Last week, Amazon.com (AMZN US) was awarded the rights to live stream 10 of the U.S. National Football League’s (“NFL”) 2017 matches on Thursday nights for a price of US$50 million. The amount itself does not sound like much for a company with a market value of US$429 billion but with competitive bidding from the likes of Facebook (FB US) and Google’s YouTube (GOOGL US), this price was 5 times more than what Twitter (TWTR US) paid for similar rights in the 2016 season.
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The matches will be streamed to Amazon.com Prime members and marks the company’s first major foray in delivering live sports content to its customers. According to press reports, Amazon.com had made an offer to the National Basketball Association (“NBA”) to be the exclusive licensee of the NBA League Pass streaming service but discussions did not progress.
So how did Amazon.com get to this position of becoming a broadcaster of live sports? And who will be the winners in the chase for content?
Consumption of content has changed
By now, most of us understand that we are consuming content in multiple ways thanks to faster internet speeds, smart TVs, tablets and smartphones. We no longer need to wait to for a TV show to appear in its allocated timeslot on free-to-air or cable TV but can watch it on-demand at our own time and leisure. In addition, we can now consume content anywhere we would like as long as there is a digital device available (and an internet connection if the content has not already been downloaded). It really has been a boon for the consumers.
However, this has also resulted in fundamental changes in how traditional media outlets operate. Newspapers have progressively moved online with paid subscription models to offset losses in advertising revenue. TV and radio broadcasters have created their own streaming services to complement their existing broadcasting businesses. However, these traditional media outlets are changing their business models not just because new technology allows them to, or because changing consumer habits are forcing them to, but also because non-traditional businesses such as Amazon.com have been steadily encroaching on their turf.
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