The NFL Sunday ticket has given fans across the country a chance to watch their favorite team regardless of where they live. It is estimated that it costs around $1 billion per year for DirecTV to obtain these rights, and with only 2 million subscribers paying about $275 a year, it is estimated that they are losing around $450-600 million every year.
The main reason why DirecTV embraces these losses is because it has used this package to entice people to bundle their cable with satellite services. Times are changing though, and to companies like Google, this is chump change. A major foundation of the NFL’s revenue system is set up through TV contracts and licensing agreements within teams’ local markets; and a move like this would have a major ripple effect through that industry. Janney Capital Markets analyst Tony Wible believes It could bolster demand for services that bypass traditional cable, pressure values for some TV and satellite networks, and encourage users to sign up for broadband.
“If Google were to secure the Sunday Ticket rights, we may have a situation where consumers can start to create a more viable alternative”
Along with the rising popularity of streaming services such as Netflix and Hulu, Google is attempting to move into the video broadcasting business, that might prove to accelerate the “cord cutting” process, or viewers switching to internet from traditional broadcast sources such as cable.
If Google were to obtain this contract, the service would become significantly cheaper for consumers.