Here are the quick numbers: according to S&P Global, 90 million Americans will pay for a cable or satellite subscription this year. According to Morningstar estimates, Amazon Prime will have 79 million memberships this year, up from around 66 million members last year. So what does this have to do with sports? Well Amazon is getting into the sports rights ownership and distribution game with its NFL deal. As we know, cable subscriptions are dropping. Prime membership is growing. If Amazon can pull off its NFL deal, increase its own subscriber base, and continue the growth of streamed sporting events, it’s another signal that traditional rights deals could be in trouble when it comes professional sports content.
Amazon paid $50 million for the rights to 10 Thursday Night Football (TNF) $30 million in promotion games. The tech giant also promised — although that paid-in-kind number is a bit nebulous. Last year, the NFL sold its TNF rights to Twitter for $10 million dollars. The increase in digital rights is a great sign for the NFL, as it continues to build relationships with digital partners. It’s setting the stage for a bidding war once the league and tech companies are totally comfortable with digital distribution of live sports content.
Traditional television companies — ESPN, CBS, NBC, and FOX — can’t be comfortable with the NFL’s tech flirtation. Those companies would love exclusive digital rights, but it doesn’t seem like that’s where the league is trending. It looks like the NFL wants to slice and dice its rights to have an official digital partner, as well as a traditional television partner. The traditional companies are already being hit hard by subscribers dropping their cable package in favor of cord cutting content partners. They have been holding on to live sports as a life preserver. The trend showing more people having access to streaming services can’t make them feel comfortable.
Of course the 79 million Prime members don’t all use the streaming service. In fact, it’s probably a small portion. But the goal is to make fans comfortable with consuming content that is different than the current — traditional — format. The more people who sign up for Prime will lead to more customers finding the NFL on their service. That could lead to more digital consumption, which could lead to more cord cutting. Sports being available over a OTT service that has added benefits is a boon for the customer.
Nevermind the fact that Amazon has the ability to market and sell-through on its platform. A sponsor or partner may be more interested in working with Amazon because it could lead directly to sales. This is just another warning sign to traditional media. Robert Kraft, owner of the New England Patriots and chair of the NFl broadcast committee is convinced the future is OTT. The NFL and Amazon partnership can help further that momentum.