NFL Network Goes Direct To Consumer With NFL+

ESPN has been studying for some time when would be the right time to make the switch from analog to online (the most recent view is at 50 million subscribers versus the 74 million subscribers they have now), but smaller networks like NFL Network are making the move now.

They recently announced that NFL Network and RedZone are being added to NFL+ next season, which will raise its price from $4.99/month to $6.99 and the premium tier which will include RedZone will go up from $9.99/month to $14.99. NFL Redzone offers 7 hours of live football every Sunday during the regular season, and features up to 8 games at once in its “octobox.” Football fanatics love it because it captures every touchdown.

For a limited time, NFL+ is offering a 20% discount on the annual packages, which run $49.99/year for NFL+ without the discount, while NFL+ Premium’s regular annual rate will be $99.99.

NFL Network has the exclusive rights to eight regular season games and will still be available on cable and satellite. It charges multichannel operators about $2/sub/month wholesale, who then market it up even further.

The NFL only rolled out NFL+ roughly a year ago, offering live local games on mobile devices. It allows subscribers to stream live in-market Sunday afternoon games and national games in prime time on Sunday, Monday and Thursday nights.

Many of the Thursday games are licensed to Amazon’s
AMZN
Prime Video for $1.2 billion per year and starting later this year Google’s
GOOG
YouTube bought the rights to the NFL Sunday Ticket package for $2.0 billion per season, which allows subscribers to watch out-of-market games on Sunday Afternoon.

NFL Network live streams and Redzone will be available on all devices, not just mobile when NFL+ makes the change. David Jurenka, the SVP of NFL Media, told a reporter that the league is also developing a slate of original programming for NFL+.

Brian Rolapp, the league’s chief media and business officer told The Wall Street Journal that it continues to search for a partner for its NFL Media unit, a process that has been going on for two years.

One likely target would be Walt Disney
DIS
. CEO Bob Iger recently announced that the company is seeking a partner for ESPN, with the most likely partners being the major sports leagues. Most sports contracts are long-term deal and it would take years for ESPN to migrate all of its content onto ESPN+. ESPN+ subscribers were essentially flat in its most recent quarter at just over 25 million. Partnering with the major sports leagues might give them some wiggle room to renegotiate contracts to open up streaming rights.

That would still be tricky as many of the Thursday night games have been sold to Amazon Prime Video, but starting negotiations early could give Walt Disney a greater chance of getting streaming rights before they are sold to competitors.

One challenge media companies are facing as they offer direct-to-consumer or DTC services is finding the right price point so that consumers, many of whom subscribe to multiple DTC services, don’t find themselves facing sticker shock and cancelling.

Disney reported in its most recent earnings call that it lost 300K in domestic subscribers from Disney+, while at the same time announcing price increases of more than 20% for the ad-free versions of both Disney+ and Hulu starting in October. Disney+ without commercials goes up 27% October 12 to $13.99 per month while the with ads version will remain at $7.99/month.

Hulu without any advertising goes up 20% to $17.99 per month, with Hulu with ads staying at $7.99. There is, however, savings in subscribing to both. The company is rolling out a new bundle called Duo Premium which offers Disney+ and Hulu without ads for $19.99/month.