The NFL lost its antitrust suit just one year after YouTube signed a seven-year, $14 billion deal to be the exclusive home of NFL Sunday Ticket.
Time is a funky thing. A lot of it can pass without too much change or disruption in a given area, as we saw with the linear pay-TV model’s decades of dominance. But when circumstances align, change and disruption can occur at warp speed—just look at how the digital revolution upended at-home entertainment in the last decade. The point is, we have no idea what media might look like ten years from now. Until recently, YouTube appeared best positioned to replace television as we know it. Yet the NFL’s recent legal troubles with its Sunday Ticket package—which could cost America’s most popular sports league close to $15 billion—threaten to delay, disrupt and diminish YouTube’s ambition of becoming the epicenter of our living rooms.
The NFL lost its Sunday Ticket antitrust trial, in which plaintiffs alleged collusion and price fixing for the out-of-market media package when DirecTV distributed it. Let me explain: the NFL provides local games for free via broadcast TV (CBS, Fox, NBC). However, out-of-market games are available with NFL Sunday Ticket, which groups all team games together. In other words, consumers pay premium prices for access to everything, even if they only want to follow one team. (For YouTube TV subscribers, the package costs $349 for the season, or $389 with NFL RedZone. As a standalone service through YouTube, it costs $449 for the season, or $489 with NFL RedZone).
As a result of the ruling, which the league said it will appeal, individual NFL teams may be able to eventually negotiate media rights deals for themselves. So, the Dallas Cowboys and San Francisco 49ers—historically two of the most popular NFL teams—could theoretically negotiate individually for top dollar. Such a free-for-all landscape would create a chaotic grab bag of new and lucrative rights competition, completely rewiring the sports media landscape in the process.
Crucially, this could eventually unwind YouTube’s 2023 seven-year, $14 billion deal to be the exclusive home of NFL Sunday Ticket, severely hampering the platform’s ability to become the default consumer media experience of the future.
When including linear content on virtual multichannel video program distributors (vMVPDs), such as YouTube TV, Hulu + Live TV, Sling TV, and Fubo TV, live programming remains the most often cited default starting point for small-screen viewership. In other words, when Jane and John Doe turn on their TVs, regardless of whether it’s via traditional linear pay-TV or streaming, they are most likely to tune into live programming.
The NFL is the largest live mass audience attraction in America by far. From Q1 2022 to Q1 2024, the market share of subscriptions lost by pay-TV captured by vMVPDs rose from 19 percent to 29 percent. As cord-cutting increases, vMVPDs hoover up a rising percentage of these lost subscribers, and the NFL puts YouTube in a better position to do so. (Linear subscriber households in the U.S. shrank by 15.2 million over the last two years. Yikes).
Traditional pay TV thrived on news, sports and premium content, all of which YouTube offers across its various services. Between YouTube proper, YouTube Primetime Channels, YouTube TV, the music-centric YouTube Premium, YouTube Shorts, video on demand (VOD), YouTube Merch Shelf, and YouTube’s fledgling free ad-supported streaming TV (FAST) hub, its ecosystem is designed to solve for nearly every audience need imaginable. As such, it can ping pong consumer attention and spend back and forth between its attention-grabbing pillars and maximize advertising revenue, which stood at $32 billion last year.
Media executive Peter Chernin once said that “content will aggregate at two extremes: the big blockbuster hits and niche products.” YouTube is uniquely positioned to provide just that across short and long-form media. It already has a track record in building significant communities of viewers around sports, fashion, comedy and every other interest imaginable, positioning it to better monetize audience passions thanks to the different ways it can help users interact with their preferred content and creators. Adding premium programming on top of its firehose of user-generated content (UGC) – which is far more cost-effective than traditional Hollywood programming – while being the go-to destination for Gen Z and Gen Alpha creates immense potential to generate high fandom affinities. (YouTube and YouTube TV have overlapping but complementary core audience demos).
Based on all this, YouTube is a realistic TV replacement that provides entertainment at a reasonable cost. However, NFL Sunday Ticket is the glue that holds this bundle together (for now).
YouTube is already one of the most dominant entertainment platforms in the market. It leads all streaming services in U.S. TV usage share at 9.7 percent as of May and accounts for 25 percent of total U.S. streaming TV time, according to Nielsen. Top YouTube streamers like Mr. Beast boast comparable talent demand to traditional pop culture stars such as Drake and Eminem recently, according to Parrot Analytics, where I work as Senior Entertainment Industry Strategist. If YouTube were a standalone company, it is estimated to be worth $400 billion, per Needham & Company.
NFL Sunday Ticket is a significant driver of the platform’s recent success; 31 percent of new subscribers last season were through YouTube TV, while 38 percent came via YouTube Primetime Channels, according to Antenna. From April to October 2023, NFL Sunday Ticket generated 1.3 million sign-ups, pushing the package to its highest overall subscriber count in five years.
By capturing separate portions of Sunday Ticket sign-ups, Primetime Channels lays the groundwork for further paid transactions on its platform in the future while YouTube TV is now on pace for 12.4 million subscribers by 2026, which would surpass both Comcast and Charter. (However, off-season churn remains an issue as MoffetNathanson estimates YouTube TV lost 150,000 subs in the most recent quarter). That’s the sort of commercial success and consumer behavior training that elicits envy from corporate enemies.
Access to nationally focused NFL games has dramatically improved YouTube’s sports offering, creating a more attractive entertainment bundle anchored by a prime acquisition driver. This differentiates it from Netflix, which has focused more on one-off sports events and sports-adjacent programming, and Amazon, which has amassed exclusive distribution agreements for smaller partial sports packages. Theoretically, as YouTube adds more sports rights, it is more likely to grab a larger share of cord-cutters while also reducing its own churn.
But YouTube has not reached an exclusive agreement for the NBA’s League Pass, as some have speculated in recent years, and may now face challenges with Sunday Ticket. That underscores the main obstacle facing the company.
YouTube can help connect audiences to blockbuster entertainment in a number of ways. But as an vMVPD, a third-party seller, and a hub for UGC, it doesn’t usually own this content or have exclusive control over its distribution, which puts a ceiling on the value it can extract (especially via advertising). That’s why the exclusive NFL Sunday Ticket package is such a strong funnel toward its other divisions.
Competing to be the default aggregator of multiple services via Primetime Channels provides more control over the fragmented marketplace and de-emphasizes the risk of single-service churn (though it requires doing battle with the likes of Amazon, Roku, Apple, and Samsung). Primetime Channels offers consumers a la carte access to streaming services on top of YouTube’s existing bundled and add-on options. This provides more flexible choice for the consumers.
Blockbuster content, such as major sports, still primarily drives customer acquisition, which brings consumers into the app, creating the opportunity for engagement expansion. Unscripted, UGC, news and other middle-brow programming options contribute to retention. Potentially losing Sunday Ticket damages a key engine that helps power the YouTube ecosystem flywheel. The company might need to prioritize securing alternative event programming or focus on further strengthening its position as an aggregator through Primetime Channels to maintain its momentum.
Most other major American sports are locked into safe media rights deals with decades of legal precedents likely preventing big shakeups. Streamers will still lust after live sports rights moving forward. But circling back to the funkiness of time, the Sunday Ticket deal was thought to be a major bellwether of YouTube’s ascension when it was struck. Just one year later, that coronation is now far from certain.
