Amazon is likely in a better position than Twitter to make money from live sports streams

conflict football
One reason Amazon believes it has better live sports potential than Twitter is because they are not truly equivalent platforms. The Amazon streaming video app is pervasive across tens of millions of connected televisions in the U.S., while Twitter is not considered a standard livestream app.

The NFL is kind of like NASA—they’re not going to shoot for the moon until they’ve tested, and tested again, and tested again.

Jim O’Neill, principal analyst at OTT vendor Ooyala, said that after testing with Yahoo and Twitter in recent years, the NFL selling streaming right for Thursday Night Football games to Amazon is like a booster rocket that will take the games’ broadcast to outer space.

“Amazon gets it,” O’Neill said in an interview with FierceCable. “They’re really looking at this as a brand builder. They understand what original content is, and they’re looking at live sports and saying, ‘This is something new that we can do, that Netflix not doing.’”

Amazon reportedly paid five times what Twitter paid last year for streaming rights to NFL Thursday Night football games. But Amazon has doubled down time and again on what content and services it offers, expanding what was originally just an online bookstore into the merchandise giant it is today.

Related: NFL sets Amazon streaming deal at 5 times what Twitter paid, report says

These options in bundling services and content are one way the company will be able to monetize live sports streams better than other platforms, according to O'Neill.

“If this goes well, it’s the NFL’s precursor step to becoming a true a la carte offering,” O’Neill said. “Maybe on Amazon or maybe another platform, maybe its own platform. I think all content creators eventually are going to go to their own platforms. It’s not necessarily going to be something they build in-house, but it’s going to go direct to consumers. There’s a huge chance of that.”

The broadcast industry is quite a ways down the road toward a new structure where vertically integrated companies that own wireline, wireless and content—such as Comcast and AT&T—will compete with digital companies such as Amazon, Google and Facebook, Barclays analysts wrote in a research note on Wednesday. Barclays also predicted that Amazon has more potential than other tech platforms to monetize live sports streams.

“We believe Amazon has the potential to be a major disruptor long term relative to other OTT entrants,” Barclays wrote. “NFL essentially used Twitter as a proof of concept last year to validate a new source of revenues which, while small in absolute terms, is already showing significant inflation and more importantly, bringing additional bidders into the NFL orbit.”

Amazon is also already in position to drive up viewership via innovative scheduling methods.

“Legacy media companies line up content in a deliberate manner linearly across time, thereby chaining it together to drive viewership higher,” Barclays wrote. “In fact, new shows on broadcast can get more than 50% of their audience from lead-ins from the linear schedule. Highly watched events like football are especially valuable in this world, not only to drive up awareness of other shows but also in driving viewership on any given evening across shows.”

But linear content consumption is decreasing, and Amazon has amassed deeper insights on individual consumers. The time consumers spent watching live TV went down between 2014 and 2016, while time spent watching timeshifted TV and online video continued to grow.

Time spent watching live TV is going down while time spent watching timeshifted TV and online video continues to grow in
the third quarter of 2016. Image: Nielsen
“In this environment, adding football or other live events over time should allow Amazon to not only drive up engagement across other services, it could over time help enable a bootstrapping process to replicate the broadcast flywheel, potentially with much bigger monetization potential,” Barclays wrote.
One reason for this bigger potential is because Twitter and Amazon are not truly equivalent platforms. The Amazon streaming video app is pervasive across the tens of millions of connected televisions in the U.S., while Twitter is not considered a standard livestream app.

But even beyond the fundamental differences between Amazon and Twitter, O’Neill of Ooyala said, is that the NFL is creating a kind of turmoil for the broadcast sports industry, and Amazon has the data about viewers that could calm the storm.

“They’ve created a bit of confusion in the sports industry,” O’Neill said. “They’re saying, ‘How do we get them [viewers]? Don’t know. How do we keep them? Don’t know.’ Those are not good answers. It’s going to force the NFL to really reconsider how they broadcast games, how they run the games, and how they support the games—with or without advertising.”