Amazon executives are left pondering a serious question now that they broadcast the NFL's Thursday Night Football package.
Amazon has its slice of the NFL pie, but is that slice big enough for the company to launch a standalone sports broadcasting network?
Last week, a snoozer between the Jacksonville Jaguars and the New York Jets drew 8.26 million viewers on Amazon Prime. And while the low-profile matchup was one of the season's lowest watched games (ranking 10th out of 14), according to Sports Media Watch, viewership this year was higher than the 7.9 million that tuned into the 49ers-Titans game on NFL Net.
Amazon is considering launching a standalone app for live sports, The Information reported Thursday, citing a source with direct knowledge of the plan, GeekWire said.
Amazon (AMZN) just raised the price of Amazon Prime, which includes Prime Video, to $139 per year, and the NFL is definitely a carrot to attract subscribers to Prime.
The NFL has seen digital viewership of its games double over the past three seasons, Brian Rolapp, the NFL's chief media and business officer, wrote in SI recently.
"A perfect example is Super Bowl LVI, viewed by an average audience of more than 11 million fans just on digital platforms. This digital viewership will continue to grow rapidly," Rolapp said.
Amazon Ahead of the Curve
Amazon's size allows the company to produce a wide-range of content for Prime Video.
And as streaming services are in the process of switching to a dual-revenue model that features advertising dollars, Amazon has placed itself in an enviable position with its live sports programming.
"Of course some things we're obviously excited about are Thursday Night Football and Amazon streaming TV ads capabilities," David Fildes, Amazon's director of investor relations, said on the company's earnings call.
Amazon struck a three-year deal with Nielsen to have the audience measurement company measure Prime Video's exclusive Thursday Night Football telecasts.
Meanwhile, Netflix, one of its biggest rivals, and its ad supported tier is struggling out of the gate.
Earlier this month, Digiday reported that Netflix is having to refund some ad spending commitments amid disappointing subscriber gains in its new ad-supported service, which launched earlier this month. Digiday said Netflix has structured the deals on a so-called pay for delivery basis, meaning advertisers were effectively guaranteed a certain level of views in order to justify paying for their promotions.
“I wish we had flipped a few years earlier on that, but we’ll catch up," Netflix CEO Reed Hastings told the New York Times' DealBook Summit in November.
“I didn’t believe in the ad-supported tactic for us. I was wrong about that. Hulu proved you could do that at scale and offer customers lower prices."
NFL Haves vs. Have-Nots
The legacy media companies Fox (FOXA), ESPN (through Walt Disney (DIS)), CBS (through Paramount (PARA)) and NBC are all paying at least $2 billion annually to the league for broadcast rights for the next 11 seasons.
Netflix (NFLX) is still the streaming content king with 223 million subscribers, but the company does not have a presence in live television.
The NFL's Sunday Ticket package, the NFL's comprehensive streaming package that allows viewers to see the league's full slate of out-of-market games every Sunday, is up for grabs and negotiations between the league and its potential suitors look like it could drag on into next year.
