With competition for audiences intensifying, reach is an important consideration for the NFL”
Gareth CaponGareth Capon is CEO at Grabyo, the browser-based video production and distribution suite integrated with social media. Grabyo’s technology is used by rights holders globally to produce professional-quality live streams and video clips.
With Amazon buying up the rights to stream the National Football League’s Thursday night games, we are once again reminded of the value of premium live sport to the titans of the technology industry. But what does the deal tell us about the battle for live sports rights? And what does it mean for advertisers?
Amazon is reported to be paying around $50 million for the 10 games it will stream, a significant increase from the $10 million Twitter paid last year. It’s Amazon’s first major move into live sports and suggests premium sports content could become a key driver for Amazon Prime – the subscription service which is already generating $6.4 billion in revenue for the company.
With Amazon Prime members also spending three times more money than other Amazon users, it could also become a valuable driver for e-commerce across the platform. So the deal is an important test for the company. As well as looking at the impact the content has on sign-ups to Amazon Prime, the company will also be monitoring whether it has a meaningful impact on broader sales and revenue.
Amazon can also use the NFL games to explore video advertising for the first time - it will have the rights to sell a handful of TV ad slots per game. It will be interesting to see how Prime users react to the appearance of video ads in Amazon Prime content. For advertisers it is a fascinating opportunity to reach Amazon’s 65-million-strong Prime audience, which is growing fastest among upper-income households with more than $112,000 a year in annual income, according to Piper Jaffray, the investment bank.
It’s Amazon’s first major move into live sports and suggests premium sports content could become a key driver for Amazon Prime
Of course, Amazon also has considerable purchasing data on its members and this could be extremely valuable to advertisers. But it’s also possible that Amazon uses the content as an opportunity to sell its own products and services – whether it be additional shows from the Prime catalogue, or music or fresh groceries from Amazon Fresh.
For the NFL, the deal is much closer to a traditional rights deal than its previous agreement with Twitter – Amazon Prime is a subscription pay-TV platform (although OTT and not cable) and does not have the global open access of Twitter. So could Amazon Prime emerge as the dominant OTT platform for live sports in the future?
While Amazon is rapidly becoming a powerful force in media distribution, and has a 300-million user base across its e-commerce platform, it lacks the ‘social’ component and mobile focus of Twitter (90 per cent of Twitter’s users access the service from their smartphone). Content discovery could be a problem.
For the NFL, the deal is much closer to a traditional rights deal than its previous agreement with Twitter
It’s also still far too early to rule out both Google’s YouTube and Facebook – both of which provide a global audience and are in the market for sports media rights. With competition for audiences intensifying, reach is an important consideration for the NFL. It’s facing competition from numerous sports leagues, both domestic and international. The larger social platforms also provide a younger demographic and better features for engagement including data-driven visualisations, voting, polling and reactions – which can be used to enhance the experience for viewers.
Interestingly, as a premium sports service bundled with music and OTT video, it could mark the emergence of a new model for media distribution. This bundled offering could become a highly appealing package for consumers, many of which are paying a multitude of monthly subscriptions. Facebook, Twitter and YouTube could now accelerate their moves for new business models, including putting content behind a paywall – seen with the recent launch of YouTube TV.
However the market evolves, it’s clear that live sports content is becoming an increasingly important medium for driving user engagement, advertising revenue and premium subscriptions for digital media companies. The good news for sports fans is that they will likely gain greater access to their favourite sports and greater flexibility to choose how they watch the big games. The big question is on which platform will they watch?