As 2022 wraps up, SI staffers Jon Wertheim and Chris Almeida will discuss some of the themes of the year in sports. So far, they’ve covered sports washing, what did and didn’t change during a wild year in college sports, and the new formula for removing problematic owners. Up today: how Amazon’s entry into the broadcasting market might soon change the way we watch sports.
Jon Wertheim: Week 2. Chargers-Chiefs. That game was not particularly memorable, and yet it might be the most important game of the season and one of the most important games, arguably, in NFL history.
Chris Almeida: Tell me more.
Jon Wertheim: This was Amazon’s real full-time foray into football. And it was a transformational shift. If everyone’s screen had been buffering people had been having issues with network connectivity and user issues, that would have been as bad as the healthcare website rollout. But instead, it looked a lot like a football game. And for all the people who must have complained about not being able to find the game, it seemed like the vast majority of people had no issues.
I think the math on this is basically: Amazon is paying a billion dollars a year for 15 games. So it’s $70 million per game. So if you think of it that way, the per-viewer price is wild. But that’s not factoring in that everybody who is watching this game had to sign up for Amazon Prime and that all of those people, in the commercial breaks, aren’t looking at 30-second beer commercials or Geico geckos but are instead buying bikes and running shoes. … It’s a different economic model. And now Amazon’s proven they can do this. The consumers have proven that they’re OK with this.
Even with a pretty bad schedule, the numbers have been pretty good, and the user experience is pretty good. And now Amazon is a player in the sports rights game and Amazon’s market cap is bigger than the networks and ESPN combined.
I think Amazon was really smart about how they did this. The Nadal-Djokovic match earlier this year at the French Open was on Amazon Prime in France. So they sort of put their toe in the water. It wasn’t like all of a sudden they were going to get into live sports and do NFL games first. So, sure, they didn’t get a great slate of games, but I didn’t hear a lot of people saying I can’t watch Thursday Night Football. I don’t know where to find it.
CA: Say what you want about the price tag, but it does feel like the NFL is really the key to making this work. We’ve seen other streaming services try to get into this game—Apple with the MLB, Hulu with the NBA—and as far as I can tell, they haven’t really made a huge dent. Probably not a lot of people are signing up for those services for those purposes. And that makes sense. Both NBA and MLB regular seasons are pretty regional things. The NFL, people will watch any NFL game. I’ve tuned into plenty of Thursday night games, Bad Thursday night games, because of fantasy implications or just because each game has a little more weight regardless of which teams are playing. So it seems like this was the right place to spend. They spent money on Al Michaels and they spent money on getting the legitimacy of this football machine. I think that’s gonna pay off.
JW: Everybody wins, right?
CA: Except for maybe us when we’re getting targeted ads sent straight into our Neuralinks…
JW: Yes, exactly. In the end, it is another service for sports fans to sign up for. But it’s happening. The NFL and the other sports leagues love that there’s another bidder. Sports is helping prop up linear television, but we all know now that streaming is real. (YouTube is reportedly the leader in a pack of tech companies bidding to get the rights to NFL Sunday Ticket.)
I think that what’s getting lost in this, is that sports are still hard to watch on your phone. You really want a big-screen experience. If I’m watching something on my phone, if I’m streaming Netflix on my phone, I’m not really inclined to mess around with other windows. I’m not inclined to shop or go on Amazon the way I am if I’m watching on my computer. So the whole idea is predicated on buying a streaming service but also to make you think: Hey, there’s a lull in the game; I’m gonna go buy this book and this bike for my groceries. Sports are a great vehicle for that in a way watching White Lotus on HBO on my phone isn’t.
CA: Right. There’s natural tune-out times. You can watch this event passively.
JW: Sports are kind of perfect for that. And so these ratings have not been going up. Thursday Night Football is getting something in the realm of six million viewers per game. So that’s about $10 per customer per game. That’s not what ESPN wants. It’s not what NBC and Fox and CBS want. But Amazon is working with a completely different business model.
CA: I think another part of this is that ESPN is playing defense. Fox and CBS are playing defense. Amazon is on offense. They’re trying to take something. So, sure, they’re willing to take the absolute worst slate of games on the night that people are the least inclined to watch, and that’s OK. It’s fine for them if they’re eating it a bit as far as ratings go because they know that whenever the other deals are up, they’ve prepared all the infrastructure and can come for Monday night or Sunday night or, hell, Sunday afternoon. ESPN would be disappointed with the TNF package because they’re just trying to maintain what they have.
JW: The other networks were hoping everybody was gonna have buffering issues and it was going to look like early AOL access and everybody was going to say We’re not ready for streaming and you have all these glitches. But that didn’t happen. This is going to change the model. Instead of doing a package, some of these leagues are going to think about doing dynamic pricing where networks will have to bid by game. What I’ve heard is the whole success of Amazon has gotten companies really thinking about completely different models. And if you’re the NFL and you have all these flex games, why not make all these networks bid game by game? This could really upend the whole business model.
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