Twitter to Air Original ESPN Programming, Announces Content Partnership with Disney

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Twitter has announced a wide-ranging content and advertising partnership (among 30 renewals and new video deals) with The Walt Disney Company (DIS), as the online news and social networking company continues to invest in video content. The deal, which spans the entire DIS portfolio, includes live original ESPN programming. 2 shows have been introduced thus far, SportsCenter Live (TWTR version of the flagship program) and Fantasy Focus Live (live stream of a fantasy sports podcast). Expect ESPN to share some additional insight on the partnership at their Digital Content NewFronts event on Wednesday.

Howie Long-Short: It’s logical for TWTR to continue to invest in live video content, because it’s working; daily video views on the platform are up +/-100% over the 12 mo. and video is now responsible for more than 50% of the ad revenue. As Global VP of Revenue and Content Partnerships Matthew Derella pointed out, the company’s “super power” is its ability to tie conversation to video during the biggest moment; “giving brands the unique ability to connect with leaned in consumers.” Shares rose 4.5% on Monday’s announcements, closing at $30.31.

TWTR reported Q1 earnings last week, the company’s 2nd consecutive profitable quarter and 2nd profitable quarter ever. Quarterly revenue was up 21% and the company said it expects to be profitable in 2018. Ad revenue is driving the growth, as more brands are shifting marketing dollars from traditional television to digital outlets.

Fun Fact: In 2016, DIS had explored the purchase of TWTR; ultimately passing on the deal amidst concerns of the company’s inability to curb hate speech and trolling on its platform.

Fan Marino: Amazon (AMZN) also recently beefed up its sports video programming, acquiring exclusive rights to stream the U.S. Open Tennis Championships in U.K. and Ireland and renewing its exclusive Thursday Night Football streaming rights through the 2019 season. The 2-year deal worth $130 million (or $15 million more/season than the $50 million paid in 2017), gives the e-commerce giant the rights to stream 11 games during the 2018 season. On May 11th, the cost of Amazon Prime will increase from $99/mo. to $119/mo. With 100 million active members and another $2 billion in potential revenue awaiting, a $15 million annual increase for TNF streaming rights is just a drop in the bucket.

Amazon also just delivered impressive Q1 ’18 results, posting its most profitable quarter ever. Q1 revenue was up 43% to $35.7 billion, with net income up 121% to $1.6 billion. The company’s cloud computing business (+49% YoY to $5.44 billion), subscription services (think: Amazon Music, +60% YoY to $3.1 billion) and ad revenue (+139% YoY to $2.03 billion) all contributed to the record quarter.

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MLB Takes “Next Great Leap” in Sports Broadcasting

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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.

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Twitch Rewarding Gamers as OWL Viewership Declines, Activision Blizzard Hits 52-Week High

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Twitch (AMZN) has begun encouraging gamers to watch exclusive Overwatch League broadcasts, by awarding Overwatch League tokens that can be used to buy team-based character skins, as the live streaming video platform seeks ways to increase viewership. OWL’s opening day drew 408,000 concurrent viewers, but that figure has steadily declined in the weeks since; compelling Twitch to run a program that encourages OWL gamers (and fans) to watch more. Viewers will earn one token per live map finish (roughly 3-4/hour), with a “percentage” of those watching the conclusion of the final map randomly winning 100 tokens during the live cast. Skins (and team specific gear) will also be awarded to users who tip (with paid emotes) during live streams. For reference purposes, users need 100 tokens to unlock OWL skins; they have a cash value of +/- $5.

Howie Long-Short: Blizzard Entertainment (ATVI) is the publisher behind Overwatch and the OWL is their most ambitious esports endeavor. Once thought to be overpriced at $20 million/franchise, CEO Michael Morhaime said on the company’s Q4 earnings call that he’s “pretty confident” the price is going up for the next group of owners that buy in; indicating there’s been an increase in global demand for OWL expansion franchises. ATVI posted Q4 ’17 earnings on February 8th, reporting an 8% YOY increase in revenue (to $2.64 billion). The company hit a 52-week high Tuesday morning ($75.41), before closing the day at $73.92.

Fan Marino: To put OWL’s opening day success in perspective, you can compare it the viewership figures Amazon (AMZN) and Twitter (TWTR) received for their initial TNF livestreams. Amazon’s first TNF game drew 372,000 viewers per 30 seconds; Twitter saw just 243,000 viewers per minute, during their first broadcast. While OWL viewership has since declined, Blizzard Entertainment managed to negotiate a 2-year, $90 million deal to stream OWL Season 1 & 2 games exclusively on Twitch.tv in English, French and Korean (they do not hold the rights to broadcast in Chinese).

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Twitter, Amazon, YouTube and Verizon Bid for TNF Streaming Rights

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Twitter (TWTR), Amazon (AMZN), YouTube (GOOGL) and Verizon (VZ) are all interested in acquiring Thursday Night Football streaming rights; with the NFL reportedly seeking a multi-year deal, for the first time (since the package was introduced in ’16). Among the remaining companies, only YouTube has yet to broadcast a league game; though, CEO Susan Wojcicki has stated she would “love to stream the NFL” and her platform may be able to offer the league, the greatest potential for viewership (AMZN drew 370K for 1st ’17 game, TWTR 240K drew for 1st ’16 game, YouTube drew 1.5 million for a recent SpaceX launch). It’s unclear if its status as an existing league partner, with some TNF mobile streaming rights, will give VZ a leg-up in the competition.

Howie Long-Short: The NFL received a 47% YOY increase in the value of their newly signed TNF contract, worth $3.3 billion over 5 years; though, Fox will also get rights to broadcast the NFL draft and may receive another playoff game. If the league receives a comparable return on mobile rights (expect the percentage increase to be higher, they increased 400% from ’16 to ‘17), the new deal will be worth more than $72.5 million/year.

Fan Marino: Fox’s TNF deal touts the potential addition of a playoff game as a benefit, but the game they would likely get (Wild Card, early slot, Saturday) has been a loser for its existing rights holder (ESPN). The game has consistently drawn the lowest ratings of Wild Card Weekend since ESPN started carrying playoff games in ’15 and the network has yet to turn a profit on those broadcasts.

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NASCAR Experiences 80% Increase in Snapchat Viewership Following App’s Re-Design

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A newly re-designed Snapchat application (SNAP), with an increased focus on Discover, has given NASCAR an 80% boost in the number of viewers who watch its stories. Discover, the platform that allows verified media companies (plus influencers, brands and celebrities) to run their own channels and to split the ad revenue generated, was given its own section following the SNAP update. On last week’s earnings call, the company announced that +/- 25% of all users were using the re-designed app; insinuating viewership numbers should continue to increase. The re-design will be fully deployed by March 31st.

Howie Long-Short: While the re-design is being panned by younger users, it appears to be serving its purpose; to give publishers, brands, influencers (i.e. the people who monetize the platform) the ability to increase eyeballs (and ultimately revenue). SNAP reported Q4 ‘17 revenue increased 72% YOY (to $286 million), while revenue per user grew 46% YOY; the image messaging and multi-media mobile application also added 8.9 million daily users (to 187 million) during the most recent quarter. It wasn’t all positive news though, GAAP (generally accepted accounting principles) net losses more than doubled (as costs soared, ex: R&D +260%) during the quarter. It should be noted that with a market cap of +/-$24 billion, the company is trading at an absurd +/-30x ’17 earnings.

Fan Marino: The Hashtag 500 will be returning for the 60th running of the Daytona 500, giving fans the chance to compete on social media for memorabilia from Sunday’s race. To play, tune in to Fox at 2:30p EST and follow @NASCAR on Twitter (TWTR); they’ll be releasing custom hashtags (every 20 laps) that give fans the chance to enter random drawings for race gear (see rules, here). A driver’s fire suit, helmet, steering wheel and a set of Goodyear Tires are among the prizes to be won; the grand prize is a trip for 2 to the ’18 Monster Energy NASCAR Cup Series Championship in Miami. The ’16 Hashtag 500 set several NASCAR social media records, including tweets per minute (13,000).

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Fox Sports Announces WC Content Partnerships with Twitter, Snapchat

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Twenty First Century Fox Inc.’s (FOXA) Fox Sports, which holds the exclusive English broadcast rights to the 2018 World Cup, has announced several content partnerships that will expand their coverage beyond the television screen. FOXA announced plans to stream exclusive digital content on Twitter, Inc. (TWTR), including 27 live shows (30 minutes per) and near real-time highlights of every goal scored. On Snapchat (SNAP), the broadcast network will create “Publisher Stories” using video, text, artwork and motion graphics to comprehensively document every day of the tournament. SNAP will also produce FIFA World Cup “Our Stories”, featuring highlights and exclusive fan reactions. The 2018 World Cup, hosted by Russia, runs from June 14th through July 15th.

Howie Long-Short: To boost advertiser interest, Snapchat commissioned a recent study (using internal data and insight from Nielsen) on the company’s “unique audience”; users more active on SNAP than they are on other social platforms. The study focused on a subset of users interested in sports and sports-related content. It found SNAP users are more likely to be sports fans (i.e. watch, attend, stream games) than non-users, are more active on their smartphones at sporting events (important to activate and connect with fans) and “feel a stronger connection to sports” (i.e. spend more on officially licensed products). That sounds like a platform all sports leagues might want to explore.

Fan Marino: Twitter is reportedly exploring the concept of implementing micro-payments that would enable sports fans to watch the endings of close games; think iTunes for sporting events. I don’t see it. Fanatics (or gamblers) who would care about the ending of a close game, already have access to the out-of-market packages. The casual fan will simply continue to catch the highlights as soon as the game ends, for free. Proponents of this idea point to video games and the success in-game micro-payments, but gamers are engaged. I don’t believe that’s a valid case study.

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Amazon Pleased with TNF Audience, Undecided on Future Pursuit of Exclusive Sports Broadcasting Rights

Last night’s Cardinals-Seahawks game marked the halfway point in Amazon’s (AMZN) season long experiment streaming Thursday Night Football, and according to Jim Lorenzo, head of sports, Amazon Video, the company is pleased with viewership numbers (8.6 million through 5 games), engagement (51 minutes) and the reliability/quality of their cloud-based streaming service. Through the first 4 games, AMZN self-reported viewership figures that surpassed what Twitter (TWTR) drew last season; particularly noteworthy as Amazon requires Prime members to log-in, while TWTR’s stream was free (TWTR also has 330 million users compared to 65-80 million Prime members). Amazon will stream this week’s inaugural Next Gen ATP Finals, but beyond that, Lorenzo says that it is too early to say if the company will pursue future exclusive sports broadcasting rights.

Howie Long-Short: In an interview with Andrew Ross Sorkin at the NYTimes Dealbook conference, Mark Cuban spoke of the “large entertainment media platforms” (i.e. Facebook, Google) and their inability to be “truly effective in recreating audiences”. Cuban says that media consolidation to this point has been “irreverent” and predicts that broadcast rights will continue to skyrocket. You won’t find an argument here. While leagues want to play in the digital space, digital-only broadcast deals aren’t coming anytime soon. NFL Senior VP, Digital Media, Vishal Shah recently confirmed that point saying, “we continue to think some of the best days are ahead [for traditional TV partners] despite some shifts in the media landscape.”

Fan Marino: While Amazon is pleased with their viewership numbers, ESPN (DIS) is less than pleased with the 15% audience decline (to 1.138 million) “NFL Countdown” has seen this fall. You can place the blame on Sam Ponder, who replaced Chris Berman after 31 years as the show’s host, but the audience decline began last season (-10% YOY) after Tom Jackson’s 2015 retirement. The appeal to Countdown was the chemistry between Boomer and TJ. Now, it’s just another pregame show.

Amazon Sports Execs Pleased With Thursday Night Football Quality, Numbers Through First Half of Season

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TWITTER CAN BEAT THE HOUSE

A study published by the Economic Enquiry, found that Twitter (TWTR) is a better predictor of sporting event results than odds makers. During the ’13-’14 English Premier League season, mathematicians at the University of East Anglia (U.K.) used software to analyze 13.8 million tweets (5.2/second). They compared the results with in-play betting on Betfair (PDYPY) and found that at any given second, a positive “combined tone” about one team indicated that team had a better chance of winning than the odds suggested. The software’s recommendations produced an average ROI of 2.28% on 900,000 bets; particularly astounding when you consider PDYPY gamblers lost an average of 5.41% on those same matches.

Howie Long-Short: The predictive power of social media works if you’re analyzing the right sections of the crowd. TWTR can beat the house. Unfortunately, the average gambler lacks the ability to analyze the tone or crowd worth following; and certainly, not in real time. The “wisdom of crowds” isn’t going to put casinos out of business.

Fan Marino: Speaking of gambling, casinos were illegal in Japan until parliament passed a controversial law last December allowing them to be part of larger resorts. Now American gaming companies are actively competing to gain foothold in a market that can be “bigger than Las Vegas”, according to Chairman of MGM Resorts International (MGM) James Murran. Both Las Vegas Sands (LVS) & MGM have repeatedly stated they would be willing to spend at least $10 billion in Japan, while Melco Resorts & Entertainment (MLCO) has expressed it would be willing to spend “whatever it takes” for the opportunity.

Twitter Could Be The Key to Successful In-Play Sports Betting, Says Study

1.6 MILLION TUNE IN TO WATCH TNF ON AMAZON; AMZN OFFERS BRANDS UNIQUE VALUE PROP

The NFL is reporting that Thursday Night’s Bears/Packers game, the first to be streamed by Amazon (AMZN), saw 1.6 million people log-in to watch the game. The retail giant averaged 372,000 viewers, who watched for an average of 55 minutes; a significant increase from the 266,000 averaged during Twitter’s (TWTR) first stream last season. The comparison is noteworthy as Amazon required Prime members to log-in, while Twitter’s stream was free. 14.7 million people watched the game on traditional broadcast television (CBS).

Howie Long-Short: Amazon sold ad packages for their streamed broadcasts for $2.8 million. While the company will not state how many minutes are included within each package, they are offering advertisers a unique value proposition; the ability to track sales. AMZN is giving advertisers data reflecting the number of people purchasing or searching for a specific product, during or immediately after the ad streams. It’s a competitive advantage that not even Google or Facebook can match.

Fan Marino: Of course, the television audience destroyed AMZN’s viewership numbers. Size matters. No one is choosing to watch a game on their phone/tablet/laptop if the option to watch on a larger television screen exists.

Amazon’s First NFL Game Draws 372,000, a Fraction of TV Audience

COMCAST SPECTACOR LATEST NHL OWNER TO PURCHASE NLL FRANCHISE

Comcast Spectacor, the sports and entertainment arm of Comcast Corporation (CMCSA), purchased the expansion rights to the Philadelphia franchise of the National Lacrosse League. The team will begin play in December 2018; with home games set to be played at the Wells Fargo (WFC) Center. A fan vote will determine the team name. The NLL has an OTT streaming service with 25,000 paying subscribers. The league’s Game of the Week, which airs on Twitter (TWTR), draws an average of 350,000 views.

Howie Long-Short: Comcast Spectacor, which owns the Philadelphia Flyers, is the 4th NHL owner to buy an NLL franchise. It’s a smart acquisition for several reasons. The league demographics are attractive, with a high percentage of college grads; meaning the team should be able to demand strong returns on advertising and sponsorship opportunities. The digital first business model aligns with Comcast’s broadband business; as the service becomes essential for OTT subscribers. Most importantly, the company’s strength is in hosting events and building businesses around pro sports teams; both on the merchandising and sponsorship side. It’s what they do.

Fan Marino: Historically speaking, Philadelphia has been supportive of box lacrosse. The Philadelphia Wings won 6 championships over 28 years in the city; with the team regularly bringing in crowds of 10,000+/game. I’m bullish on their ability to build a fan base, as I don’t believe they are starting from scratch.

Fans get to vote on team name for new NLL Philly Lacrosse team