Why Amazon joined the fight over NFL broadcasting rights

Tech

Tampa Bay Buccaneers Tight End Rob Gronkowski (87) celebrates after scoring a touchdown in the first quarter during Super Bowl LV between the Kansas City Chiefs and the Tampa Bay Buccaneers on February 07, 2021, at Raymond James Stadium in Tampa, FL.

Cliff Welch | Icon Sportswire | Getty Images

Amazon has its eyes set on being more than just a website to stock up on phone chargers and paper towels and stream the latest episode of “The Marvelous Mrs. Maisel.”

Amazon is in talks with the National Football League to carry Thursday night games exclusively starting in 2023, CNBC reported on Thursday. As part of the agreement, Amazon would be responsible for the production costs and the games would still be broadcast on local TV in home markets of each of the teams playing. 

Winning the exclusive streaming rights would mark Amazon’s most aggressive push yet into sports content. It also has the potential to pump even greater value into Amazon’s Prime Video platform, while serving as an added perk for its Prime subscription program, which now boasts more than 150 million paid members around the world.

For Amazon, its streaming video service has always served a greater purpose than being just a tool to compete against streaming rivals like Netflix and Hulu.

Prime Video is part of Amazon’s much-lauded “flywheel” of compelling consumer offerings. The idea is that Prime Video will entice more people to become part of its Prime subscription service, which costs $119 a year, leading to more engagement and more purchases on the site. 

Amazon CEO Jeff Bezos laid out succinctly why Prime Video is a good business model for the company in a 2016 interview with Recode: “From a business POV for us, we get to monetize that content in an unusual way. When we win a Golden Globe, it helps us sell more shoes.”

Sports content and NFL games in particular beef up that value proposition for existing and would-be Prime subscribers. Sports content could also lure the rapidly accelerating share of cord-cutters away from other services.

The company already has a service called Amazon Channels, which lets customers pick and choose the channels they want to subscribe to, like Starz and HBO, without having to sign up for a bundle of programs or enter a contract. 

Inking a deal with the NFL could make the Amazon Channels service even stickier by helping it stand out from similar offerings that don’t offer sports. 

Longer term, if Amazon succeeds in carrying the NFL games exclusively, which would mean taking them off of traditional TV, it could serve as a winning pitch for advertisers. Amazon possesses vast amounts of consumer data, from user interactions with devices linked to its vast Alexa ecosystem to the millions of purchases on its e-commerce site. 

Amazon doesn’t just have visibility into what shoppers are searching and buying, but also which ads they click on and whether or not they purchased an item after viewing an ad. So it can assure brands that their advertisements get in front of the right people. 

Advertising has rapidly transformed into a key profit engine for Amazon’s overall business. Amazon is predicted to be the leading share gainer among the dominant digital ads businesses in 2021 and 2022, with ad revenues rising to $85.2 billion by 2026, up from a projected $26.1 billion in 2021, according to a Cowen survey released in January.

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