Live Sports On Facebook: Will This Keep Its Users Hooked?

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In a recent interview with Variety, Facebook‘s (NASDAQ:FB)  V.P. of Partnerships, Dan Rose, confirmed that the company is in discussions with the National Football League (NFL) to secure rights for live streaming of football games on its platform. The social media network is also reaching out to Hollywood agents to bring actors, athletes, music artists and others to its live stream service.  While Facebook has so far been a platform for user generated content, its interest in NFL rights appears to be a shift in strategy where the company is looking to acquire content. With sports events,  Facebook plans to include additional content such as behind-the-scenes reporting from the locker room or on the field. It also plans to create a social experience around live sports and is open to having a wide variety of content beyond the game on Facebook. In August last year the company had launched its “Facebook Live” for limited users. This live broadcast facility is now available to iPhone, iOS and Android users in the U.S.  We believe bidding for NFL rights is an indication that Facebook is increasing focus on its live video stream and looking to provide high quality content to its users, even if it has to pay for content. This could increase its costs in the short term but can prove to be a powerful way of  reducing content fatigue and increasing user engagement while attracting TV advertisers to its platform in the long term.

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Creating A Digital Social Experience While Watching Sports Events

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Facebook’s interest in streaming NFL games live on its platform is an indication that the company is open to acquire content for its platform. The NFL deal might not prove beneficial for the company since it cannot bid for smartphone rights where it gets maximum usage. Exclusive rights to stream NFL games on smartphones are held by Verizon. However, Facebook is looking to create a social experience around live sports and the NFL experiment can pave the way for future live streaming of sports on Facebook which would also be available on smartphones.  While viewership on conventional  TV is set to decline in 2016, sports events still attract audiences to TV screens, often in a social setting.  Facebook appears to be looking to capture this audience and create a digital social experience around watching sports.  In January this year the company launched “Sports Stadium” a dedicated place on its platform for users to experience sports in real time with friends and family. With 650 million sports fans, the live streaming of sports events could attract more users to this new feature and increase engagement on Facebook during live sports events.

Engaging content on its platform is the key driver for Facebook to increase user engagement and attract new users on its platform, which in turn drives the company’s revenues. According to comScore data, Facebook’s active users globally spend around 20+ minutes per day on its platform. The company is constantly looking at innovative ways to increase this time as content fatigue and lack of interesting stories on News Feed can reduce user activity. We believe Facebook Live is aimed to increase user engagement,  By including live “owned content”, Facebook is exploring avenues other than user generated content to engage users. While the first step in this direction appears to be live sports, the company could expand into other popular live events. If successful, this initiative can increase user engagement and also attract new advertisers to its platform, including the ones currently advertising on TV.

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