Economy

Amazon steps into live sportscasting

The online retail giant has struck a $50 million dollar deal to livestream 10 Thursday night football games from the NFL. The games will be accessible only to Amazon Prime customers.

Dallas Cowboys tight end Jason Witten (82) is tackled by Minnesota Vikings free safety Harrison Smith (22) after making a reception during an NFL football game in Minneapolis on Thursday, Dec. 1, 2016. The game was one of the NFL games that was streamed live on Twitter during the season. Amazon will stream 10 NFL games during the 2017 season in a deal with the league, replacing Twitter. Games will be available to members of Amazon Prime.
Andy Clayton-King/AP/File
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Amazon has won the rights to livestream 10 Thursday night National Football League games with a $50 million deal that beat out a number of other competitors, including Facebook and Twitter. Football fans will be able to watch the games with a subscription to the company's Amazon Prime service.

The new deal is the latest of many by Amazon to expand its business footprint into the world of media in addition to its main focus, online retail. The new live broadcasting deal could also mark a significant shift in sports entertainment online, an industry that has been the domain of television and other conventional media outlets for decades.

As online businesses like Amazon continue to grow, customers may be turning away from traditional retailers and media for the convenience of online consumption. But despite the increasing popularity of video streaming services such as Netflix and Amazon Prime, the potential revenue from online sports broadcasts has remained a largely untapped market, says Galen Clavio, director of the National Sports Journalism Center at Indiana University in Bloomington, Ind.

"Yes, the shift to the online economy is in full swing, and I expect sports programming will be the last big domino to fall when it comes to traditional television losing its primacy in the media space," he tells The Christian Science Monitor in an email.

While movies and even TV episodes can be watched at any time, and increasingly at times that are convenient to viewers, most sport fans prefer to watch a game in real time, says Dr. Clavio. Live sports programming, therefore, has kept many TV stations alive over the past 10 years, since online alternatives were often time shifted because of technical limitations or hampered by poor streaming quality. But now, the advantages TV once enjoyed over digital streaming are falling away as digital technology continues to improve.

"As streaming quality and speed gets better, the rationale for preferring terrestrial or satellite TV signals over streaming video gets weaker," Clavio says.

The increasing reliability of the web-based streaming technology provides Amazon with a unique opportunity to acquire a foothold in the online sports streaming business, even while most viewers continue to watch the NFL on television. But financial success right out of the gate is far from guaranteed.

Last year, Twitter held the same streaming rights to 10 Thursday football games that Amazon now does for the upcoming season. Twitter and NFL executives counted the livestreaming experiment as a success at the time. But that success was not terribly dramatic, with the games pulling in less than 300,000 viewers per minute on the social media platform.

Those same games generated an average of 15.8 million viewers on NBC and CBS, in what would seem to be a resounding victory for conventional television. The numbers seem even less encouraging when considering the fact that Twitter was able to show the football stream for free to any of its users, while Amazon will only stream the games to paying subscribers of Amazon Prime, who are already paying $99 a year or $10.99 a month for the service.

Despite the potential drawbacks, Amazon is still paying $50 million – five times the $10 million price tag Twitter paid last season – for the streaming rights to the games. But what might not pay off in the short term, says Clavio, the company evidently believes they are making an investment that will earn them money in the long run.

"I don't think people will look at the ratings for Amazon's streaming and say that it's a bad move or a failure," Clavio says. "They will look at the fact that Amazon is streaming NFL games and suddenly start to think of Amazon as a place to go for that sort of programming."

This eye for long-term trends and the moneymaking potential of online services has already worked well for Amazon in the retail market. In January, for example, the company announced that it will add 100,000 full-time jobs to its US workforce (which already numbers more than 180,000) over the next year and a half. The hiring spree stands in stark contrast to the news from traditional retail competitors like Macy's and Sears, which announced poor sales figures and mass store closings in the days before Amazon's announcement.

But while traditional retail companies might be on the decline thanks to online competition, traditional media companies aren't going away – at least, not yet, says Clavio.

"Streaming quality and speed are still held back by the poor infrastructure of telecom companies and service providers in most parts of the country," he says. "If you're in a big city, you're probably in good shape, but in the suburbs and rural areas, you run the risk of being left behind as a consumer."

"There's still a lot of work to be done in restructuring these businesses to take full advantage of the current environment," Clavio adds.