Did You Love Twitter’s NFL Stream? There’s More Where That Came From.
The oft-beleaguered social media giant is not alone in the digital race for live sports rights. Here comes Amazon!
The sports media world currently is abuzz over Twitter’s and Sports Illustrated’s live stream of the NFL’s “Thursday Night Football” this week, and rightly so. While there certainly is room for improvement in the personalization of the experience, most are greeting this experiment as an early success.
Undoubtedly, Twitter’s broadcast of a live NFL game is another major step in the inevitable transition away from linear cable TV, but in what is likely to be a “winner-take-most” market, another major digital player recently made a quiet move to build its foundation for success in the unpredictable future of sports TV.
Bloomberg is reporting that Amazon is targeting a purchase of live sports rights, trying to draw viewers to its online TV service. Amazon’s investment in original content is not breaking news, but its interest in live sports rights is, and the specific sports they reportedly are interested in is a possible predictor of the company’s future strategy.
“Amazon has been leaning forward on sports.” - Tennis Channel CEO Ken Solomon
Bloomberg specifically mentions rugby and French Open tennis as Amazon targets, and while it’s tempting to be underwhelmed by those properties, they do share three distinct qualities that make them perfect for a digital media company’s first entry into the market:
1. Tennis and rugby are cheap.
Ok, they’re relatively cheap. Cheap like rent in Boston compared to rent in San Francisco. Cheap like the Cincinnati Bengals are cheap compared to the Dallas Cowboys. (Well, the Bengals might be just plain cheap.)
The Tennis Channel actually had trouble selling a portion of its French Open rights after ESPN dropped them last year:
ESPN had been paying Tennis Channel around $4 million to sublicense the rights for tennis’ fourth major, sources said.
NBC could have been considered a natural to carry the package, given the fact that it carries the French Open championship matches. But NBC also passed on it. Tennis Channel ended up keeping the package for itself.
Given that Twitter paid roughly $1 million per game for non-exclusive NFL rights, it’s reasonable to assume a non-exclusive package would be affordable for Amazon, too, especially when considering how desperate the Tennis Channel might be to recover lost revenue.
2. Tennis and rugby each has an international audience.
One of the major advantages digital media companies have over traditional TV and cable companies is that their products are easily distributable worldwide. Gaining a foothold in a global market has benefits well beyond mere advertising revenue.
3. Most important, while tennis and rugby may not have large American audiences, their fan bases tend to be extremely passionate.
I’ll let Matthew Ball over at REDEF Originals take this one:
One of the most transformative shifts in the television landscape stems from the way digital audiences choose content. Even as we moved into the era of appointment TV in the late 2000s, most television consumption was passive. Viewers would either hire a particular channel/network to entertain them for a few hours or channel surf until they found something that would. In an online environment content is “on-demand” — and thus actively selected by the user.
This shift has profound consequences for content monetization — and not just because it challenges decades of network television performance metrics (i.e. ratings). First, true hits will be more valuable than ever before (and thanks to OTT distribution, they’ll be bigger, too). Second, content that connects with a passionate but niche audience becomes an asset — not a missed opportunity or failure that needs to “broaden its base” to be renewed.
By investing in the French Open or rugby, Amazon effectively is going all Moneyball on the rest of the industry. No, not by using “fancy” numbers, but simply by identifying properties it thinks are currently undervalued by the rest of the market — especially relative to what they think the market will value in the future. It’s the same thing that stock traders do every day.
There are many parallels between Amazon’s reported goals and the strategy that NBC Sports Network has employed since its launch in 2011. Focusing daily programming on the NHL and English Premier League, NBCSN has developed brand loyalty among some of the most loyal fans in sport, preparing itself for a market that financially rewards quality of viewership over quantity.
With Netflix seemingly content to sit on the sidelines of the impending shopping spree for live sports rights, it appears that Amazon sees an opportunity to establish itself as a leader in that space. Should it follow through on these rumors, Amazon would set itself up to have a strong foothold in live sports rights broadcasting (and related product innovation) when the rights for the major American sports become available.
