As streaming video becomes more popular, Amazon is likely to dominate the sports segment as the battle for the rights for top leagues intensifies. A report by Juniper Research that looks at the possibilities in the 2018 season, projects a battle for rights to top leagues such as the NFL, Indian Premier League or the English Premier League with Amazon and Facebook emerging as the major candidates.
The two giants are not new in the bidding for major sports. Amazon paid $50 million to stream 11 NFL games that fall in the prime Thursday night spot. Facebook on the other hand failed in its bid to clinch a deal to stream the Indian Premier League cricket matches after offering $600 million. Twitter, another contender in the streaming race, streamed 10 NFL games at a cost of $10 million.
The trend in the coming year will be for these companies to bid for a lucrative deal like the English Premier League, and then turn focus on major U.S. leagues. These exclusive rights come at a hefty premium and Facebook is reportedly seeking to fill a new position for a senior executive who will be in charge billions of dollars for negotiating favorable rights to major sports leagues.
The use of auctions to settle on who gets the rights to broadcast games has led prices to skyrocket. The contest between big companies with heavy purses has been intense in the past and the entry of these tech giants will only up the stakes for next year. Some estimates indicate that the costs for the rights to the English Premier League may as well swell by 40 percent since it will be an auction.
Currently the rights to the EPL are shared between BT and Sky. BT paid $1.3 billion to broadcast 42 games per season for three years. On the other side of the Atlantic, NBC paid $950 million to gain rights to 19 Sunday Night Football games through the year 2022 while Fox coughed $500 million for 42 Major League Baseball games. This means that if Amazon wants exclusive rights to any of the major U.S. leagues it will have to up its bid in such a competitive environment.
Amazon stands to benefit more if it wins rights to any of the major leagues. Its Prime membership program has grown to become a goldmine for the company. Prime members have been known to spend more on Amazon compared to non members. Live streaming of popular sports will therefore be an inducement to bring on board new members who in turn would ramp up revenues from subscriptions and also from retail sales.
The hefty price Amazon would pay in an auction would be easily be recouped in the double of new subscriptions and added retail sales.