Facebook signs two-year deal to show NFL highlights right after games, have NFL create highlights shows

We’ve seen a rapid expansion of Facebook’s sports programming recently, with the company picking up exclusive college football games through Stadium, streaming MLB, Champions League and MLS games, paying sports media outlets like Bleacher Report and Barstool Sports to develop shows for them, and even launching a $600 million bid (which was ultimately unsuccessful) for cricket rights.

Now, Facebook has struck a deal with the NFL so its users can watch team highlights on the platform immediately after games, with the NFL also creating exclusive Facebook highlights shows. Recode’s Peter Kafka has more on why this worked this time:

Facebook has signed a two-year deal to bring highlights and other clips to its two billion users around the world.

The deal, which kicks in immediately, will let Facebook users watch highlights of any game shortly after it ends.

The NFL is also creating a couple of highlight shows specifically for Facebook’s new “Watch” video platform, which will only be available to U.S. viewers, for now.

Users will be able to watch the clips for free; Facebook is paying the NFL an undisclosed amount for rights to show the highlights, and will try to earn some of that money back by selling ads that will run during the clips.

This is a deal Facebook has been thinking about for several years but hasn’t been able to pull off until recently because it didn’t have a good way to make money from videos that run on its platform. Now it hopes its unskippable “mid-roll” ad format will make it work.

Kafka notes that Facebook did a short “test” highlights deal during the 2014 NFL playoffs, but that didn’t work as well thanks to ads being shown after the clips. The “mid-roll” ads may be much more desirable for advertisers, as they’re more likely to actually get watched. And Facebook will need to make back at least some of the money from this; while there’s arguably a user attraction and retention benefit beyond pure ad-based monetization (if these clips and shows get new users to sign up for Facebook, or existing ones to use the site more regularly, that’s beneficial too), NFL highlights rights aren’t cheap, so selling ads against them is rather important.

Something else that stands out about Facebook’s deal here is the potential personalization. The company has a ton of user data that could let them figure out what teams many users like (from outright likes on the team page to listing a team as an interest to liking fan sites or players’ pages) beyond pure geography, so they may be able to market relevant highlights to users as soon as they log on. And they can then gain further data from what highlights people watch, which may help them market other products to those users. (It’s similar to Amazon’s multiple revenue streams for Thursday Night Football.)

Given the global interest in the NFL, too, that makes it a desirable league for Facebook to work with. Even if not all the content here will be available globally, there’s still a lot that will be. And it’s interesting that they’re also paying the NFL to make Facebook-specific highlights shows; if those are done well, that may help promote the company’s Watch tab further as a destination for original content, and help in getting people to think of the site as a key place to go for NFL content. We’ll see how this plays out, but while it’s certainly a big bet for Facebook, it’s one that seems to have plenty of potential positives for them.

[Recode]