Amazon’s Big NFL Play Could Kick Off a Shake-Up in TV Sports Rights

TV network execs likely aren’t losing sleep over any serious ratings drop because of Amazon’s blitz into pro football: This week, the e-commerce kingpin kicks off its live-streaming of 11 NFLThursday Night Football” games to customers across the globe.

Amazon’s first “Thursday Night Football” live-stream will be Sept. 28, in a classic face-off between the Chicago Bears and the Green Bay Packers. The run concludes with a Christmas Day meeting between Pittsburgh and Houston.

The games will be available to Prime Video members in more than 200 countries and territories (excluding China, where Amazon hasn’t launched video) — a global reach that Amazon execs say was critical for the NFL. “There aren’t many companies that can deliver a worldwide live event like this,” says Jim DeLorenzo, head of sports for Amazon Video.

But the Amazonian gridiron foray could mark just the earliest days of deep-pocketed technology giants pursuing the TV rights to league deals that for years have served as the glue that holds together the TV bundle. “Imagine the scenario when Amazon is joined by Google, Facebook and Apple at the table in direct opposition to the networks that have historically battled for the prize,” says Mike Bloxham, senior VP at research firm Magid.

That’s already starting to happen. Facebook earlier this month entered a losing bid of $600 million for five-year rights to Indian Premier League cricket matches (Star India paid $2.6 billion for broadcast and streaming rights). Both Amazon and Facebook have been rumored to be interested in English Premiere League soccer rights, while Twitter (which lost the NFL “Thursday Night Football” digital package to Amazon) has begun streaming weekly MLB games and a bouquet of second-tier live sports.

However, compared with its tech brethren, Amazon stands apart.

That’s because its key objective with the NFL deal — along with the rest of the Prime Video service, for which it’s spending an estimated $4.5 billion this year on content — is to drive new subscribers to the Amazon Prime membership program. It was widely reported that Amazon is paying $50 million for the “TNF” rights, which would be five times what Twitter paid last year. Sources familiar with the pact say the outlay is actually much lower; in any case, it’s little more than a rounding error for Amazon, which generated $136 billion in sales in 2016.

Even at the high end, consider that 500,000 new Prime subscribers, paying $99 annually, would offset the reported $50 million price tag for NFL rights. And that doesn’t even include sales of advertising for the games or purchases by Prime members, who spend more on products and services than non-Prime users.

“They can monetize [the NFL rights] through additional transactions,” says Wall Street analyst Michael Nathanson. “That’s unlike anything that Facebook or YouTube could do.”

And while the game is being played, Amazon could one day use its massive shopping engine to sell fans team merchandise, tickets and media — or even game-day snacks from Whole Foods (now part of the Amazon empire), says Craig Howe, CEO of sports digital-media consulting firm Rebel Ventures. “Amazon can capture a more meaningful relationship with sports organizations with their proven ability to transact commerce,” he says.

With the NFL deal, Amazon is able to take advantage of its existing video-delivery infrastructure, including apps for connected TVs, game consoles and set-top boxes including Amazon Fire TV. It’s also using the mammoth AWS worldwide cloud-based services to live-stream “Thursday Night Football.”

And it only makes sense that, in its football pitch to advertisers, Big Data is part of the Amazon playbook. The company has access to a portion of the ad inventory in the broadcasts of the game provided by “TNF” TV rights holders CBS and NBC. For the advertisers in the Amazon stream — which in the U.S. include Showtime, Pepsi, Under Armour and Gillette — the e-tailer will report the actual purchase data of Prime users who saw their ads and then bought the sponsor’s goods or services.

That, the company says, represents the first time anyone’s brought together e-commerce metrics and TV. Amazon also is planning to slot in its own ads during the games.

DeLorenzo calls the NFL the “gold standard” of sports, and Amazon’s belief is that it will attract a healthy number of viewers: “Sports fans are super passionate … and we have so many people already engaged with Amazon Video.” Amazon doesn’t disclose how many Prime members it has, but estimates put the number at 54 million in the U.S. alone.

One of the data points that persuaded Amazon to do the “TNF” deal, according to DeLorenzo, was customer demand for “All or Nothing,” an original docuseries from NFL Films that followed the Arizona Cardinals over an entire season. Season 2 tracked the L.A. Rams, in their first year back in the City of Angels, and Amazon has greenlit another installment about the University of Michigan football team.

Amazon has some other tricks up its sleeve to spur Prime users to stream the NFL games. It’s added an Alexa voice-recognition skill to let Fire TV and Echo users just say, “Alexa, watch ‘Thursday Night Football’” to launch the live stream. Along with the CBS and NBC play-by-play audio, Amazon will offer three other audio feeds: one with U.K. announcers for those not familiar with American football, as well as commentary in Spanish and Brazilian Portuguese. And this fall, it plans to ship out 10 million boxes in the U.S. for Prime orders with a football-shaped design to drive “TNF” tune-in.

Meanwhile, more sports is streaming its way onto Prime Video. Last week, Amazon announced a pact with the Assn. of Tennis Professionals, under which it nabbed worldwide distribution of the Next Gen ATP Finals men’s youth tennis tournament, starting with the inaugural event in Italy in November. The deal runs through the end of 2018.

What are Amazon’s plans for other sports? DeLorenzo is cagey, saying the company will analyze the results of “TNF” before deciding to pull the trigger on football next year or engage in future bids. “We’re always looking to see what our customers find compelling,” he says.

Today, sports leagues still put top value on broadcast television for maximum reach, Nathanson notes. But going forward, “I think you’ll see Amazon at the bidding table,” he says. By grabbing NFL rights, Amazon is showing that it’s willing to “move up [in] the stack of premium entertainment and go to sports rights.”

What should worry the likes of ESPN-ABC, NBC, CBS, Fox and Turner is that the Seattle colossus may be willing to write much bigger checks — if the data shows live sports moves the Prime shopping needle.

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