YouTube (GOOGL) has won the exclusive rights to NFL Sunday Ticket, the National Football League confirmed in a statement on Thursday.
"We're excited to bring NFL Sunday Ticket to YouTube TV and YouTube Primetime Channels and usher in a new era of how fans across the United States watch and follow the NFL," NFL Commissioner Roger Goodell said in a press release.
"For a number of years we have been focused on increased digital distribution of our games and this partnership is yet another example of us looking towards the future and building the next generation of NFL fans."
Sunday Ticket, which makes out-of-market games available to fans nationwide, will be available as an add-on package on YouTube TV and standalone a-la-carte on YouTube Primetime Channels starting with the 2023 NFL season. Terms of the deal were not disclosed.
A recent report from the New York Times, however, suggested YouTube was willing to pay as much as $2.5 billion to acquire the rights — $1 billion more than former rights holder DirecTV paid for the package.
The report noted the NFL could receive additional payments depending on the number of YouTube subscribers added to the service, along with other performance benchmarks.
Shares of Alphabet were down about 2% amid a broader market decline following the news.
The sought-after package comes after Puck News reported fellow tech giant Apple (AAPL) backed out of negotiations earlier this week.
Apple reportedly wanted more contractual flexibility than the NFL was willing to provide with negotiations falling apart due to existing restrictions attached to the deal.
"It's an extremely expensive package of content," Tim Nollen, analyst at Macquarie Group, told Yahoo Finance Live, noting the Sunday Ticket package was not a profitable service for DirecTV.
"But the sports world is moving towards streaming now," he added, citing the recent debut of ESPN+, which some analysts argue Disney could potentially spin off next year.
YouTube TV, which costs $64.99 a month, has more than five million subscribers and trial users as of July. DirecTV previously boasted 1.5 million to 2 million Sunday Ticket subscribers with each user paying about $300 per season.
'There is so much money in sports'
According to PwC's biannual U.S. Deals Outlook, demand for live sports, including sports-adjacent industries like sports gambling, will likely drive future M&A activity in the media space.
"There is so much money in sports, and getting live sports onto the streaming platforms is an area that is still not completely tapped," Jon Christian, EVP of digital media supply chain at Qvest, the largest media & entertainment-focused consulting company, previously told Yahoo Finance.
"The question there is: Can they put a pencil to it? Because the price is so high for the content. Are they now going to be able to get the subscribers necessary to be profitable in that business?"
Nollen agreed the "math is difficult" due to the high costs, although it might be a necessary step forward for companies hoping to survive the streaming wars: "Linear subscribers are falling by the wayside. Streaming subscribers are still growing. It's competitive, but they're still growing, and over time more sports could help to attract more users to those platforms."
"How they'll make enough money to justify double or whatever the price increase is? You'd think they'd have to double the price for the streaming services," the analyst suggested.
Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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