Amazon has made a major move into the UK sports rights space, picking up the rights to stream 20 Premier League matches a season across the 2019/20 to 2021/22 seasons in the UK.
The deal means Amazon will stream 10 games on Boxing Day, as well as 10 during a midweek fixture in December through its Amazon Prime content service. While it is unclear how much Amazon paid for the rights, it is thought BT paid around £90m for a similar package with Amazon’s figure likely to be in roughly the same ballpark.
This is not Amazon’s first foray into live sports, it already has the rights to show ATP World Tour tennis and the US Open in the UK, as well as a deal to show Thursday night NFL in the US. And the package is relatively small, with Amazon showing no interest in picking up one of the major packages bought by Sky and BT.
That suggests that, while £90m is no small figure, it is relatively inconsequential for a company like Amazon, which invested a reported $100m (£74m) in its royal drama The Crown alone.
Julian Aquilina, broadcast research analyst at Enders Analysis, suggests Amazon could afford to spend a lot more on football but has “chosen not to”. This is in part because there are inherent disadvantages to buying Premier League rights.
For one, they don’t have the global scale that digital players such as Amazon are typically looking for. Secondly, there is no shelf life in live sports. And thirdly, while the Premier League is very important in the UK, it has a relatively low appeal with average viewing figures of little more than 800,000.
“What Amazon has done is bought the cheap packages and extracted good PR and marketing value,” says Aquilina.
Nevertheless, Amazon will have to think about how it markets the games it has to reach an audience that will have to use an online streaming service to watch their team play for the first time. Both Sky and BT spend millions advertising their Premier League content in order to attract subscribers.
But it is unlikely Amazon will be looking to make money from the Premier League rights directly, with the company instead seeing live sport as a way of convincing more people to try its Amazon Prime subscription service. It is thought that around 70% of people who sign up for the one-month trial will go on to pay for at least another month, and that subscribers spend up to five times as much as non-subscribers.
However, Paolo Pescatore, vice-president of multiplay and media at CCS Insight, says looking to new business models such as introducing ads could “make sense”. Viewers are used to watching football with breaks, and ads don’t interrupt the content in the same way they do during a drama series, plus Amazon will need to give some thought to the whole production around a Premier League match.
“Let’s be clear, Amazon might have deep pockets but its current business model is unsustainable to support the acquisition of costly live sports rights in the long term,” he explains.
“Yes, prices [of Amazon Prime subscriptions] will increase, but Amazon will have to do more. Amazon could introduce a new sports channel bundle for Prime subscribers. Also, it could seek to introduce advertising to support its push into linear TV. Another option could be events-based advertising. This way it will benefit from new streams of revenue.”
If it did, Amazon would no doubt find brands willing to jump on board. In the UK, the Premier League is the “crown jewels” of sports broadcasting, says Pescatore, and brands want to be associated with that content and reach its audience.
“The more data Amazon gets from its customers, the more confidence it gains to invest in other areas and serve users with relevant stuff across its vast empire,” he says. “As it acquires more sports rights it does need to think about the business case and revenue opportunities. One of which is advertising and I expect it to work even more closely with brands.
Yet Aquilina says while he would not be surprised to see Amazon “try new approaches” when it comes to how it broadcasts live football matches, that is not its end goal.
“At the end of the day, its purpose is not to recoup costs through advertising or sponsorship or a dedicated football channel. Of course it has the capability to do that, but really it wants to make it as easy as possible for consumers to sign up for a free [Amazon Prime] trial and convert them into subscribers.”