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Discussion in 'DIRECTV Programming' started by the2130, Sep 27, 2019.
WSJ News Exclusive | DirecTV Rethinks NFL Sunday Ticket Deal Amid Cord-Cutting
No NFLST = I leave ATT. Easy equation.
It could go non-exclusive. That's more likely than DirecTV dropping the package.
Dumb move. ST is literally the ONLY thing keeping me with Directv. It staves off cord cutters....give them one more reason to leave. Just dumb.
It doesn't mean DirecTV would no longer have the package. If it goes non-exclusive, DirecTV wouldn't have to pay as much for the rights and they wouldn't have to keep raising the price to keep from losing too much money on the package. According to the article, they are losing about $500 million per year on Sunday Ticket.
This is probably more AT&T throwing down the gauntlet to the NFL that they aren't going to pay more next time around. The NFL already made it clear they were going to consider non-exclusivity - that's why they had that clause in the contract that allowed them to end it early had they chosen to do so.
The fact they didn't choose to do so shows they weren't able to find a way to make $1.5 billion a year in other ways, otherwise they would have done so. If they still can't find a way to make $1.5 billion a year off it in in the 2023 season and beyond then AT&T is saying they'll sign up for another exclusive at the same price as the current contract.
MoffettNathanson Research analyst Craig Moffett said while subscription fees for Sunday Ticket alone don’t cover the cost of the NFL contract, there are other factors in evaluating its value to DirecTV.
DirecTV still earns healthy profit margins from Sunday Ticket subscribers as a whole, and many people only choose the satellite broadcaster because of the Sunday Ticket package.
“Lose the ‘Ticket’ and those customers will walk,” Mr. Moffett said.
It seems like a bookkeeping question. The actual dollars collected for subscriptions may not cover what the NFL is being paid, but the financial benefit of being the exclusive home of the package goes beyond the dollars collected for subscriptions. Lose the exclusivity and ~2 million paying subscribers (and additional non-paying subscribers, such as new subscribers signing two year contracts and getting NFL ST for free) will be free to go elsewhere - not tied to paying DIRECTV.
Perhaps a bean counter would make a bad decision - one needs to look at the big picture.
Also, don't forget that the WSJ was reporting a few weeks ago that AT&T was "considering" selling DIRECTV. At best that story was a case of "everything is considered" but some things are very unlikely. I'd put this speculative story in the same category.
Just a thought after several margaritas.
If DirecTV gave up exclusivity, and the retail price of ST to subs went down between 25 - 50%, I'll bet they'd come out ahead on the deal.
1) DirecTV would be paying less, perhaps as much as half, depending on how much the NFL diluted the distribution.
With the current exclusivity, ST is only available to about 15% of all US households.
If Comcast, Dish, XFinity, etc. all had access, DirecTV would be paying hundreds of millions less for sharing that access.
2) They would have minimal churn, as existing subs would be happy the price went down. People really do not want to switch unless they have to.
3) Existing DirecTV subs might add the package if they have been scared off by the current high price.
One giant problem with all your thoughts. Why on earth do you think the price would go down? I think it’d go up, because nfl always wants more money every contract and they know only so many people will buy it, and there probably isn’t a lot of room for adding a lot more Sunday ticket subscriptions...
The NFL doesn't care what the individual person is paying, they care only about the big number. So if they get a 25% less from Directv, because they are making it up and then some, by offering it to Amazon, Hulu etc, the NFL's big pie grows, while the piece I pay lessens. The poster is right IMO, a win/win for all.
That won't work either - if Sunday Ticket goes non-exclusive, they will stand to lose a lot in the next contract with the network providers, as whatever 2nd choice they choose will cannibalize ratings on the network affiliates.
They would need to get a similar number from DirecTV, probably a large cut of a per-sub number from an internet provider, and keep the network contract flat or flat-ish, to make this all work. I doubt that happens.
The NFL wants a bigger big number. They currently get $1.5 billion per year and would like more. The current contract gives them $1.5 billion whether there are 2 million paying subscribers or just one paying subscriber.
25% less from DIRECTV? That is $1.125 billion dollars. Assuming that they keep the 2 million paying subscribers that is a cost of $562 per subscriber. How does the price subscribers pay go down? NFL ST would remain a loss leader, with AT&T hoping to make up the difference elsewhere on their bill. But without the exclusivity subscribers would likely find less expensive sources. Some of the 2 million paying subscribers would go elsewhere, raising the cost per remaining subscriber - unless NFL ST stops being a flat rate cost for AT&T|DIRECTV.
If the NFL is willing to be paid per subscriber a cost of $250, marked up to $300 for the customer, allows DIRECTV to make a little money off of the deal - but assuming that DIRECTV maintains 2 million paying customers that only provides the NFL with $500 million in subscription fees - one third of what they are collecting today. They would need six million subscribers across all platforms to break even.
The challenge is figuring out a way for the NFL to collect $1.5 billion per year plus whatever increase they want AND lower the price for the 2 million paying subscribers. The only mathematical solution is to get far more than 2 million paying subscribers. This is the math challenge that is keeping high priced networks such as ESPN in package tiers. $120 per year for ESPN works when there are 80+ million subscribers. Especially since a majority of those subscribers would be happy not paying for or watching ESPN. As an add on package, NFL ST needs to be priced at a level subscribers will accept and purchased by enough subscribers where the NFL would break even.
So, considering that there are only two million paying subscribers today, do you believe that there are six million people across all platforms who are willing to pay $300 for NFL ST? Or ten million willing to pay $200 for NFL ST? The NFL did the math earlier this year and figured out that they were better off with the bird in the hand ... $1.5 billion for two million paid subscribers. I do not expect the math to get better in the next couple of years.
Remember, it's the networks that have contracts with the NFL, not the affiliates, and Sunday Ticket subscribers are seeing the network feeds (including ads that run on the networks) on the Sunday Ticket channels. If the overall number of subscribers increases on a non-exclusive deal, as it likely would, the network contracts could actually be worth more than they are now.
Do you think NFLST would get more subscribers if it wasn’t tied to a satellite or cable subscription? Like the other three professional leagues offer.
The subscription price actually DID go down a few years ago. When it got close to $300, DirecTV lowered the price to $199, then started raising it again each year. Now it's close to $300 again and they froze it this year to keep it below $300. There is no way to know if the price would go down under a non-exclusive deal, but there wouldn't be the pressure to keep raising the price to stem their losses on the package.
That's why the NFL is also interested in a separate streaming package like what MLB offers.
The NFL would need six million paid subscribers across all platforms at $300 ($250 to them, $50 to the provider or infrastructure) to break even on their $1.5 billion price. That is a huge jump in paid subscribers. The only way the price goes down after 2022 is if the number of fully paying subscribers triples or the NFL accepts less money for their product.
I'd be surprised to see NFL ST under $400 after the DIRECTV deal expires.
With Thursday Night -Sunday Night & Monday Night -- NFLST has lost it charm get rid of it and my bill may go down $5
The number of subscribers depends in part on the price of the package, which is why it isn't likely the price will go to $400. Your analysis also fails to account for revenue from commercial accounts.
If you don't like the numbers provide better numbers yourself. It is easy to throw stones.
(My numbers are based on the WSJ article above. $1.5 billion to NFL, $500 million lost on the service, 2 million paying subscribers.)
I believe you have no sense of reality if you actually expect the price of NFL ST to go down in 2022. But that is just my opinion.
DIRECTV's current price point is based on losing money on NFL ST while making money on other DIRECTV services to compensate for the loss. Non-NFL ST subscribers are covering the losses.