NFL (national football league) mobile device strategy

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<ul><li> 1. NFL Audit James CorneBob EdmistonGeoff KowalskiJon Schultz</li></ul> <p> 2. How does the NFL manageits content portfolio? Goal: Quality Product to Maximum Audience Saturation, Breakeven, Allocation Content NOT Distribution? 3. Where is the NFL? 4. Coverage Map 5. 28/30 Most Watched Television Programs $9.4 Billion Revenue Time-Sensitive ContentWhy has this Worked? 6. Investment &amp; Production Costs?$$$ $ 7. Risk!!! 8. Personal Conduct Policy 9. And the Winner Is 10. Quality Control $560M/ 8yrs $400M $207M/WASH 11. How has it Worked? Value Map &amp; Sources Silos &amp; Exclusivity Competition 12. Media Timeline 1994 1959 Fox lagging in raGngs, CBS picks up NFL buy rights to NFL for 1.8 B. 1939 1987 2006 ESPN is a nobody, NBC is rst NFL Network Created picks up NFL network to pick up the NFL 13. Value Map: How Fans get the NFL 14. Max Revenues: Silos &amp; ExclusivityPer Year: Per Year: Per Year: 2006-2013 2011-2014 2009-2012 $622.5M $1B $180M $650M $1.1B Bully NetworksNOT Fans! $712.5M $3.09B 15. Network Revenues Thursday Period AFC Package NFC PackageSunday NightMonday Night Total Amount Night $420 million/19821986NBC CBSNoneABC yr $473 million/19871989NBC CBSESPN (2nd half) ABC yr TNT (1st half) $900 million/19901993NBC CBSABC yrESPN (2nd half) TNT (1st half)Fox ($395 19941997NBCABC $1.1 billion/yrmillion/yr)ESPN (2nd half) CBS ($500 Fox ($550 ESPN ($600 ABC ($550 19982005ESPN$2.2 billion/yr million/yr)million/yr) million/yr)million/yr)NFL CBS ($622.5 Fox ($712.5 NBC ($650 ESPN ($1.1 $3.085 20062013Network million/yr)million/yr) million/yr) billion/yr)billion/yr($0/yr) 16. Will it Continue to Work? Contract Length Mobile vs. Wireless Bring In-house? 17. Length, Channels &amp; Revenue8 7 6 5 Contract Length 4 Number of Distributors 3 Revenue (Billions) 2 1 0 82-86 87-89 90-93 94-97 98-05 06-13 18. Max Revenues: Silos &amp; ExclusivityPer Year: Per Year: Per Year: 2006-2013 2011-2014 2009-2012 $622.5M $1B $180M $650M $1.1B ??2 year $712.5M Deals $3.09B 19. NFL Mobile1999Text, Email, Web2005 Video 20. NFL Mobile $15B by 2013 ($2.2B in Q1&amp;Q2 10) 21. NFL Mobile = $720 M/4-yrs 22. QuestionMobile vs. WirelessInternet TV? 23. Tablets New Silo- Wireless Exclusive? AT&amp;T? Verizon? Apple? Samsung? Wait &amp; See Emerging or Established? Develop or License? Contract Length vs. Value 24. Multiple System OperatorsRank MSO BasicVideoSubscribers 1 Comcast CorporaTon NBC 22,937,000 2 DirecTV Silo-ed 18,934,000 3 Dish Network CorporaTon 14,289,000 4 Time Warner Cable, Inc. 12,551,000 5 Cox CommunicaTons, Inc.1 4,968,000 6 Charter CommunicaTons, Inc. 4,653,000 Silo-ed 7 Verizon CommunicaTons, Inc. 3,290,000 8 Cablevision Systems CorporaTon 3,043,000 9 AT&amp;T, Inc. 2,739,000 Xbox 360? Microso` 25. Web Traffic RankingWebsite Rank (US Traffic)ESPN.com 22ndNFL.com 184thMLB.com 291stNBA.com 303rd 26. Internet TV GoogleTV? wait &amp; see Winner? In-house? Decrease risk? Cord-Cutting? Length? Reversible? 27. Internet TV changing the game? Revenue: Direct or Indirect from consumer? NFL as a Distributor: Furthering NFL Network and NFL RedZone channels? GlobalizaTon: Channel for distribuTon? Engagement: How important is fan interacTon? Mobility: Greater access with increasing connecTvity? Other? 28. Current TV Market Pie $8 Billion Subscriber Ad $$ $$ NBC DirecTV CBS $4 Billion Ad $$ ESPN FOX Ad $$ Ad $$ $3.4 B Ad Revenue $600 M Subscriber 29. Breakeven Revenues for the NFLCurrent TV $ 4 Billion Internet TV Ad Revenue? ESPN 1 Network 1 1.9 ESPN 1.9 DirecTV 1.1 DirecTV 1.1 New Revenue Networks get approx. $2.2 Billion from adverGsing 30. Key Numbers for Internet TV NFL games Reached 207,700,000 unique viewers in 2010 in the U.S. On average 17.9 million viewers per game 31. What would NFL charge to breakeven? Viewership 100% 90% 75% 60% 45% 10% Keep Season $ 9.15 $ 10.16 $ 12.20 $ 15.25 $ 20.33 $ 91.48 ESPN A la carte $ 0.42 $ 0.47 $ 0.56 $ 0.70 $ 0.94 $ 4.23 No Season $ 14.44 $ 16.05 $ 19.26 $ 24.07 $ 32.10 $ 144.44 ESPN A la carte $ 0.63 $ 0.70 $ 0.84 $ 1.05 $ 1.39 $ 6.28 * DirecTV is charging $350! 32. NFL Internet TV Pie PotentialLower Ticket Prices Ad Rev. equal Cover $1.9 with Cover $1.9B $11.5 to Networks +Subs. + Gain Ad $6.2 Billion $4 Billion lost with Ad 10% Sequal to Rev ubscribe Billion Rev. at $350 Networks Increase Intl Exposure 33. What is stopping the NFL? Does this t the goals of the NFL? Not currently since internet connecTvity is only at 77.3% with only 57% having high-speed While 99% of the US has TV access However internet is trending up Requires the NFL to become a distributor Experience with NFL Network and NFL RedZone NFL would have to interact on a higher level with fans NFL does not know how this channel will develop Goes against their Wait &amp; See strategy Is this decision reversible? 34. QUESTIONS?THANK YOU! 35. Back- up Slides Ahead 36. NFL vs. PrimeTme Viewership 37. Most Watched Shows for Fall TV Season 38. 15 Most Watched Basic Cable Shows of 2010 39. History s t the Product User Paths to NFL Where iof he NFL? 40. Map of Cable Coverage 41. The NFL is a Content Producer $5M/year $7/month2.3Subs$3B/yr rv$5/subXbox IPTVOpportunity Cost CompeGGon 42. Key is in the Strategy and Contracts Strategy: Wait &amp; See, Silo &amp; Exclusivity The NFL is in a nancial posiTon that they can aord to wait for a clear winner(s) to emerge before signing content distribuTon contracts Puts the NFL in a great posiTon to take advantage of new technology as it becomes established while minimizing their risks and proTng greatly Contracts: Length of new contracts will be a very telling signal of the future of the NFL content Long contracts: Signal that the NFL wants to milk the cash from this established distribuTon because it is established and not at risk of disappearing or being disrupted greatly Short contracts: Signal that the NFL wants to potenTally get in or out of a distribuTon method What kill switches are included on behalf of the NFL? 43. Contract Lengths and End Dates TV Contracts: CBS, FOX, NBC, and ESPN expire in 2013 Started 2006 DirecTV expires in 2014 ESPN rumored to be close to a deal to lock up MNF past 2020 but hasnt happened yet In the news January 2011 Wireless: Verizon signed a 4 year deal for 2010-2014 Will be interesTng to see who gets and how long new distribuTon contracts are for? Depending on how other distribuTon channels advance and how quickly they become mainstream could aect the new deals of the TV networks, if they even get new contracts. 44. TV is STll Making Money O the NFL Current Prot: CBS: $146 million FOX: $107 million ESPN: $83 million NBC: $12 million However, the quesTon is will this last? Analysts suggest that it will and that these prots will actually grow as well but analysts have been wrong before All depends on companies being willing to spend huge $$$$$ on adverTsements 45. Bring Content DistribuTon In-House US Pop: 307 million NFL Revenue: $9.4 billion Revenue from Networks: approx. $4 billion 2010 regular season reached 207.7 million unique viewers NFL games were watched by an average of 17.9 million viewers $3 billion/207.7 million = $14.44 Leave ESPN the most protable contract in place for MNF - $1.1 billion per year $1.9 billion/ (207.7 million 17.9 million) = $10.01 46. Value Added Process Fans 47. Emerging Sports on Cable 48. Established Cable$5M/year 49. Investment Costs? 50. Production Costs? 51. How the NFLs Brand Translates to Revenue for the League Thursday Period AFC Package NFC PackageSunday NightMonday Night Total Amount Night $420 million/19821986NBC CBSNoneABC yr $473 million/19871989NBC CBSESPN (2nd half) ABC yr TNT (1st half) $900 million/19901993NBC CBSABC yrESPN (2nd half) TNT (1st half)Fox ($395 19941997NBCABC $1.1 billion/yrmillion/yr)ESPN (2nd half) CBS ($500 Fox ($550 ESPN ($600 ABC ($550 19982005ESPN$2.2 billion/yr million/yr)million/yr) million/yr)million/yr)NFL CBS ($622.5 Fox ($712.5 NBC ($650 ESPN ($1.1 $3.085 20062013Network million/yr)million/yr) million/yr) billion/yr)billion/yr($0/yr) 52. Damage Control Corporate Partners Player Sponsors 53. Rank MSO BasicVideoSubscribers 1 Comcast CorporaTon 22,937,000 2 DirecTV 18,934,000 3 Dish Network CorporaTon 14,289,000 4 Time Warner Cable, Inc. 12,551,000 5 Cox CommunicaTons, Inc.1 4,968,000 6 Charter CommunicaTons, Inc. 4,653,000 7 Verizon CommunicaTons, Inc. 3,290,000 8 Cablevision Systems CorporaTon 3,043,000 9 AT&amp;T, Inc. 2,739,000 54. NFL as a Content Distributor NFL distributes Thursday Night Games NFL Network and NFL RedZone Sold to cable companies Comcast pays $5 million a year to have these channels Many cable companies have not picked them up Represents a missed opportunity for addiTonal revenue Does not compare to the revenue brought in by networks This represents a risk of going to internet TV right now since it is not an established market 55. Move to Internet TV NFL Revenue: $9.4 billion Revenue from Networks: approx. $3 billion Reached 207.7 million unique viewers in 2010 Games watched by an average of 17.9 million viewers $3 billion/207.7 million = $14.44 for season Leave ESPN the most protable contract and largest online presence in place for MNF - $1.1 billion per year $1.9 billion/ (207.7 million 17.9 million) = $10.01 for season DirecTV charges $350 for NFL Sunday Ticket 256 regular season games + 11 playo games = 267 $3 billion / (267 games x 17.9million) = $0.63 per game $1.9 billion / ((267 games 16 MNF games) x 17.9million) = $0.42 56. Internet TV changing the game? Revenue Direct or Indirect from consumer? GlobalizaTon channel for distribuTon? Engagement how important is fan interacTon? Mobility greater access with increasing connecTvity? NFL as a distributor of their content? NFL Network and NFL RedZone channels Other? 57. Breakeven Revenues for the NFL Current TV Internet TV $ 4 Billion Network ESPN 1 1.9 1.9 ESPN 1.1 New NFL Rev 1.1 DirecTV 1 DirecTV Networks and ESPN get $3.4 Billion from adverGsing DirecTV gets $600 Million from subscribers 58. Key Numbers for Internet TV NFL games Reached 207,700,000 unique viewers in 2010 in the U.S. On average 17.9 million viewers per game 59. Current TV Market Pie$8 Billion Subscriber Ad $$ $$ NBC DirecTV CBS $4 Billion Ad $$ Ad $$ ESPN FOX Ad $$ 60. What would NFL charge? Viewership 100% 90% 75% 60% 45% Keep Season $ 9.15 $ 10.16 $ 12.20 $ 15.25 $ 20.33 ESPN A la carte $ 0.42 $ 0.47 $ 0.56 $ 0.70 $ 0.94 No ESPN Season $ 14.44 $ 16.05 $ 19.26 $ 24.07 $ 32.10 A la carte $ 0.63 $ 0.70 $ 0.84 $ 1.05 $ 1.39 * DirecTV is charging $350! 61. Silo via ESPN3.com?AD Ad $$ $$ $2Billion ESPN Ad $$ Ad $$ $6 Billion Subs &amp; Ad Revenues Ad $$ 62. Current, Breakeven &amp; Potential $12 Billion 45% Subscribe at $175 $8 Billion Lower Ticket Prices $4 Billion Increase Intl Exposure 63. What is stopping the NFL? Does this t the goals of the NFL? Not currently since internet connecTvity is only at 77.3% with only 57% having high-speed While 99% of the US has TV access However internet is trending up Requires the NFL to become a distributor Experience with NFL Network and NFL RedZone NFL would have to interact with the fan on a higher level new to them NFL does not know how this channel will develop Goes against their Wait &amp; See strategy Is this decision reversible? </p>