Amazon Explores Possible Premium Sports Package With Prime Membership

Amazon Explores Possible Premium Sports Package With Prime Membership

By SHALINI RAMACHANDRAN Updated Nov. 21, 2016 8:24 p.m. ET

Amazon.com Inc. is exploring an ambitious push to infiltrate the last bastion of traditional pay-television: live sports.

In recent months, the e-commerce giant has been in talks with heavy hitters like the National Basketball Association, Major League Baseball and the National Football League for the rights to carry live games, according to people familiar with the matter. It also has talked with soccer, lacrosse and surfing leagues, the people said.

With at least some leagues, including the NBA, Amazon has floated the idea of creating an exclusive premium sports package available with its Amazon Prime program, though the details are unclear, the people said. Such a package could attract new members to the $99-a-year Prime program, as well as to a “skinny bundle” of live online channels that Amazon is pursuing.

An Amazon spokeswoman declined to comment on its sports efforts.

If Amazon is successful in breaking into the premium-sports market, it could pose a significant threat to traditional pay TV. While streaming services offer a wide array of TV shows and movies, it is hard to find live sports outside of traditional broadcast and cable outlets. That’s why pay-TV executives have long referred to sports as the “glue” that keeps millions of customers paying for relatively pricey bundles of cable channels.

Amazon, meanwhile, is also racing to compete against rival tech giants like Facebook Inc. and Twitter Inc., as well as BAMTech, a spinoff of Major League Baseball, which are seeking sports rights to beef up their video offerings. But as traditional pay-TV comes under pressure, and even big sports properties like the NFL suffer TV ratings declines, big leagues are eager to entertain new bidders that might be able to continue driving up their rights fees.

As part of their search, Amazon executives have approached traditional TV networks about game rights they aren’t using. They have asked Univision Communications Inc. if it would consider producing and packaging the Mexican soccer league games that it doesn’t air, one of the people said. And they have approached Walt Disney Co.’s ESPN and ONE World Sports, which carries niche sports like Russian hockey league matches, for leftover live games, other people said.

Other sporting leagues Amazon has talked with include the collegiate Atlantic Coast Conference, college-sports network Campus Insiders, sports website 120 Sports, the National Lacrosse League, Major League Lacrosse and the World Surf League, people said.

Amazon also is scouting abroad, amid a planned global video expansion. It paid $10,000 for a tender document to potentially bid on the popular Indian Premier League cricket games. And it is discussing licensing an international package of NBA games, a person familiar with the talks said.

“My sense is they are interested in anything that might be out there,” said Chad Swofford, vice president of digital for the ACC college-sports conference.

Amazon could shake up the lucrative sports pay-TV business in part because it takes “such a view of the long game, while near-term financial returns drive the agenda for most companies,” one senior sports executive said.

People familiar with their thinking say Amazon executives are mindful that the premium NFL Sunday Ticket package helped DirecTV attract subscribers in its early days as a cable rival.

Amazon has asked to exclusively license the NBA’s League Pass, which offers live out-of-market games, one person said, but the NBA demurred, having long preferred selling it via multiple outlets. Amazon also is seeking sports packages like NFL Game Pass, which shows replays of past matchups, to sell as an add-on to Prime members the people said.

Leading the talks is Amazon’s head of sports, James DeLorenzo, a former Sports Illustrated executive hired in March. Also on Amazon’s acquisition team: Sunil Dave, a former Dish Network Corp. executive who negotiated with sports networks.

One big hurdle: many premium rights are tied up. The NBA’s deal with ESPN and TNT stretches until the 2024-2025 season, while the NFL’s pacts with ESPN, CBS, Fox and NBC run through early next decade. Many college conferences’ rights lie with various TV networks. And Disney’s recent investment in BAMTech means ESPN’s untapped sports rights likely will land in its coming multisport streaming service with BAMTech, a person familiar with ESPN’s thinking said.

Amazon has the firepower and willingness to bid for top-tier, exclusive sports rights when they become available, people familiar with its thinking say. Coming up next year: the NFL-Twitter deal for streaming 10 games. Amazon had bid for those rights this year, a person familiar with the matter said.

Amazon would be wagering that sports will attract enough new Prime members to offset potentially large years long costs. Rival Netflix has long said viewers don’t care to watch sports on-demand after the fact, making it an unattractive investment compared with shows or movies. Already, Amazon’s ballooning investments in video are a drag on its meager profits.

The company may first grab a toehold in the “long tail” of sports, like lacrosse, gymnastics or surfing, sports executives say. Amazon executives believe the e-commerce giant can uniquely target a lacrosse viewer with lacrosse gear, for instance, allowing Amazon to land a greater return on a sports investment, people familiar with the matter said.

“Amazon’s ability to aggregate information about individual consumers is without peer,” said Alexander Brown, chief executive of TV network ONE World Sports.

The ability to re-target consumers could be key to justifying expensive sports rights as traditional networks grapple with declining ratings for some events.

It isn’t uncommon for Amazon to float various ideas and retreat—a potential outcome of its sports foray as well, media executives cautioned. At times there are several overlapping video efforts going on at once—a model that Amazon Chief Executive Jeff Bezos encourages for a bit of “business Darwinism,” one person close to Amazon said.

There is debate internally about whether a sports package should be available free with Prime or as a premium add-on subscription, people familiar with the matter said. It is still possible Amazon may just opt to license channels, like traditional cable distributors do, rather than acquire sports rights.



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