Amazon gets serious about streaming live sports

An opportunity to broadcast major events like the Premier League or the U.S. Open tennis championships will help Amazon prove to rights holders that it has the reach and the monetization credentials to contend with traditional broadcasters. This is key, given that many existing broadcasting agreements for various other leagues are up for renewal in the next decade. As Amazon acquires more sports rights, it will be easier for the company to gauge how best to monetize those rights. For now, it’s content to test and learn, buoyed by the fact that its early experiments with streaming NFL games have been fruitful. Amazon sold two minutes of ads for each hour of its NFL coverage, allowing advertisers to track how many people saw the ads and went on to take action on Amazon.com or other sites across the web.

“Amazon got positive feedback from the brands it worked with around the NFL livestreams,” said one ad exec. “What really stood out for us and them was the measurement aspect of advertising around that content, rather than the targeting. We were able to see the impact of someone who sees an ad for a shaving brand, for example. You could see how many people visited a product page or how many people actually went on to purchase it. That’s something you don’t get in a television environment.”

Amazon gave no clues as to whether it would conduct similar trials on its football broadcasts. But four media buyers Digiday spoke to for this article said Amazon will due to the types of rights its content executives have targeted. Amazon seems to be pursuing smaller packages that are unlikely to tempt fans into becoming Prime subscribers, but are big enough to see how existing subscribers respond to personalized ads during livestreams. The goal for Amazon is to be able to serve dynamic ads tweaked to logged-in viewers’ shopping history and preferences during broadcasts.

As old as Amazon’s ad business is, it’s only now whirring into gear as it accounts for a larger percentage of the company’s overall revenue. In the fourth quarter of 2017, the ad business grew to about $1.7 billion, up about 60 percent year over year. It’s what makes Amazon “dangerous” to the TV market, said John Turner, head of media practice at OC&C Strategy Consultants. “When you look at the growth of average purchasing on Amazon Prime both in the U.K. and the U.S., it’s growing rapidly,” Turner said. “Sports is a way to bring people into that ecosystem, albeit in a very expensive way.”

Amazon’s problem is people don’t watch Prime regularly like they do Netflix, said Richard Broughton, director at Ampere Analysis.

Sports could change that. With the mix of properties that Amazon appears to be amassing, casual fans who already subscribe to Prime could be tempted to use the service more regularly. If that happens, then the business can decide what ad-supported content on Prime looks like. Broughton said Ampere Analysis’ research found that 40 percent of the people who have shown an interest in the Premier League don’t have access to Sky Sports or BT Sport. About three-quarters of those people aren’t Prime subscribers, which is about 30 percent of the overall Premier League fan base that Ampere Analysis surveyed, Broughton said.

Video ads are likely to be a factor in any plans to monetize casual fans. The 10- to 30-second ads Amazon sold during NFL games might not be the most innovative way to make money from them, but video has higher margins than search or display media. Amazon, therefore, has been looking for more ways to serve video ads. Video ads on product listings on the Amazon site or app, for example, are not as obvious a fit as putting them around live sports.

“Amazon has been selling video inventory for years, but what’s new is they’re really going into more of the television space with the sports rights they have,” the advertising executive with knowledge of Amazon’s plans said. “Prime viewers get a similar experience as they would if they were watching TV, but then there’s the prospect of a better ad experience, which Amazon have been quietly fine-tuning. There’s big demand for video anyway, and it’s one of the top questions being asked of Amazon at the moment in terms of the opportunities around it.”

Some media buyers aren’t so sure that Amazon will prioritize video budgets despite the clear opportunity. Amazon sees a clear correlation emerging between people watching content on Prime and those buying more goods, said Misha Sher, vp at MediaCom Sport & Entertainment. “But I don’t think the future of monetizing content is always going to be in interruptive advertising in the way that we’re used to,” he said. “The truth is that the only reason Amazon is buying sports rights is because they want to sell more products. It’s more likely that Amazon will come up with a way to recommend products while people are watching a football match, for example, rather than pushing pre-rolls in front of them.”

Amazon’s biggest challenge will be how it adapts to a rights market spread across different regions. That’s not necessarily a good fit for its own holistic approach. As Gareth Capon, CEO at video tech platform Grabyo, said: “The regional nature of rights is a necessary evil of doing business in sport, so that companies monopolizing rights are forced to buy panregion or global properties. But if you look at what [live sports streaming service] DAZN are doing now in looking for more regional acquisition of rights where possible, and are buying out almost entire sports on a global basis to then resell them to give them access to those rights, that model is beginning to change.”

Amazon declined to comment for this story.