Amazon’s NFL Thursday Night Football streaming win accelerates its live sports strategy
Amazon paid $50 million for streaming rights to 10 of the NFL's Thursday Night Football games for the 2017 season, five times more than what Twitter paid a season ago.

Amazon recently beat out Twitter on a deal to get the streaming rights to 10 of the NFL's Thursday Night Football games for the 2017 season, illustrating the value the company sees in offering live sports.

According to reports, Amazon paid $50 million, five times more than what Twitter paid a season ago. Facebook and YouTube also bid for the streaming package. 

What’s different about the Amazon service is that it's part of its flagship Prime video package. Today, Amazon charges $99 per year, or $10.99 a month, for the streaming service.

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MoffettNathanson said in a research note that Amazon’s move shows that the company sees how live sports can be integrated into its subscription packages.

“By buying these rights, Amazon clearly demonstrates that they understand the unequaled power of live sports to attract consumers,” said MoffettNathanson in a research note. “Given their focus on building Amazon Prime Video as a tool to acquire and market to Amazon Prime members, Amazon can monetize this investment over a broader base of transactions and a longer time frame than other bidders who are limited by advertising-only models.”

Alan Wolk, lead analyst at TV[R]EV, agreed and added that the company can use the consumer data it collects to drive custom advertising based on their users’ sports viewing habits.

“Amazon has a wealth of data on consumers—we often say that 'Facebook knows who we want to be, but Amazon knows who we really are,'” Wolk said in an interview with FierceOnlineVideo. “And unlike other platforms, Amazon can use the data to allow for easy t-commerce. If they notice you tune in every time the Detroit Lions play, they can start to include Lions gear in your recommendations and even adjust the price so that Lions jerseys are less expensive the day of the game, making it more likely you’ll buy one.”

Mutual benefits

Amazon’s deal reflects the overall emphasis online video providers are placing on carrying live sports streaming, one that provides mutual benefits to itself and the sports leagues. The online giant can get its brand and related products in front of more eyeballs, while the leagues can gain additional revenue.

“It’s an easy win for them and for the sports leagues,” Wolk said. “For the leagues, the revenue is accretive—they are not giving up their billion-dollar deals with the networks. And for online players, it’s like a trophy—they get to look cool and hip and maybe get taken a little more seriously.”

Wolk added that “if Amazon can use the deal to fuel sales of gear, they may actually make some money too.”

MoffettNathanson said that looking forward to the year 2021, which is when the next set of rights will be auctioned, the U.S. pay-TV market will start to see “increased disruption.” The analyst group said that “disruptions to existing models will most likely start in 2021, if and when digital players decide to start bidding on live sports rights, which is the glue to the traditional ecosystem.” 

A repeatable blueprint

While the NFL is the first large agreement it has signed for online sports streaming, Amazon could use this deal as a blueprint to replicate with other sports leagues in the United States and other countries.

Various dynamics will govern where and when Amazon would be able to pursue similar deals. In the U.S. market, the large premium sports rights won’t be available for purchase until 2021.

MoffettNathanson said that “it is safe to say that where Amazon has ambitions to be a leader in retail (U.K., Germany, India), the blueprint for buying more sports rights has been drawn.”

Wolk agreed, but added that Amazon will have to deal with a number of logistical issues in order to scale the business.

“I can see Amazon doing this with other sports in other countries,” Wolk said. “Live broadcasting is tricky though—you need to have the infrastructure that comes with huge spikes in traffic. That means investing in the right hardware and software. Amazon certainly has the resources to do so.”