Welcome back to What I’m Hearing+, and hello from New York, where I’m still basking in the third-hand excitement of watching the Detroit Lions potentially embark on a deep playoff run. (I’m from Toronto, so this is one of my adopted home teams.) Considering how dreary the weather’s been in New York, staying inside and devouring hours of wild card football was a perfect way to spend my birthday weekend. Speaking of which: Live sports, and their seismic impact on the streaming business, animate this edition of WIH+.

Peacock’s exclusive Dolphins-Chiefs game drew some 23 million viewers, a record for the platform. That’s a meaningful win for NBCUniversal, which continues to push its linear audience toward streaming. And yet the outcome of the NFL’s first streaming-only playoff game also highlights the challenges as incumbents work to shift consumer behavior, especially considering that so much sports media is actually being consumed on… YouTube.

But first….

• The McAfee platform question: During the past couple weeks, Disney executives have had to contend with the saga of Pat McAfee, the former NFL player turned YouTube star who moved his talk show to ESPN last year in a five-year, reportedly $85 million licensing deal. I won’t recount the entire recent McAfee drama, but it involved his frequent guest Aaron Rodgers baselessly accusing ABC late-night host Jimmy Kimmel, a prized member of the Disney family, of palling around with Jeffrey Epstein. Kimmel threatened litigation and McAfee subsequently declared Rodgers persona non grata on his show—which airs on ESPN’s cable channel, ESPN+, and its free YouTube channel—only for Rodgers to reappear the very next day.

  Anyway, the real problem for Disney, and for streaming writ large, isn’t simply that McAfee is a loose cannon or that Rodgers is a fabulist. The existential challenge is that McAfee and Rodgers aren’t playing to ESPN’s audience—instead, they were playing to McAfee’s audience, which is first and foremost a YouTube audience, regardless of ESPN’s efforts to capture his value.

  The embarrassing situation speaks to the shifting balance of power between platforms—a major topic of conversation inside boardrooms from New York to L.A. Consider that the viewership share of children’s content decreased by 4 percent on Netflix during the past two years, according to Nielsen, as YouTube’s share increased by 4 percent. More than 500 hours of content are uploaded every minute to YouTube, and nearly 50 percent of all YouTube viewing is now done on smart TV sets. (Google’s Android maintains the largest market share globally for connected TV operating systems, which ensures prime placement for sister unit YouTube before anything else is downloaded.) ESPN’s Jimmy Pitaro may be pissed about McAfee’s buddy starting trouble on its airwaves, but he should also be incensed by the fact that so many fans were watching his foolish comments off-platform.

  Yes, the legacy players are notching some wins with live events, like last weekend’s Peacock playoff (see below), as they try to capture audiences migrating from cable to streaming. But they’re going to need another strategy entirely if YouTube, not streaming, becomes the new TV. And it looks like it might.

• Goodell trouble: Saturday night’s clash between the Chiefs and Dolphins came less than 48 hours after a federal judge ruled that NFL teams are not immune from antitrust liability for the way they pool telecasting rights and eliminate competition between themselves. But for mutual agreement, the Kansas City and Miami teams could separately license their game broadcasts. Of course, that would be a huge change. Guess what? U.S. District Court Judge Philip Gutierrez heard the NFL’s argument that this alternative arrangement would destroy the league’s broadcast model, and decided it’s an issue that’s best reserved for trial. As such, a six-week trial is tentatively set to begin in late February.

  Will we actually witness such a proceeding, which would be consequential across the media landscape given the supremacy of live football? Time will tell. With billions at stake, this could be the moment that commissioner Roger Goodell starts earnestly negotiating a settlement with class-action lawyers. —Eriq Gardner

Of course, the NFL has been streaming-curious for a few years now. Amazon has had Thursday Night Football for two years, and even promiscuously broadcast the league’s first “Black Friday” affair, which doubled as an ersatz shopping experience. The specter of a streaming-only playoff contest, for which NBCU paid a reported $110 million to broadcast, seemed like the natural next step for both the league and its broadcast partner. And the decision to put Chiefs-Dolphins on Peacock rather than the less enticing Browns-Texans seemed like an indication that both the league and NBCU weren’t screwing around. They were intent on running an experiment with their best product.

Sure, this upset many people, as is often the case. (As Matt Belloni noted on Sunday, Disney caught flak a decade ago when ESPN became the first cable network to exclusively broadcast playoff football.) New York Congressman Pat Ryan was so incensed that he fired off a letter to the NFL and NBC calling the move “a bait-and-switch” and “a disgrace.”

But the strategy worked: 23 million people tuned in, according to NBCU, which called the game “the most streamed event ever in U.S. history.” Peacock shot to the top of the Apple App Store, indicating a huge surge in downloads. We won’t know for several months (perhaps more than a year, really) how many of those new customers were one-and-dones who churned out soon after paying that initial $6, or whether they discovered enough new content (or convenience) to stick around. More broadly, though, the game demonstrated the power of live events—and must-watch sports, in particular—to drive meaningful changes in otherwise stubborn consumer behavior. Or at least it seemed to.

Some customers may have been frustrated about having to download Peacock, but most already accept that some NFL viewing comes with a cost. According to the research firm Kantar, football is more associated with a “need” to sign up for a service than any other sport in the U.S., and football games were responsible for 40 percent of SVOD signups in Q3 2023. In the U.S., a heavily saturated streaming region where customers feel satiated by Netflix, the NFL still brings in big business.

Will they stick around? In 2021, NBCU put a ton of Tokyo Olympics content exclusively on Peacock, which led to its biggest month in sign-ups to that point, according to research firm Antenna. But the customer lifetime expectation for those who subscribed for the Tokyo Games was actually 11 percent lower than the eight-week benchmark (i.e., those who signed up for Peacock via non-Olympic content). Sports are usually enough to get grumbling customers in the door, but aren’t enough to keep them month after month.

Peacock, to be sure, has evolved a great deal from 2021. Demand for Peacock originals has more than doubled in that time, according to Parrot Analytics, where I work as director of strategy. “Catalog demand,” or demand for everything on the platform including licensed fare, has grown from 6.5 percent to 8.8 percent of total demand share across platforms. The Peacock of today offers something for new subscribers—WWE matches, a Ted show, a John Wick show, Oppenheimer on Jan. 16—to make them feel like the subscription is worth it. Perhaps football fans will find this content and stick around?

Peacock’s wild card game may have offered a cable experience on a streamer, but streaming isn’t cable—at least not yet. As I’ve noted before, the consumers’ desire to re-create cable on streaming suggests just how ill-equipped most companies are to facilitate the pivot. Indeed, as much as every streamer is worried about each other, they are all truly worried about the only player big enough to potentially offer a reboot of this comforting experience: YouTube. It may not be fair to compare YouTube to subscription platforms that pay big money for sports rights. But those comparisons may soon become much more apt. Experiments with Sunday Ticket, which Google reportedly paid $2 billion a year to secure, YouTube TV’s growth as a vMVPD (it may soon surpass Dish to become the fourth-largest player in the space), and the leagues’ interest in the convening power of the main YouTube app suggest where this is all headed.

One underappreciated linchpin of streaming strategy is the strength of the supportive slate after an event, like the Olympics or an NFL playoff game. This is the beating heart of a service (and, of course, it’s where Netflix excels). Streaming, after all, isn’t a pure event-driven business. The lifeblood of a service is consistent revenue. Amazon’s supportive tissue is the Prime retail business. YouTube’s backbone is the combined VOD and vMVPD business—even if customers cancel their Sunday Ticket, YouTube’s goal is increased engagement on its ad platform, where it still draws most of its revenue, and through YouTube TV subscribers who don’t churn because of access to other sports like the NBA and MLB. Not all sports may head to YouTube one day, especially if the FTC has anything to say, but YouTube has figured out a better supportive infrastructure than SVODs like Peacock and Paramount+.

Netflix C.E.O. Ted Sarandos is among those who have predicted that sports will follow audiences to streaming. And the search for sports fans’ holy grail—having everything in one place, again—will likely prove fruitful. But the future of Peacock and Paramount is as unclear as their corporate parents’ plan for M&A activity. There are only a few players who will likely be distributors, and only a few who want to be sports hubs in the U.S. So today we may be talking about Peacock’s big NFL win, but getting a ton of people to use an app for a football game is comparatively easy. Ensuring an existence as a streaming service in five years requires more than just a couple of big games.