Earlier today, I published a post titled “Twitter’s NFL Gamble“. The post illustrates perfectly the danger of jumping on breaking news too quickly, in that a major piece of information emerged after I hit “Publish” on the post, which totally changed the dynamic of the story. So here I am with a second post in the same day on the same topic, from quite a different perspective. A good deal of the material in the initial piece still holds, but the key point from the title no longer makes as much sense.

The key piece of information was reported by Recode, and concerns two important elements – the price Twitter paid, and the nature of the content it will carry, specifically as it relates to ads. Here are the two key paragraphs from that piece:

“While the NFL and Twitter haven’t disclosed the price for the package, people familiar with the bidding said Twitter paid less than $10 million for the entire 10-game package, while rival bids topped $15 million. Those numbers are a fraction of the $450 million CBS and NBC collectively paid for the rights to broadcast the Thursday games. (A note from Twitter’s Investor Relations Twitter account notes that the company had already baked the cost of the deal into their 2016 guidance.)

One big reason for the disparity is that CBS and NBC have their own digital rights, and they will own most of the digital ad inventory in their games, people familiar with the deal say. So Twitter will be rebroadcasting the CBS and NBC feeds of the games, and will have the rights to sell a small portion of the ads associated with each game.”

With this as context, it becomes clear that this is far less of a gamble for Twitter than I originally understood, and actually far more of a gamble for the NFL. Splitting the broadcast and digital rights for the Thursday night games was a great innovation, and one I actually wrote up pretty positively in a post for Techpinions. But it now appears that the NFL has chosen not to be as disruptive as it might have been. Rather than license these rights to a new online video player, with all the advertising rights packaged in, the NFL has chosen to forego a big new revenue opportunity from the digital world and instead hand the ad revenue opportunity mostly to CBS and NBC, while Twitter merely gets the benefit of increased traffic from broadcasting games almost entirely packaged up by others.

That represents a big gamble on the NFL’s part, that it’s better off giving most of the rights to traditional players rather than opening up a new opportunity with a major video player from the online world. The Recode reporting certainly suggests that the NFL even chose to go with Twitter despite the fact that its offer was lower than others. The NFL may appear to be doing the opposite of gambling here, but the risk is that it’s setting up these online rights as something much less than what they could be. Over the next few years, these online rights could be really lucrative, and this Thursday night package was a great way to really test that market, but the NFL is putting all its eggs in the broadcast basket instead.

Bloomberg broke the news this morning that Twitter is the winner of the digital rights package of Thursday night games the NFL has been auctioning off recently. Twitter came out of left field (if that’s not the wrong metaphor for this particular sport), and it’s worth thinking about both why Twitter would want this deal, and what the implications might be.

Update: some significant new details have emerged since I wrote the first version of this post, notably that Twitter has likely paid far less for these rights than previous rights owners, in part because it will sell very few ads itself and will largely carry the broadcast and ads provided by the network broadcasters. As such, the size of the gamble is significantly smaller, and the comments about guidance also make more sense. I subsequently wrote a second piece which covers the later news.

Firstly, we know now that Jack Dorsey really is serious about making live – and live video specifically – a focus in 2016! So far, Twitter has been used almost entirely for people to talk about live events being broadcast on other platforms, which has meant it hasn’t been able to benefit as directly as some other players from those live events, even if massive numbers of tweets were sent and even shown on television. Last night’s NCAA Championship basketball game is a great example of this. This deal suddenly gets Twitter directly into the business of showing these games and tapping into some of the additional associated revenue opportunities. It also significantly ups Twitter’s live video game from short, grainy videos to professionally produced content.

One of the most interesting things is going to be seeing how this fits into the Twitter product – with all the other bidders, there were obvious existing platforms for broadcasting NFL games, but with Twitter they’ll have to create a completely new home for this kind of thing. It’s possible they might use Periscope, but given the poor quality of most Periscope videos until now, I would think the NFL might have qualms about having their high-quality content appear there. Now that the news is out from the NFL, with comment from Twitter, we know that Twitter is describing the experience as being “right on Twitter,” but I’m curious to see the exact implementation.

The other big questions is how Twitter will do selling ads against this content – it’s obviously a very different type of advertising from what they’ve sold before, but it gives them their first real opportunity to cross-sell these different types of ads and break into television advertising for the first time. It may also be a first real opportunity to make really good money from the “logged-out users” Twitter has been talking up for so long, but who are so hard to advertise to effectively.

And then there’s the question of how much Twitter paid for the rights here. It’s hard to guess at because this package of rights is very different from any other similar package sold before – non-exclusive in the US, but exclusive internationally. But almost no matter what the exact number, it’s likely to be a meaningful fraction of Twitter’s overall revenue. That’s one of the reasons Twitter is such a surprising bidder (and winner) – it’s a much smaller company than most of the other names that were bidding, with just over $2 billion in revenue last year. If the rights costs in the hundreds of millions of dollars, which seems likely, then they may well cost 10-20% of revenue. That’s a huge gamble, and we all know the gamble didn’t pay off for Yahoo. The strangest thing is that the Twitter Investor Relations account tweeted this morning that all expenses associated with the rights are already baked into its guidance for the year. That seems particularly odd given that Twitter likely didn’t know whether they’d won the rights yet when they announced their guidance, and it’s a material amount of money.

Hopefully we’ll get more detail on all of this either later today or over the coming weeks, but it’s a fascinating illustration of the sheer breadth of the companies getting involved in the live video business at this point, coming from a diverse set of starting points within the broader industry.