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Can DIRECTV Innovate NFL Sunday Ticket Enough to Survive?

As DIRECTV’s NFL Sunday Ticket heads into its 25th season, the league and its satellite partner are working to keep up with the changing media landscape.

DIRECTV’s Sunday Ticket marketing lead, Jamie Dyckes, spent this offseason unearthing memories. While leading audience research into the eternal questions: Why do we keep watching football? and How are we doing it differently in 2018?, Dyckes also studied the past. He flipped through bygone sales presentations. He looked at old market studies. Sunday Ticket enters its 25th season this year, and yet, “It is funny how consistent it’s been,” Dyckes says.

The NFL led the way in 1994, changing the game for fans, leagues and the media hierarchy. But as the world sprints away from that century, the shield and its satellite partner are now working to keep up.

The idea, like all ideas, was already out there. Neil Austrian was the CEO of Showtime when he first conceived of selling out-of-market football games to fans in 1987. He got Pete Rozelle on board, but CBS scuttled a deal at the time. A couple years later, Jon Taffer, now the host of Bar Rescue, but then just a bar owner, consulted for a telecom curious about the viability of, for example, showing Cowboys games in Chicago bars. Austrian joined the league as president in 1991. Two years later, the NFL renegotiated its rights deal, with Fox replacing CBS, and Sunday Ticket was born.

1994 was the NFL’s first year with a salary cap, the first season for the newfangled two-point conversion, and the first time officials used microphones rather than starter’s pistols to signal the end of quarters. And, for the first time, DIRECTV customers could easily watch every NFL game. At first, the package was a boon for sports bars, Taffer says, but it quickly became clear that the bigger business was selling the service directly to homes.

“We totally underestimated the number of people who were out-of-market but wanted to watch their own home team,” Austrian says. “I think almost immediately when we got the signups, and definitely by year two, I think we knew we had a bull by the horns.” DIRECTV hasn’t confirmed the number of Sunday Ticket subscribers, but analysts have estimated that it drew nearly two million users by the end of the first decade.

Further validation came as the MLB and NBA launched similar products, Extra Innings and League Pass, by 1996. But as those two services later expanded to become available on cable as well, Sunday Ticket stayed exclusive on DIRECTV with a five-year agreement signed in 2002.

As much as the NFL has always preached its desire to reach fans, the decision to keep Sunday Ticket limited was intentional. As Broncos owner Pat Bowlen explained at the time, “With DIRECTV, we're in 11 million homes. With cable, it would have been, what, 80 million? That would have had a huge impact on our over-the-air broadcast partners.” Local TV stations were wary that if too many people had access to the all-you-can-watch Sunday Ticket, the traditional in-market games—the ones that built the NFL behemoth—would go unwatched. Giving fans access had to be balanced with keeping CBS, FOX, and NBC happy. But exclusivity had benefits for viewers, too.

With full control over Sunday Ticket, DIRECTV had both the power and motivation to innovate. It won an Emmy in 2004 for “the enhancement of original television content.” In 2005, it debuted the Red Zone channel, which the NFL Network would later duplicate on cable. A game mix channel helped fans watch multiple games at once. Another Emmy for “outstanding new approaches” came in 2011 after the launch of more on-demand scores and stats, plus features directed at fantasy players.

Who knows what influenced what, but as the NFL transcended regionalism in the 2000s—with fantasy football creating mixed allegiances, with online gambling making every game worth watching, with the idea of a “small-market” NFL team becoming preposterous—Sunday Ticket fanned the flames. And as fans morphed into channel-flippers, needing to see everything without wanting to sit and watch anything, Sunday Ticket satiated.

Amidst all this transformation, the league changed too. Sunday Ticket was the first major venture from NFL Enterprises, set up to help the league capitalize on new technologies. “It showed that beyond the in-market games coming to fans in the four windows each week, there is actually more interest and appetite from our fans to engage with different and deeper NFL experiences,” says Hans Schroeder, the COO of NFL Media. By 2010, NFL Enterprises (which was overseen by Roger Goodell before he became commissioner) reportedly brought in just under $1 billion for the league. In 2014, the NFL and DIRECTV re-upped for a record $1.5 billion annually through 2022.

At the time, the league entertained offers from digital giants like Google, but DIRECTV had reason to prevent any upstart from nabbing the license. The satellite service was also launched in 1994, and its exclusive Sunday Ticket offering helped it grow into the country’s second largest pay-TV service. AT&T bought DIRECTV in 2014, but only on the condition that Sunday Ticket came with. So the provider held onto the rights, making a commitment along with the league to further develop a streaming option.

What that looks like now is NFLSUNDAYTICKET.TV, which offers access to every out-of-market game at the same price as the satellite package, but only for people living in areas where DIRECTV is unavailable. Special student pricing has made it attractive on college campuses, but the service is significantly more limited than the MLB or NBA’s. It lacks the NBA’s per-game pricing, simultaneous stream support or special mobile view option and trails the MLB in technological features such as baseball’s algorithmically produced highlight feature, Catch Up.

“Digital … can greatly improve,” NFL chief media officer Brian Rolapp says. “We’re having a lot of conversations with them about that. I think you’ll see in the next handful of years some significant changes.”

In the shorter term, look for the league and DIRECTV to begin experimenting with increased access to the online product in select markets.

DIRECTV has been hit as hard as anyone by cord-cutters, losing a million subscribers since the first quarter of 2017. In response, it’s built up an over-the-internet alternative, DIRECTV Now, which can be streamed on mobile devices and TVs for $40/month. Theoretically, DTV Now could one day use something like the Sunday Ticket product to differentiate itself from its new Google, Sony, and Dish-backed competitors, just like it has used football to dominate the satellite category for a quarter-century.

So maybe it’s a question of when, not if, the business plan will be radically altered. But, in a world of illegal streams and scores on Snapchat, it’s also a question of Will it be soon enough? Will what was an innovative offering be vital for another 25 years?

Sunday Ticket is celebrating Year 25 with parties in Los Angeles, New York and Philadelphia. At each stop, Dyckes meets with fans that have had the service since the beginning and spends times with the team that has been delivering the product for just as long. He doesn’t see the changing landscape as increasing pressure on him, he says. If anything the tradition of offering Sunday Ticket has been a stabilizing force. With the season now underway, he’ll soon start planning for next year. Once again, it’s time to look forward. Challenges await.

Correction note: This article has been updated to better reflect the fact that Jon Taffer had no material impact on the development of the Sunday Ticket product.