Amazon is plotting the end of traditional sports broadcasting

In what could be the final nail in the coffin for declining traditional sports broadcasters, the The Wall Street Journal reported earlier this week that Amazon has been in talks to expand its streaming services with broadcasts of major American sports leagues the NBA, MLB, NFL and MLS.

In addition to the most popular leagues, Amazon has also looked at less prominent sporting competitions as potential sources of content. The company has reportedly approached Univision in the hopes of packaging unaired Mexican football league games, as well as ONE World Sports and ESPN for more obscure sports such as the Russian hockey league for any games not broadcast live. Amazon has also spoken with the Atlantic Coast Conference of college sports, sports content websites such as Campus Insiders, Indian Premier League cricket, and professional lacrosse and surfing leagues.

“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, in a comment to the Wall Street Journal.

Potentially impeding Amazon’s negotiations are the long-term deals that have already been penned between the top sports leagues and traditional broadcasters. The NFL’s numerous deals with ESPN, NBC, CBS and Fox run into the early 2020s, while the NBA is locked into its deal with ESPN and TNT through to 2025. The majority of leading college sports divisions already have agreements in place with national and local broadcasters.

“The NFL has already dabbled with Yahoo and Twitter – why not Amazon? But I would not expect any major changes to the NFL contracts in the near future,” said Bruce Leichtman, president of the Leichtman Research Group, in a comment to USA Today.

As Leichtman mentions, major sports leagues have begun to test the waters of alternative streaming methods with increasing confidence, a development Amazon appears poised to build on in the near future.

Last year, Yahoo spent $20 million to stream an NFL game, and Twitter live-streamed an NFL game this September to an audience of over two million viewers. Sports media lauded the Twitter stream as a groundbreaking success. “It was a marquee moment for sure,” in the words of FootballNation CEO Andrew Miller.

The NBA has also been experimenting with Twitter broadcasts, agreeing to weekly live-streams of the popular shows “The Starters” and “The WarmUp.” The NBA and Twitter announced last week their first live-streaming advertisers for the two programs in American Express and JBL Harman. Over the summer, the league streamed Team USA exhibition games over Facebook Live, where fans could interact and comment in real-time.

These moves into new streaming platforms come at a time when traditional broadcast networks are flailing, with viewership for major sports leagues suffering in kind. This season, the NFL saw its ratings through to week five plummet 10 percent compared to the same period last year. This predicament may force sports leagues to seek new broadcast platforms such as Amazon or risk mounting losses to the value of their product.

Leading American sports broadcaster ESPN is in the midst of a decline that has seen unprecedented subscriber churn and dragged down the stock of parent company Disney. In October, audience tracking firm Nielsen reported that ESPN had lost a record 621,000 subscribers over the course of the month. ESPN claimed that the data was incorrect, but Nielsen evaluated their report and reaffirmed its accuracy.

ESPN lost 1.5 million subscribers between February and May of 2016 alone, a 12-13 percent drop in subscribers since the broadcaster’s 100.1 million subscription peak in 2011. When Disney released its fourth quarter earnings in November, the weight of ESPN’s loss was fully apparent. Revenue for Disney’s cable network division fell seven percent year-over-year with an operating income loss of 13 percent, led by ESPN’s 13 percent year-over-year decline in ad revenue. In light of these issues, Disney has looked to expand its streaming services, spending $1 billion this August to acquire a 33 percent stake in BAMtech, the streaming platform produced by the MLB.

Traditional sports broadcasters are not just suffering in the United States. Sky Sports, the leading sports broadcaster in the United Kingdom, reported in October a 19 percent drop in Premier League viewership compared to the same period last year. This is especially troubling given that Sky was forced to spend £5.136 in 2015 to maintain the rights to the majority of Premier League matches through 2019 amid challenges from emerging broadcaster BT Sport.

The combination of declining traditional broadcasters and a growing comfort among professional sports leagues with new streaming platforms creates a favorable environment for Amazon to expand into live sports. The sports packages may come as a bundle with Amazon’s premium Prime service or as an additional subscription package, according to the Wall Street Journal.

News of Amazon’s intentions comes at a time when the company is looking to make its mark on the global streaming market and could prove pivotal in claiming large audience shares. Reports broke last week that Amazon is planning to expand its video streaming services to around 200 countries worldwide in order to compete with global streaming leader Netflix, which expanded its offerings to over 190 countries in January.

This is not the first recent announcement regarding Amazon’s ventures into sports broadcasting. In September, reports surfaced that the company was eyeing the streaming rights to the French Open tennis competition and professional rugby matches. Tennis Channel CEO Ken Solomon said that he has held broad talks with with Amazon for more than a year, but told Bloomberg that “we’ve made it a point to talk with everyone.”

Traditional broadcasters have good reason to be anxious. Amazon has already begun to examine its streaming options, reportedly attempting to secure an exclusive license for the NBA’s League Pass, as well as examining packages similar to the NFL’s Game Pass to show game replays as an Amazon Prime add-on. The company has also placed experienced talent familiar with the industry in charge of the acquisition efforts, with Amazon head of sports and former Sports Illustrated executive James Lorenzo in charge. Former Dish Network executive Sunil Dave also rounds out the acquisition team, bringing years of experience in negotiating with sports networks.

While many of the top leagues are currently locked into broadcast deals, there is a visible sense of their need to branch out into alternative streaming methods. The increasing number of games on platforms such as Twitter provides Amazon with an entry point and a clear indication that sports leagues would be receptive to new methods that can resuscitate their viewing audience. As Amazon arranges for a global expansion, threatening the weakening dominion of tradition broadcasters could be the decisive factor in bringing large numbers of customers into its e-commerce platform.

“The world is becoming saturated with original dramas and movies are a commodity,” said Diffusion Group senior analyst Joel Espelien to USA Today with regard to news of Amazon’s objectives. “Sports is one of the few areas where it is possible to differentiate.”

About author

Matthew Schattner
Matthew Schattner 16 posts

Matthew is an Intern at Snack Media and Writer for Digital Sport. Follow him on Twitter @mattinthehat10

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