As many have written, the bidding for the Premier League rights in the United States will be intense. With NBC growing the property to incredible heights and the popularity of the sport skyrocketing, the next rounding of bidding could lead to ESPN, NBC, and Fox “splashing” a lot of cash for the league rights. However, fans should not discount a different kind of bidder – Amazon.
This article is not written with any inside intelligence or knowledge of the ongoing negotiations. What it is written with, however, is knowledge of how media consumption is changing and how companies like Amazon are taking advantage of it.
To deviate from the soccer for a moment, online companies like Amazon (and to a lesser extent Netflix and Hulu) use a brick-and-mortar sales strategy already used by Sam’s Club and Costco to turn a profit. By charging a membership fee, the company can charge a lower rate for products but instead depend on the need of customers to belong to receive these discounts to make money. For Costco, that is a membership fee, and for Amazon that is Amazon Prime. The yearly fee is more than just the ability for customers to receive free two-day shipping; rather, it is a revenue stream for the company that allows it to keep prices relatively low and still please stockholders.
As you may have noticed if you’re a Prime member, Amazon now offers non-product benefits like free streaming of certain movies and free unlimited photo storage. Again, the cost to the company of rights and bandwidth is offset by the membership fee, and the relationship is reciprocal. That is why Amazon is experimenting in original content and movies, because if it succeeds more people will pay the fee regardless of increases.
Now let’s bring soccer back into this. Amazon has experience in producing “television” shows and soon movies. They have the ability and capital (we assume) to create a platform to stream EPL games in the U.S. NBC already streams all of the matches online, so Amazon could either eliminate the terrestrial option or partner with a network to show a few games with Amazon branding.
Considering how expensive the rights will be, how can they afford to compete with ESPN and NBC? Two options. First, they could charge people to purchase a viewing package of all the games or certain games. This would likely be a loser financially and would not be appealing to the league. Option two would be, however. Amazon would stream all matches for free, for Prime members. Now non-Prime customers for Amazon would have to purchase the yearly access to watch their games, and Amazon could begin to offset their cost through the yearly fees it would gain. And, since the valuea of the membership increased, naturally it could justify an increase from the current $99 fee. Such a scenario could apply to a number of streaming sites, although Amazon is probably best positioned for this model.
Amazon is not in the pole position to win the EPL rights this time around. It is however well positioned to compete for rights of other leagues or competitions in an era when television consumption is decreasing. It is inevitable that a league one day will entrust its viewing rights to an online company, it is just a matter of who will take the leap. Just don’t think its the online companies like Amazon that aren’t ready for this new day.
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