What's Behind the NFL's Deal With Twitter

Peyton Manning #18 of the Denver Broncos signals to his teammates during Super Bowl 50  - H 2016
Kevin C. Cox/Getty Images

The social network will stream 10 'Thursday Night Football' games beginning this fall.

Twitter is jumping into the TV business with Thursday Night Football this fall.

The San Francisco-based social network has emerged as the winning bidder for the rights to stream 10 NFL games during the 2016 regular season. The deal, announced Tuesday morning, surprised many media observers who thought that a deep-pocketed player with a growing digital video business like Amazon or Verizon would flex its muscle to land the streaming package.

Twitter is said to have bid less than others for the NFL package, but BTIG media analyst Rich Greenfield says there are other reasons the social network could be an attractive partner to the league. While Amazon and Verizon and, until recently, Yahoo have been building up their video businesses in an effort to compete for audiences who traditionally turned to broadcast and cable TV for entertainment, Twitter has positioned itself as a companion to TV, a place to go to talk about moments as they are happening.

"The NFL still has so much financially focused around traditional media outlets," explains Greenfield, acknowledging the $450 million that CBS and NBC are paying for the TNF package as well as deals for Sunday and Monday games and the Super Bowl. "Their partners are really important to them."

Twitter's connections to the NFL might have also played a factor. Twitter CFO Anthony Noto, who spearheaded the deal, was previously the NFL's top finance executive. The two companies also have had a partnership since 2013 through its Twitter Amplify program, and last year inked a deal for the distribution of game highlights and clips.

Not to mention Twitter's positioning as a second screen for TV. There were 27 million tweets, generating 4.3 billion impressions, during Super Bowl 50 in San Francisco earlier this year, for example.

"Twitter is more of a complement versus a competitor," adds Greenfield. "The NFL is ensuring the health of the current ecosystem while dangling some future opportunity for the digital world."

For Twitter, which is attempting to ignite its stalled user growth and expand beyond its core base of celebrities and other online influencers, even becoming a non-exclusive partner to the NFL has huge upside. The NFL, with 32 teams across the country, is the most popular sport in the U.S. and last year drew a TV audience of 200 million, a fan base that Twitter will now be able to tap into.

"This is really mostly a promotional effort," says Brian Wieser, a media and advertising analyst at Pivotal, explaining that buzz about the games could boost interest in Twitter even if people still choose to tune into the games on TV. Twitter stock got a small boost during midday trading on the news and closed flat Tuesday.

The deal gives Twitter the rights to stream the Thursday package that CBS and NBC will broadcast on TV. The NFL Network also will simulcast the game.

But the biggest winner from the deal could be Periscope, the live-streaming app that Twitter acquired last year. As part of the deal, Periscope will broadcast pre-game video featuring the players and teams. Notes Wieser: "It seems bigger for Periscope than anything else, because that’s where the original and exclusive content will be."