DIRECTV Didn’t Try to Keep NFL Sunday Ticket Due to Dwindling Subscribers; How Will YouTube TV Draw in More Users?
A product like NFL Sunday Ticket has the potential to be so much more than it currently is. But an insistence from the league on maintaining a premium price for Sunday Ticket has hamstrung providers, and it could be one of the biggest reasons that YouTube TV is reportedly struggling to attract users to the out-of-market games package in its first year on that service.
- DIRECTV Chief Content Officer Rob Thun says his company never even engaged on talks to renew its former deal for NFL Sunday Ticket.
- Thun says DIRECTV would be losing $1.5 billion per season if it had kept Sunday Ticket at the rate YouTube TV is now paying for it.
- YouTube TV reportedly has around 1.3 million subscribers for NFL Sunday Ticket; estimates have suggested the company would need 4.5 million just to break even on its deal with the NFL.
Sunday Scaries
YouTube’s parent company Alphabet Inc. paid approximately $2 billion per season to land the rights to NFL Sunday Ticket in January. At the time, it appeared the company had swooped in and snatched the deal out from under the nose of Apple, who had been in negotiations with the NFL for months.
But as time has passed, it appears the competition for NFL Sunday Ticket rights was simply not all that fierce. Former owner DIRECTV didn’t even think about taking the package back, according to that company’s Chief Content Officer Rob Thun. Thun spoke with Sports Business Journal's John Ourand on a number of topics recently, and said that when the subject of keeping Sunday Ticket came up in meetings at DIRECTV, he always had the same response.
“Well, let me ask you a question. ‘Do you like losing a billion dollars a year?’” Thun would ask rhetorically. “That was the old deal. The new deal, it’d be a billion and a half. It didn’t make sense for our platform because … We’re losing subs because we’re a pure-play video provider and the price of content continues to escalate beyond what people are willing to pay. We were very data-driven about whether or not to pursue those rights. We didn’t even engage frankly in the conversation. The only piece that we engaged upon was getting the commercial rights.”
DIRECTV will continue to distribute NFL Sunday Ticket to bars and restaurants through that commercial rights deal, but once it was free of its obligation to deliver the service to residential customers it never looked back. Now, it appears it may have left YouTube TV holding the bag.
A Numbers Game
The NFL tried to spike the football early this year, claiming after Week 1 that Sunday Ticket already had more subscribers than it did in 2022. But data released by Antenna in October puts that claim into further context; Sunday Ticket has indeed surpassed its 2022 subscriber numbers, but only by 100,000 users. More importantly, Antenna says that YouTube TV has only drawn 1.3 million customers to Sunday Ticket thus far.
That’s a far cry from the 4.5 million viewers MoffettNathanson analyst Michael Nathanson figured YouTube TV would have to bring in just to break even on the Sunday Ticket contract. So what can the company do to ensure that Sunday Ticket attracts significantly more paying users next year?
For one thing, YouTube might have to consider offering Sunday Ticket at a much more substantial discount to YouTube TV customers. Users can currently purchase Sunday Ticket without a YouTube TV account via YouTube TV’s Primetime Channels, but if they choose to get both services their price drops from $449 for a season of Sunday Ticket to $349. However, factoring in the cost of four months of YouTube TV on top of a Sunday Ticket subscription, and the total price comes in at $640.96 for both services during the NFL season. A better discount would incentivize more current YouTube TV subscribers to opt into the package next year.
The NFL has been incredibly hesitant to allow users to purchase single-team packages of Sunday Ticket, as the league fears watering down the value of the overall product. But if YouTube TV managed to change the league’s mind on that front, it would be highly beneficial to Sunday Ticket’s subscriber base. This could be very difficult to accomplish, however; the NFL gets its money from the deal no matter how many subscribers YouTube TV attracts, so weaking the pricing power of the product could be a tough ask.
YouTube TV could also offer more incentives to Primetime Channel subscribers. Perhaps partnering with a streamer like Max to give customers who sign up for Sunday Ticket through Primetime Channels free access during football season would help more viewers think of the package as a good value. YouTube did offer four free months of Max to Sunday Ticket subscribers this year, but only if they were also subscribed to YouTube TV.
There are plenty of options available to YouTube TV for bringing more customers to NFL Sunday Ticket next season, but it’s critically important that the company pick the right one. YouTube TV signed a seven-year deal for NFL Sunday Ticket in 2023, which means it could be in a world of financial hurt if it doesn’t start attracting many more users to the service.
NFL Sunday Ticket
NFL Sunday Ticket is a subscription video streaming service that allows football fans to watch every live out-of-market NFL game on Sunday afternoons on YouTube or YouTube TV.