Facebook Is Building Out A Sports Pay-Per-View Platform

Friends,

With the internet enabling completely new ways for sports content to be delivered outside of traditional TV broadcasts, many subscription-based, over-the-top (OTT) platforms have popped up.

ESPN is paying $1.5 billion over a five-year period to stream UFC fights on ESPN+, while Amazon is spending almost $1 billion annually for exclusive rights to the NFL’s Thursday Night Football. Those are perfect examples.

But now, Facebook is looking to get involved also — albeit in a much different capacity.

How so?

By doubling down on its pay-per-view model.

Since launching its paid online events platform last August, Facebook has strategically leveraged its 2.85 billion monthly active users to expand the service into 44 markets globally, including the U.S.

Here’s how it works: Users create an online event from their Facebook page, which allows them to stream everything from live concerts & sporting events to cooking classes & comedy shows. In return, viewers pay a one-time access fee to watch and participate. Facebook doesn't currently take a fee, but eventually probably will.

In simple terms, it’s pay-per-view.

But here’s how I think about it. Facebook is a juggernaut. Almost 70% of all U.S. adults actively use the platform, and 3% of all time spent on digital devices globally is spent on Facebook. That has enabled them to create an incredible network effect.

Now, they want to provide a new playbook for the monetization of lower-tier sports rights. By democratizing access to the pay-per-view model for individuals, schools, organizations, small businesses, and more, Facebook enables its users to create additional supply, and therefore more revenue.

Keep in mind; this isn’t meant for the NFL. They already make over $10 billion on annual media rights. Instead, this is for small concerts, amateur wrestling events, high school football games, small DII & DIII college athletic programs, and more.

For example, the Challenge Miami is a triathlon that was held in Miami earlier this year. They used Facebook online events and allowed users to purchase tickets for $2.99 each.

The result? The event drew over 18,000 online attendees, with 70% of the group watching from outside the United States. Not only is that more people than the triathlon typically draws in person, but it provided the small event with more than $50,000 in additional ticket revenue.

That’s just one example, but you get the point — the amount of potential use cases is endless. A high school basketball team will broadcast its games. A trainer could monetize their workout classes, or a large college football program might even satisfy boosters through additional behind-the-scenes content.

Ultimately, while organizations like Amazon and ESPN zig by monetizing expensive live sports rights through subscriptions, Facebook has chosen to zag, providing smaller-scale events the opportunity to increase supply by reaching a global audience digitally.

We’ll see how it works. The product is less than a year old and hasn’t even been monetized yet. Maybe that screws it up, or maybe it doesn’t. But with companies like Spotify and others launching similar online event products, I certainly wouldn’t bet against them.

The subscription space is becoming overcrowded and there is fan demand for individual moments, rather than recurring monthly fees, proving the pay-per-view model is far from dead.

Facebook’s network effect will provide a massive advantage, but now it’s time to expand and monetize.

I hope you all have a great weekend, and we’ll talk on Monday.

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