Facebook despite raising the budget for its streaming service Watch to $ 1.40 billion, will cut back on its spending sports media rights content.
According to a report by The Information, in spite of enhancing the Watch budget by 40 million the social media giant will be spending less on costly originals and more on talk shows and licensing clips from TV networks and sports leagues.
In a major shift in the strategy of making aggressive bids for the Indian Premier League and UEFA Champions League rights, Facebook has reportedly decided to refrain from bidding for streaming rights of major LIVE sports content at least for now.
The social media giant will spend “more on talk shows and licensing clips from TV networks and sports leagues,” the report says.
The report aligns with Facebook’s recent activity in the sports sector, such as the agreement with golf’s PGA Tour for the distribution of event highlights. Facebook also announced in September the extension and expansion of its content partnership with the National Football League (NFL) to distribute recaps from all of its regular-season and play-off games via the Watch platform until 2020.
Also in September last year, the International Cricket Council (ICC) and Facebook have signed an agreement for the distribution of match recaps to Watch users in the Indian sub-continent, including highlights from men’s and women’s national team tournaments.
If accurate, the report suggests a big departure from Facebook’s previous approach to sports content. In 2017, the company was unsuccessful with $600 million domestic rights bid for the Indian Premier League (IPL) Twenty20.
A year later it secured a deal for South American broadcast rights to the Uefa Champions League, European soccer’s elite club tournament, amongst a handful of other live sports content acquisitions.
Peter Hutton, Facebook’s director of sports partnership, said in October that the social network is still “testing the market” and will make a decision on how it wants to be positioned in the sports rights landscape based on its findings.
“Our position changes as the platform changes, but I am certainly not expecting any huge investments in sports rights in the near future,” he said, adding that Facebook does not pay for “95 to 96 per cent” of its live sports content.
“Covering sports live and being involved in the sports industry is a big learning process, so it’s important that, when you take steps, you take small steps and you don’t take big gambles.”
This strategy sets the company apart from the likes of Netflix, Apple and Disney, which have reportedly spent several billion dollars a year on their services. Facebook’s model, on the other hand, is more similar to YouTube, which is geared toward (usually) shorter, free content supported by ads. Facebook is using Watch to boost user engagement and potentially bring in TV ad dollars, the report says.