Facebook Acquiring Sports Content to Build Watch Viewership

Facebook200x200

Facebook (FB) has been aggressive of late in its pursuit of global sports content, having recently announced deals with Golden Boy Promotions and Premier League (in Asia); the social network is also reportedly courting Cristiano Ronaldo for a reality show. The deal with Oscar De La Hoya’s boxing promotion, in collaboration with Kathy Duva’s Main Events, adds 5 live fight cards (1st is Aug. 11) to the Facebook Watch lineup. A $265 million agreement with the Premier League gives the company exclusive rights to broadcast 380 games in Thailand, Vietnam, Cambodia and Laos during the 2019-2020 season. The latest rumors focus on a 13 episode docu-series with the Portuguese futbol star; FB has reportedly offered Ronaldo $10 million+ to participate. Of course, Facebook also owns exclusive broadcast rights to 25 MLB games this season; the first non-traditional broadcaster to hold exclusive rights to a big 4 sport.

Howie Long-Short: Facebook Watch is the company’s video platform for TV-like content. The company’s increased focus on sports programming isn’t about generating ad dollars (there won’t be any ads on Golden Boy broadcasts), but about trying to boost viewership on its struggling Watch platform; Watch launched in August ’17 but has failed to gain a mainstream following.

Premier League is popular in Southeast Asia and Ronaldo is the most famous athlete on Facebook with 120 million followers, so those deals should certainly draw eyeballs. I’ll reserve judgement on the boxing deal until I see the financials, it remains a niche sport in the U.S.

Back in late April, Facebook reported Q1 ’18 earnings increased +62% YoY (to $1.69/share adjusted) on revenue that grew 49% (to $11.97 billion). Ad revenue (+50% YoY, avg. revenue per user was $5.53), operating margin (+5% YoY, to 46%) and usership (+13% YoY) also all rose during the quarter. The company is expected to report Q2 financials after the close on July 25th. Shares hit a 52-week high ($203.64) on Friday, closing at $203.23.

Fan Marino: Facebook has been making headlines with new content acquisitions, but Watch has received less than stellar reviews from sports fans. The MLB games airing on Watch have been drawing +/- 3 million views, but there is a large contingent of fans upset they’re being forced to stream the game (as opposed to watching it on TV).

Then there are the technical issues. World Surf League was forced to come out last week and apologize to fans who experienced “a slew of streaming issues” (including not being able to watch at all) that prevented them from watching the opening rounds of the Corona Open J-Bay. Facebook is the exclusive digital provider of all WSL events for 2018 and 2019. As we’ve discussed before, if your top priority is ensuring access to the game, television remains your best option.

Interested in Sports Business? Sign-up for our free daily email newsletter list, here!

Facebook Unveils FB.gg to Compete with Twitch

Facebook200x200

Facebook has unveiled a homepage for streaming gaming content to supplement its Gaming Creator program. The new destination FB.gg, designed to compete with Twitch (think: social network for gamers), aggregates gaming videos, suggests live streaming feeds, showcases creators (discoverability is an issue on Twitch) and enables users to search content by game title. The social media giant also announced that it would be introducing functionality offering viewers the opportunity to tip ($.01/per) broadcasters, giving emerging creators the chance to monetize their work. The Level Up program has not yet been rolled out, but a select group of gamers have been allowed to charge fans ($5) to subscribe to their channels.

Howie Long-Short: Facebook is looking to take its cut of a video game streaming market that generated $4.6 billion in revenue last year; 37% of which was controlled Twitch. The company will profit from FB.gg by taking a percentage of the transaction amount when a viewer buys Facebook Stars, the virtual currency used to tip streamers. The percentage will range from 5%-30%, depending on the number of stars included within the “pack” (more stars = lower percentage).

Back in late April, Facebook reported Q1 ’18 earnings increased +62% YoY (to $1.69/share adjusted) on revenue that grew 49% (to $11.97 billion), bouncing back strongly from the Cambridge Analytica scandal. Ad revenue (+50% YoY, avg. revenue per user was $5.53), operating margin (+5% YoY, to 46%) and usership (+13% YoY) also all rose during the most recent quarter. Shares popped 8.5% after FB posted Q1 ’18 financials and have steadily climbed since, closing Tuesday at $192.40.

Twitch was acquired by Amazon (AMZN) for $970 million in 2014. The company increased concurrent viewership +21% during Q1 ’18 (to 953,000), growing its already large lead in the game streaming market over 2nd place YouTube Gaming (GOOGL, -12% to 272,000); but, Facebook (FB, +103% to 56,000) also reported significant audience growth last quarter and will enter Q3 ’18 armed with an enhanced destination for gaming enthusiasts.

As for AMZN, they posted their most profitable quarter ever in Q1 ’18. AMZN grew revenue +43% to $35.7 billion, while net income rose 121% to $1.6 billion. Cloud computing (+49% YoY to $5.44 billion), subscription services (+60% YoY to $3.1 billion) and ad revenue (+139% YoY to $2.03 billion) all contributed to the record quarter. AMZN shares are up 7.5% over the last 3 weeks and climbed past $1,700 for the first-time last week, before closing on Tuesday at $1,698.76.

Fan Marino: ESL (think: Dota 2, Counter-Strike: Global Offensive) signed an exclusive broadcast deal with Facebook Watch, as opposed to the market leader Twitch. Why? As World Esports Association Commissioner Ken Hershman points out, in addition to being a “tremendous streaming platform”, Facebook is “a social and engagement platform.” FB’s targeting capabilities and recommendation engine have enabled the esports federation to grow rapidly, from 750,000 viewers/mo. to more than 25 million within a year.

For those wondering, .gg stands for good game.

Interested in Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!

NBA 2K League Finds Media Rights Partner, Viewership for Inaugural Game Disappoints

nba-2k-league

The NBA and Twitch have agreed to a multi-year partnership that makes the video streaming service the league’s first official media rights partner. The agreement ensures that the inaugural season of the NBA 2K League will be broadcast live, in its entirety (up to 199 games); with all games featuring live commentary and updates from around the league. Twitch has announced plans to introduce “Extensions” to increase viewer engagement during broadcasts (they’re going to need to draw viewers first, see Fan below). Twitch is a Founding Partner (i.e. they’ll have an equity stake) of the upstart league.

Howie Long-Short: Twitch was acquired by Amazon (AMZN) for $970 million, back in 2014. The company increased concurrent viewership +21% during Q1 ’18 (to 953,000), growing its already large lead within the game streaming market over 2nd place YouTube Gaming (GOOGL, -12% to 272,000). Facebook (FB, +103% to 56,000) and Microsoft’s (MSFT, +90% to 9,500) also reported significant growth with their streaming audiences last quarter.

As for AMZN, the company posted its most profitable quarter ever in Q1 ’18. It grew revenue +43% to $35.7 billion, while net income rose 121% to $1.6 billion. Cloud computing (+49% YoY to $5.44 billion), subscription services (+60% YoY to $3.1 billion) and ad revenue (+139% YoY to $2.03 billion) all contributed to the record quarter.

Fan Marino: The NBA 2K League’s inaugural season kicked off yesterday, with Bucks Gaming and Pistons GT participating in the league’s first ever game (Pistons won 49-44). Just 9,000 watched the contest, a particularly disappointing total considering OWL’s opening day drew 408,000 concurrent viewers. This league is far from the slam dunk predicted following last month’s successful gamer draft.

Interested in Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!

MLB, Tencent Partner to Grow Sport of Baseball in China

Tencent

MLB has partnered with Tencent (TCEHY) to grow the sport of baseball in China. As the Official Digital Broadcasting Partner of MLB within the country, TCEHY will live stream 125 games (including the All-Star Game and every game of the Postseason/World Series) exclusively on Tencent PC, Mobile and OTT platforms. The technology giant has also committed to broadcasting a series of MLB highlight shows and supporting/broadcasting youth baseball and developmental events. Super Baseball Week (April 4-8) will kick off the new partnership; 5 straight days of games featuring the league’s biggest stars (see: Trout, Judge, Bryant).

Howie Long-Short: Tencent Holdings Limited (TCEHY), one of 50 constituent stocks making up the Hang Seng Index (largest companies on HKSE, represent +/- 58% of HKSE cap), is a leading provider of comprehensive internet services in China. The company’s social messaging app WeChat has more than 1 billion users. TCEHY was recently named China’s most valuable brand for a 4th straight year, with WPP and Kantar Millward Brown assessing its brand value (how a brand powers business) at $132.2 billion (+25% YoY). Just how big of a global player is Tencent? The company’s market cap is $496 billion, $30 billion more than Facebook (FB).

Fun Fact: Just one sports related brand made the Top 100 most valuable Chinese brand of 2018 rankings, Anta Sportswear (ANPDY) at #78.

Fan Marino: MLB opened an office in China in 2007 and has maintained 3 Development Centers within the country (Wuxi, Changzhou and Nanjing) since. The fruits of those labors have started to pay off. 3 players have graduated and gone on to sign MLB contracts (“Itchy” Guiyan – O’s, Hai-Cheng Gong – Pirates and Justin Qiangba – Red Sox) and another 12 are currently playing professionally in China. The success can’t just be measured by players on the pro level, though. Since 2014, 36 players have graduated from the program and gone on to play collegiate baseball.

Interested in Sports? Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!

MLB Takes “Next Great Leap” in Sports Broadcasting

Facebook200x200

Facebook (FB) has landed the exclusive broadcast rights to stream 25 Major League Baseball day games (primarily on Wednesdays) during the 2018 season; the first time a “big 4” U.S. sports league has awarded exclusive distribution to a social network. Industry consultant Lee Berke called the deal “the next great leap” in sports broadcasting, comparing the milestone to the migration of games from network to cable television in the mid-to-late 1980s. It’s been reported that the social network paid $30-$35 million for a package that includes; the live games (MLB network will produce the broadcasts), on demand highlight packages (for every game) and weekly recaps of all 30 teams. The first Facebook Watch broadcast will be on April 4th (Mets vs. Phillies).

Howie Long-Short: While this is a landmark deal in sports broadcasting history, it’s premature to call it a “great leap”; it’s more like a big step. A “big 4” sporting event appearing exclusively on a digital platform is noteworthy; it’s just not the game-changer that Berke implies. All 4 leagues have broadcast rights tied up through at least the balance of the decade and none are expected to forego linear television money in the next round of negotiations. There may be a day when FAANG companies control exclusive NFL, NBA, MLB, NHL broadcast rights, just don’t expect it to come anytime soon.

Fan Marino: In the hours following the announcement, Twitter (TWTR) and MLS announced their own streaming partnership; a 3-year deal gives TWTR the exclusive English broadcast rights to at least 24 live matches/season that air in Spanish on Univision (plus on-demand highlights). A week prior, AMZN announced a deal with the UFC to stream PPV events (cost $64.99) on Amazon Prime Video (do not have to be Prime member); while YouTube TV (GOOGL) locked up exclusive live streaming rights to the Seattle Sounders FC, it’s 2nd MLS deal (L.A. FC). The arms race between digital companies seeking to lure users with sports, is officially on.

Interested in Sports? Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!

Bleacher Report Diversifying Revenue Streams, Reducing Platform Dependency

B:R

Bleacher Report (B/R) is building out e-commerce and content licensing departments, as the company looks to diversify its revenue streams (1/3 currently comes from ad sales on the company’s social media accounts) and reduce platform dependency (12% of referral traffic comes from Facebook). Best known for their “team streams”, delivering fan-specific news; the company intends on selling content themed merchandise, capitalizing on a series of successful original video brands (Game of Zones, Gridiron Heights, No Script) and their House of Highlights Instagram account (8 million followers). Come Spring, the company’s parent company Turner Broadcasting System will launch a sports streaming service; using B/R to drive viewers both through their website and mobile application. President Rory Brown said the goal is for the app to become the “home base for sports fans.”

Howie Long-Short: Turner Broadcasting System, a division of Time Warner (TWX), acquired B/R for $175 million in ’12. They then invested $100 million in to the company in March 2016. President Brown said the company increased revenue 17% YOY in 2017 (though no figure was provided); but, that the company is profitable. As for TWX, the company grew revenue 6% YOY in Q3 ’17, with HBO leading the way (+13% YOY); Turner was up 6% YOY during the quarter. The company will report Q4 ’17 and Full-Year 2017 earnings on Feb. 1. 

Fan Marino: The B/R Entertainment division (just 2 years old) has experienced early success. Facebook (FB) reportedly paid the company “millions of dollars” to license the series, “No Script” starring Marshawn Lynch; while, it’s animated (NBA stars as medieval characters) series “Game of Zones”, has received 40 million views and landed AT&T as an ad sponsor. The company plans on introducing 5 more original series in ’18.

Editor Note: B/R is the premier digital sports media outlet. In December, the company had 120 million “interactions” on social; more than 2x the number ESPN reported (55 million). The company has the most engaged readers because it consistently delivers the best content (across all sports). I don’t write that because B/R publishes our work; I pursued a partnership with B/R because I wanted to align with the best. We couldn’t be prouder to have an association with them.

Want more JohnWallStreet? To join our free daily email newsletter list, sign-up here!

Facebook Hires Eurosport CEO to Negotiate Sports Streaming Rights Deals, No Interest in TNF

Facebook200x200

Facebook (FB) has hired Eurosport Chief Executive Peter Hutton to lead its multi-billion dollar global sports rights initiative. The move is yet another strong indicator (they bid $600 million for rights to Indian cricket, losing to Star India) that the social networking service sees live sports as a key part of its streaming growth strategy. The hiring appears timely as the deadline to submit bids for the rights to stream the EPL in Europe is Feb 9. Hutton isn’t expected to begin his new role until after the completion of the Winter Olympics though, making Facebook appear to be an unlikely destination for the Premier League now.

Howie Long-Short: Discovery Communications (DISCA) owns Eurosport, the home to the next 4 Olympic Games (through ’24) in most European markets. DISCA paid just $1.44 billion for European rights to the games, across all platforms, which is a fraction of the $7.65 billion NBC is paying for television and online rights to the games through ’32. The company reported Q3 earnings in early November; revenue was up 6% YOY (to $1.65 billion) led by its international portfolio, but net earnings remained flat as U.S. subscriptions continued to decline. CEO David Zaslav said at the time, that the company was looking forward to leveraging the Scripps Networks Interactive portfolio upon the closing of the $14.6 billion acquisition (to occur in early ’18). The company will report Q4 and full-year 2017 financials on February 27th.

Fan Marino: Facebook has decided against bidding on the NFL’s Thursday night package. Noteworthy, as the company has bid on the package in past years and the league’s Sunday (through ’22) and Monday night (through ’21) packages are tied up for the next several years. As for TNF television rights, Fox and Disney (would put games on ABC) are both likely to bid; while CBS & NBC, who shared the rights this year, are looking to pay less (paid $450 million in ’17).

To join our free daily email newsletter list, sign-up here!

Playoff Fantasy Football Contest Paying Out in Bitcoin

FanDuel

The NFL Playoffs start tomorrow (Tennessee at Kansas City, 4:35p EST) and FanDuel is giving daily fantasy football players the chance to win Bitcoins (BTC); the first time a sports-tech company has awarded cryptocurrency as a consumer promotion. FanDuel will host a free single-entry contest (aka the Bitcoin Bowl) that will award the winner a single Bitcoin; and a second multi-entry contest, that costs $3 to enter and offers a multi-tiered payout (winner receives 2 Bitcoins). The deadline to enter and select a lineup is kickoff of the Tennessee/Kansas City game.

Howie Long-Short: FanDuel has raised capital from the following public companies (or subsidiaries of public companies) KKR & Co. (KKR), Google Capital (GOOGL), Time Warner/Turner Sports (TWX), NBC Sports Ventures (CMCSA) and Comcast Ventures (CMCSA); so, there are no shortage of ways to play the fantasy sports outfit. As for the popular cryptocurrency, the WSJ reported that Peter Thiel’s venture capital fund bet $15 million to $20 million on Bitcoin; upon release of that report, BTC prices shot up 14% to $15,447. The digital coins were trading at +/- $15,150 on the evening of January 4, 2018.

Fan Marino: Facebook (FB) has entered the DFS space, launching TheScore Fantasy on Facebook Instant Games; accessible only through their Messenger application. The mobile game currently enables you to play NFL, NBA, NHL, MLB & Premier League contests, but only against your friends and there is no monetary incentive to win. It’s not a game for the hardcore DFS player, but the simplistic interface and small roster sizes (just 5 players) could make it attractive to the next generation of football fans; those not yet of age (18) to play DFS.

To join our free daily email newsletter list, sign-up here!

Facebook Watch Adds WWE and NLL, Social Interactive Components Worth Watching

Facebook Watch (FB) has announced partnerships with both the WWE and National League Lacrosse (NLL), giving the burgeoning video platform additional sports content. Beginning on January 16th (10p EST), a new weekly in-ring wrestling series entitled “Mixed Match Challenge” will debut; wrestlers from both Raw and SmackDown rosters will compete in a single elimination mixed tag-team tournament that spans 12 weeks. Watch will also begin airing a new weekly show from NLL productions entitled ReLax that offers fans insight and analysis on the weekend’s games. The show, airing exclusively on the Watch platform Mondays at 6p EST, will give fans a chance to interact and ask questions during the first hour of the show.

Howie Long-Short: The WWE experienced their “all-time best quarter” in Q3 ‘17, as the company grew revenue 14% to $186.4 million, set a company quarterly record for adjusted OIBDA ($40.4 million) and saw net income rise to $21.8 million (from $11.1 million YOY). The company will release its Q4 ’17 (and full year ’17) earnings report on Feb. 8th. 2018 projects to be a banner year for the WWE, with the company anticipating setting another record for revenue generation and targeting adjusted OIBDA of at least $115 million; which would also set a record.

Fan Marino: Mixed Match Challenge episodes will run 20 minutes in length and be optimized for mobile consumption. The social interaction elements included will be worth watching, as fans will have the opportunity to select match-ups and match stipulations. Teams will be announced beginning tomorrow night. You can find a list of participants, here.

To join our free daily email newsletter list, sign-up here!

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.

To join our free daily email newsletter list, sign-up here!