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Facebook in 1Q17: Live Sports, Ad Strategies, and Competition

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Part 5
Facebook in 1Q17: Live Sports, Ad Strategies, and Competition PART 5 OF 15

How Facebook Could Edge Twitter out of Live Sports Deals

Facebook seeking to live-stream NFL games

Facebook (FB) has joined Twitter (TWTR), Amazon (AMZN), and Alphabet’s (GOOGL) YouTube to submit bids to show NFL games. These tech giants are seeking the rights to broadcast Thursday Night Football games to their online audiences.

In 2016, Twitter edged out competitors to sign a $10 million deal to live-stream ten NFL games on its platform. However, Twitter’s subscriber base and revenue growth in 2016 suggests it didn’t make many meaningful gains from carrying the NFL games.

How Facebook Could Edge Twitter out of Live Sports Deals

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A larger audience and deeper engagement

For Facebook, there are several factors that suggest it may see greater success with live sports than its rival Twitter. For example, Facebook has a larger audience of 1.9 billion monthly active users and 1.2 billion daily active users compared to Twitter’s ~320 million monthly active users at the end of 4Q16. The chart above shows how Facebook’s daily user base has trended in the past five quarters.

Further, sports engagement is already high on Facebook’s flagship app. According to a Wall Street Journal report, ~35% of Facebook’s 1.9 billion users follow a sports page, indicating a strong demand for sports content on the site.

With that, Facebook seems to stand a better chance to convince the NFL and other major sports leagues to license their content to its platform because it could provide potentially higher returns than Twitter can deliver. Additionally, Facebook’s large user base and deep engagement make it possible for the company to generate more revenues from offering live sports content.

Digital video push

Facebook seems to be betting on live games to strengthen its digital video push as it seeks a larger share of video advertising funds. Live sports could help the company drive superior ROI (return on investment) for advertisers, which could give it an edge over competitors like Snap (SNAP) in the contest for advertiser dollars.

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