tv announced a partnership with the G-League that enables users to co-stream games. Social media influencer Mia Khalifa has a Twitch.tv channel, is calling the NBA development league’s games and averaging 100,000 views per broadcast (3 million views, 30 broadcasts). In the second half of an exclusive interview (you can read the 1st half, here), JohnWallStreet had the chance to get her thoughts on the future of sports broadcasting, the platforms she uses to watch games and her strategy for getting John Wall to the All-Star game.

JWS: Are you broadcasting these games on behalf of Twitch.tv (or the G-League) or is this a personal endeavor?

Mia: Twitch.tv approached me offering front page promotion and I was like “wait what? The G-League is on Twitch.tv?” I was excited because it was such a big step in the right direction for sports streaming. Nobody wants to be forced to sit down on their couch and watch NBC; they want to watch the game on their phone, wherever they are.

JWS: Are Twitch.tv co-streams the future of sports broadcasting?

Mia: I think the future of broadcasting is going towards people’s favorite pundits, being the ones that they listen to. Twitch is the one spearheading all of this; but I think in 5 years, people will have the option to pick who they want to listen to.

JWS: How do you watch sports? Do you stream games or watch them on television?

Mia: I do both. All my favorite teams are out of market and I have all the packages, so most of my viewing is via streaming; unless my team has the rare national broadcast game. I have 6 TVs and only 1 has cable; the rest are Apple TV and Roku. The only reason I have cable is for Rivalry Night (NHL on NBCSN), SNF and MNF; Twitch has TNF, but you can’t co-stream. Millennials are going cable-less, so sports leagues are going to have to adjust. I can name all my friends who have cable on one hand.

JWS: You are a big D.C. sports fan and actively working to get John Wall to the All-Star game. Can you discuss your campaign strategy?

Mia: I am going to win him that all-star vote single handedly, it’s my main mission in January; and I’m going to do it in the most deceptive way possible. My plan is to post really hot pictures of myself with “make @johnwall a 5-time #WallStar! RT to cast your #NBAVote” so all those retweets, by all my thirty fans, go to his all-star voting. It’s working so far.

Howie Long-Short: Amazon (AMZN) took in 37% of all game-streaming revenue (projected to be worth $4.6 billion) in ’17, with 51% coming from direct revenue streams; their percentage of the take on subscriptions, donations etc.  That statistic is particularly noteworthy when you consider SuperData had projected 69% of all revenue industry-wide to be indirect.

Fan Marino: Mia is an FSU graduate and fanatical FSU football fan. I asked if she was pleased with the hiring of Willie Taggert?

Mia: I’m excited for the Taggert era, but that’s just me trying to make Jimbo jealous. I want to see how we finish recruiting-wise this offseason, before I answer that question more openly.

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Mia Khalifa, the G-League’s Most Popular Broadcaster

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In December, Twitch.tv announced a partnership with the G-League that enables users to co-stream games. Social media influencer Mia Khalifa has a Twitch.tv channel, is calling the NBA development league’s games and averaging 100,000 views per broadcast (3 million views, 30 broadcasts). In the first half of an exclusive interview (2nd half will be in tomorrow’s newsletter, so make sure to sign-up), JohnWallStreet had the chance to ask Mia about her new role as a color commentator, her audience and least favorite broadcaster.

JWS: Twitch.tv has gained widespread popularity within the gaming community, but remains under the general public’s radar. How did you get introduced to Twitch.tv

Mia: As an undercover gamer, I’ve known about Twitch since I was in college; as a place to see new games being demo’d. My manager used to run Chive Gaming live streams and he talked me in to starting one of my own. At first I was hesitant because I’m not necessarily too good at any one video game. I just like to play them for fun and I didn’t think I had it in me to conduct streams that people would want to watch, but he opened my eyes to the IRL channel (in real life streaming); where I can do a cooking show, I can have a Q&A session, I can post a talk-show if I want. I can turn it on and talk sh!t about all the playoff games I lost money betting on. I can do anything I want with this new channel on Twitch; I don’t have to pigeon-hole myself to (video) games and it’s been great. It’s my main job right now; doing cooking and G-League streams.  

JWS: Do you have an idea of who your audience is?

Mia: Most of the people who are watching me stream, I would say probably aren’t even basketball fans; but, that’s the beauty of it. It’s opening basketball to the eyes of people who would never go out of their way to see a court, which is amazing. These are all nerds, like level 10 nerds, like real true nerds who are watching the NBA’s G-League.

JWS: So, what is your goal? Are you looking to become a color commentator? The next Bill Raftery?

Mia: No, I do not take myself anywhere near that seriously. I like to consider myself a colorful commentator, like a rainbow commentator. I’m not trying to be the next Kirk (Herbstreit), I’m just really being myself. I’m commentating on these games the way I would if I was just talking sh!t with my friends. I don’t call plays. It’s all light hearted, all in good fun. You don’t have to be a sports fan, it’s just banter and a good time; and it’s inclusive, World of Warcraft nerds can tune in just as hardcore sports fans can. We’re exposing basketball to an audience that wouldn’t usually tune in.

JWS: Barstool Sports did a live stream of guys living and dying with every pitch during the ’16 World Series, which seems along the lines of IRL streaming. Do you have any aspirations of joining those guys?

Mia: Uh, what’s a barstool?

Howie Long-Short: The video game streaming market was expected to generate $4.6 billion in 2017 revenue. Amazon (AMZN), which bought Twitch back in 2014 for $970 million, is well positioned to cash in moving forward. The company reported concurrent viewership increased 67% during Q3 ’17 (to 737,000, nearly 3x more than YouTube Gaming); while the company took in 37% (the most of any company) of all game-streaming revenue across the industry.

Fan Marino: Mia’s favorite broadcaster is Kirk Herbstreit. I asked who her least favorite was?

Mia: God, Quint Kessenich is so bad. Who is he sleeping with at ESPN to escape all those layoffs? How does he still have a job? Also, Pierre McGuire sucks and NBC Sports should fire him.

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Amazon Takes on The Sports World; 25 Companies That Will Be Affected

Amazon has been credited with killing everything from book stores to electronics retailers since its 1994 launch. Now, with a market cap +/- $570 billion and $16 billion in annual operating cash flow, the company is taking aim at the sports world. In our final newsletter of 2017, we look at 4 of AMZN’s recent initiatives and the 25 companies most likely to be affected in 2018.

Amazon Expands Brand Registry Program, Now Includes Nike

In June, Nike (NKE) agreed to join Amazon’s brand registry program; seeking to curb counterfeiting and non-licensed selling within the e-commerce marketplace. The partnership also supports the athletic apparel and sneaker brand’s initiative to boost revenue through a shift to digital and DTC sales, relying less on struggling retailers. Competitors Adidas (ADDYY) and Under Armour (UAA) already have direct-sales deals in place with AMZN.

Names to Watch: FINL, DKS, FL, HIBB, BGFV; LON: SPD, LON: JD

Howie Long-Short: Athletic apparel and sneaker retailers count on NKE (70% of FL business comes from NKE); but NKE launched its “Consumer Direct Offense” strategy in fiscal Q1 ’18, increasing e-commerce business 19% YOY. Mediocre retailers beware, the company is maintaining just a few dozen wholesale relationships as it looks to increase its e-commerce business (from 15% of revenue to 30% over the next 5 years).

Amazon Entering Private-Label Sportswear Business

In October, Amazon (AMZN) announced it was entering the private-label sportswear business and working with the same Taiwanese suppliers, Makalot Industrial Co. (TPE: 1477) and Eclat Textile Co. (TPE: 1476), that some of the world’s biggest athletic brands use. Elcat’s involvement is particularly noteworthy as the company manufactures high-performance sportswear for Nike (NKE), Lululemon Athletica (LULU) and Under Armour (UAA).

Names to Watch: NKE, UAA, ADDYY, LULU; TPE: 1476, TPE: 1477

Howie Long-ShortAMZN wants to be in the private-label clothing business because it pushes retailers to sell inventory on the e-commerce site. Should a retailer choose not to, AMZN will simply produce the item themselves and compete directly against the brand.

The Pursuit of Exclusive Broadcast Rights

In September, the company hired Brian Potter to lead its sports video business. In November, Jim DeLorenzo, head of sports, Amazon Video, said the company was pleased with viewership numbers, engagement and the reliability/quality of the cloud-based streaming service during its season long experiment streaming Thursday Night Football (10 games, $50 million); though it is too early to say if the company will pursue future exclusive sports broadcasting rights. The company has since done deals that will deliver Prime subscribers 37 ATP tour events (previously owned by SKYAY), the AVP Beach Volleyball tour each of the next 3 summers and docu-series on Michigan Football.

Names to Watch: CBS, DIS, FOXA, CMCSA, FB, GOOGL, NFLX, AAPL, SKYAY

Howie Long-Short: NFL Senior VP, Digital Media, Vishal Shah recently said “we continue to think some of the best days are ahead [for traditional TV partners] despite some shifts in the media landscape.” That doesn’t sound like linear television will be excluded in the next round of negotiations, but the NFL is encouraging interested media companies to bid on both television and streaming rights for the leagues TNF package; leaving the door ajar for the tech giants to receive exclusivity for the first time.

Twitch: The Future of Game Broadcasts?

Twitch, the live-streaming platform most often associated with video games, has agreed to stream up to 6 live G-League (Gatorade sponsored NBA minor league) games. Broadcasts will include interactive overlays (viewers can click a team name/logo for player, team, game and season stats), a loyalty program to reward viewer engagement during broadcasts (i.e. custom emotes for group chat) and the ability for users to provide their own live commentary (over the game feed) via the Twitch co-streaming feature.

Names to Watch: CBS, DIS, FOXA, CMCSA, TWX, RCI, MSGN

Fan Marino: NBA Commissioner Adam Silver has gone on record stating he’d like to see changes in the way sports broadcasts are presented; pointing out the lack of live stats and chatter surrounding the broadcast, that gamers have become accustomed to. I’m not ready to give up Mike Breen, Marv Albert and Ian Eagle for Towelliee; but it’s worth watching to see if anyone else is.

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Adidas Takes Macro View, Competing with Netflix for Share of Wallet

Adidas Global Creative Director Paul Gaudio believes the company isn’t just competing with rival footwear and apparel manufacturers (i.e. NKEUAAPMMAF etc.), but with anyone “competing for share of wallet.” Gaudio’s premise assumes that consumers have a fixed budget for recreational purchases and weigh the value of a product not just against its immediate competitors, but against all other products under consideration prior to purchase. ADDYY isn’t the first company outside television and film to be threatened by the blue-chip company; in 2016 Darden (DRI) CEO Gene Lee said the restaurant industry was competing with what he calls today’s “new necessities” (including: smart phones and NFLX) for discretionary dollars. ADDYY reported a Q3 ’17 sales increase of 9% YOY (to $6.6 billion) and profit that increased 30% YOY (to $610 million).

Howie Long-Short: While I admire Mr. Gaudio’s macro view on consumer spending, U.S. consumer confidence remains near a 17 year high. Consumer confidence measures feelings about current and future economic conditions, with an optimistic consumer purchasing more goods and services. If consumer confidence remains high, NFLX isn’t a threat to ADDYY; however, if consumers begin to pull back the reigns on spending (should the economy falter) it’s reasonable to think they will begin asking if that new pair of NMDs is worth forgoing 12 months of binge watching.

Fan Marino: Kanye West got Kim Kardashian a portfolio of blue-chip stocks including; Disney (DIS), Apple (AAPL), Amazon (AMZN), Adidas (ADDYY) and Netflix (NFLX) for Christmas! The portfolio included; 920 shares of DIS (valued at +/-$98,500) and 955 shares of ADDYY (valued at +/- $96,500). That sure beats the luggage I got for Hanukkah as a 16-year-old. Thanks dad (eye roll).

Adidas considers Netflix as competition

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NFL Sends Out RFP for Thursday Night Football, Open to Altering Package

The NFL is soliciting bids for its Thursday Night Football broadcast package, encouraging interested media companies to bid on both television and streaming rights. The RFP indicates the league is open to altering the package, with the number and dates of games (like TNF on Christmas Day) up for negotiation. Bids are due in early January. The league-owned NFL Network will continue to carry at least 7 games, per existing linear television affiliate agreements.

Howie Long-Short: Richard Sherman wrote a column on the Player’s Tribune entitled “Why I Hate Thursday Night Football”, citing injury, safety and quality of play concerns. Sherman isn’t the only player to feel that way (see: RoethlisbergerBrees), so why does the league insist on playing the games? The NFL made $500 million from its ’17 Thursday Night Football broadcast package; CBS and NBC (CMCSA) paid $450 million (each got 5 games) for television rights and Amazon (AMZN) paid $50 million to stream games 10 games. Oh, and people are still tuning in; the lowest rated TNF game drew 10.6 million viewers (3.3x the amount of the highest rated NBA game this season).

Fan Marino: Here’s a solution. CFB held its conference championship games on the weekend of December 2nd. Play Saturday triple headers (1p, 4p, 8p EST) the last 4 weeks of the season (no NCAA games) and add one on Christmas (in ’18 Christmas falls on Tuesday, so teams playing would get a bye the week prior). There’s no reason to concede that day to the NBA. That leaves 3 games; add 2nd MNF games (7p and 10p EST) to the last 3 weeks of September (there is already one in Week 1).

NFL RFP Suggests League Is Open To Changing “TNF” Package

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Facebook Hiring “Head of Sports Programming” To Bid on Rights

Facebook has announced it is looking to hire a “top level executive” to oversee sports rights acquisitions. The “head of sports programming”, will have a budget of “a few billion dollars” to buy broadcast rights on a global basis. The social network does not intend to produce sports broadcasts; it would like to stream events, partnering with leagues or broadcasters that have linear television distribution in place.

Howie Long-Short: Back in May, Zuckerberg said “the long-term goal is actually not to be paying for specific content like that” and that he would prefer to pursue a “revenue share model”; but those comments were made under the presumption FB would be producing the broadcasts. If the plan is simply to stream events and FB isn’t pursuing exclusivity, the up-front cash outlay becomes significantly more palpable (AMZN paid $5 million per NFL game, CBS/NBC (CMCSA) paid $45 million/game for TNF). EPL rights expire in ’18, with MLB and the NFL coming up shortly thereafter (’21 and ’22, respectively). Look for linear distribution rights to increase (again) with total broadcast rights skyrocketing, as the tech giants bid on streaming rights. I do not expect FAANG to receive any exclusivity in the next round of negotiations.

Fan Marino: Whistle Sports recently announced that it was creating its first exclusive show for FB Watch, the “Next Trickshot Superstar”; a 10-episode series, hosted by Chad Johnson that features trickshot artists competing for $25,000. As a video content creator, with a following of 375 million followers/subscribers (and growing 2.5 million/week), Whistle Sports has raised $80.5 million to date; TGNA, NBC Sports and CBS Sports all participated in the company’s $29 million Series C round, announced in January 2017.

Facebook reportedly seeking an executive whose job will be negotiating sports rights

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