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Tuesday, February 27, 2024

Amazon and Live Sports: Can it Happen?

By: Casey Sudzina, @CaseySudzina

In a recent move, Amazon looks to make a splash in sports. (Image via Variety)

It can be difficult to be a fan of an out of state team. I have never personally encountered this situation, being as I have always lived in Ohio, but I know some who have. My grandparents live in South Carolina, but are still fans of the Cleveland Cavaliers, the Indians, Browns, and The Ohio State Buckeyes. A lot of times, unless the games are very big, they cannot watch them because they only broadcast the Carolina teams. How convenient would it be for them to be able to purchase one package to watch all of their teams? Led by what could be considered an outsider, we may see the industry moving in this direction soon.

Most well know for its e-commerce platform, Amazon Inc., has held talks with the NBA, MLB, NFL, and MLS on securing rights for streaming rights in a move to form lasting partnerships with the leagues that would allow them to stream live games. Closer to MLB TV and not TNF on Twitter, these partnerships would allow Amazon to create a one stop shop to access all live sports, regardless of the channel.

Why Sports, Why Now?

Packages such as the aforementioned MLB TV, allow fans access to all games in the MLB for a set price per month or per year, depending on the fan’s preferences.

With prices that range from $84.99 per year to $109.99 per year for MLB TV and MLB TV Premium respectively, Amazon sees an area where they can compete given their current price of a Prime Package at $99, which already includes unlimited streaming of movies.

While prices for Prime would most likely increase with a sports option given the cost of current rights deals, imagine what it would be like to pay even $150 dollars a year for free two-day shipping, unlimited movie streaming and access to all your favorite team’s games. Pretty incredible if you ask me.

With options to stream sports limited outside of the packages that professional leagues provide, there is clearly room for a company like Amazon to find a way to leverage its core competencies to deliver sports directly to the consumer in the most efficient way possible. If it can work everywhere else, why not with sports? After all, Amazon’s mission statement reads, “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.”

Will cost and current deals play a factor?

Even though Amazon Inc. comes in ranked at 18th on the Fortune 500 list, buying these rights would come at a pretty penny. With the NFL alone pulling in rights deals worth $275 million, $1 billion and $1.9 billion for this year, if Amazon were to try and purchase the rights for all of the leagues they have spoken with, you would see a deal in the billions.

Beyond the sheer monetary amount that a deal like this would fetch, the biggest challenges of creating a partnership like this are the already existing deals the leagues have. With networks like ESPN locked into the NFL until 2022 at $1.9 billion annually, finding a way to work around these deals might be the hardest part of the equation.

If not the “Big Four” where else?

Beyond the well-known leagues, Amazon seems to be looking to get its foot in the sports broadcasting world any way possible. Not only have they spoken with the Atlantic Coast Conference, Major League Lacrosse, and The World Surf League, they have even reached out to the Indian Premiere League. You have to start somewhere right?

Amazon seems to be having difficulties with the bigger leagues, offering a partnership to the NBA with their NBA League Pass, that was ultimately declined. It is too appealing for these leagues to have partnerships with multiple cable companies and their own exclusive packages with League Pass for them to give all rights to one independent organization like Amazon. So, while the partnership may not be immediate, we may see small strides towards a bigger deal in the next ten years.

Could Amazon make the investment worth it?

This seems to be the million-dollar question, quite literally. It is going to cost Amazon billions of dollars to finalize this deal, which they certainly have available to invest. The question then becomes this: Will they receive an adequate return on their investment?

If Amazon is able to transform the way people consume sport, I think yes. We have seen Netflix do this to the way people consume TV shows. Many people think it is well worth it to pay for Netflix and HBO monthly rather than to pay for cable. If you have a device like a game console or a fire stick that you can use those services on, it’s well worth it. Reflecting on my decision to pay for cable this year, I can only recall one reason I decided to do so: live sports. Last year, I simply used a game console and had Netflix at my apartment. Not having cable did not bother me aside from missing sporting events. I caved this year and purchased cable so I could watch college football and NFL. If there was a program I could purchase that could give me live sports without a full cable package, you better believe I would jump on it, and I know I’m not the only one. If Amazon can do this to live sports, the possibilities are endless, if not, they may not gain the inflows they need to sustain the deal.

What happens next?

It should be interesting to see where this partnership goes in the future. Nicholas Spike, the Sr. Vice President of the Business Development at Thuzio, a company that connects athletes and other talent to businesses and consumers, gave us his thoughts on the deal saying, “Considering how long it took Twitter to work out its deal with streaming NFL games recently, I think we are years away from this happening.” He also explained that he can’t see the leagues varying pricing or distribution too much from what is currently offered online, limiting the overall potential impact of such a deal.

Like most of us who use Amazon frequently, Spike enjoys the convenience of Prime and would be all in for a deal like this, “I love my Prime membership, so I am all for it.”

While Spike loves the idea, the important question is, will it be enough of an additional perk to Prime to attract more members in order to make up for the cost of the deal? Only time will be able to tell. There is excitement for the future of streaming live sport, and it will certainly be interesting to see just how many people jump on the emerging trend.

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