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Ad spending on NFL programming for TV networks NBC, CBS, Fox, and ESPN decreased by low single-digits in 2017, according to Standard Media Index (SMI) per The Wall Street Journal.
NFL ad revenue declined 1.2% year-over-year (YoY) to $2.4 billion in the 2017 regular NFL season. In contrast, NFL ad revenue increased 9.6% and 3% in 2015 and 2016, respectively.
Moreover, total NFL ad spend has steadily increased from $2.2 billion in 2010 to $4.2 billion in 2016. The 2017 ad revenue decrease came despite the average price of a 30-second ad spot increasing 1.2% YoY from $499,000 to $505,000.
The 2017 NFL regular season ad revenue decline is indicative of changing consumer media consumption habits:
Linear TV is steadily decreasing in importance among consumers. The number of people viewing prime-time TV has steadily declined over the last five years, especially for viewers under 35, per the Los Angeles Times. Moreover, a September 2017 study by Omnicom’s Hearts & Science surveyed 1,500 people and found nearly 50% of adults 22 to 45 watched zero content on traditional TV, and instead opted to watch content on streaming platforms.
The appeal of traditional sports, in general, is relatively lower among some viewers. Cord-cutting millennials are increasingly abandoning cable TV and traditional sports for eSports and online video game tournaments, according to LEK consulting per The New York Times. BI Intelligence estimates the audience for eSports will reach336 million in 2018.
And this has contributed to shrinking NFL audiences. Viewership of NFL games fell 10% YoY during the 2017 regular season, greater than its 8% YoY decline in 2016. The 2017 viewership declines may have influenced automotive and electronics advertisers’ decision to pull back their 2017 NFL ad spending.
NBC looks to reverse declining ad revenue with its Super Bowl broadcast. NBC is charging over $5 million per 30-second ad spot, and expects to rake in over $1 billion in ad revenue between its broadcast of the Winter Olympics and the Super Bowl. NBC is able to justify the high ad price tag as the Super Bowl attracts over 100 million US viewers annually, a reach unparalleled by any other broadcast on TV.
BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the digital disruption of live sports that:
- Assesses the evolving live sports landscape.
- Examines how ESPN's business model is threatened by the decline of live sports.
- Profiles the promising new players in the space.
- Looks at what's next for legacy broadcasters.
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