Amazon.com Inc. is exploring an ambitious offensive aimed at
infiltrating the last bastion of traditional pay-television: live
sports.
In recent months, the e-commerce giant has been in talks for
live game rights with heavy-hitters like the National Basketball
Association, Major League Baseball and the National Football
League, as well as smaller players like Major League Soccer, the
Atlantic Coast Conference, college sports network Campus Insiders,
120 Sports, National Lacrosse League, Major League Lacrosse and
World Surf League, the people said.
With at least some leagues, including the NBA, Amazon has
floated creating a premium, exclusive sports package that would
accompany a Prime membership, though the details are unclear, the
people said. A premium sports package could entice new subscribers
to Prime and to Amazon's potential "skinny bundle" of live channels
online.
Amazon executives have even canvassed traditional TV networks
for game rights they aren't using. They have asked if Univision
Communications Inc. would consider producing and packaging the
extra Mexican soccer league games that it has rights to but doesn't
air, one of the people said. And they approached Walt Disney Co.'s
ESPN and ONE World Sports, which airs offbeat sports like Russian
hockey league matches, to seek leftover, unproduced live games,
other people said.
Amazon also is scouting abroad, on the cusp of a global video
expansion. It paid $10,000 for a tender document to potentially bid
on the popular Indian Premier League cricket games. And it is
discussing licensing an international package of NBA games, a
person familiar with the talks said.
"My sense is they are interested in anything that might be out
there," said Chad Swofford, vice president of digital for the ACC,
a college sports conference.
An Amazon spokeswoman declined to comment on its sports
efforts.
Amazon's potential entry into sports broadcasting could shake up
a lucrative business that has long been a stronghold of traditional
pay-television. That is in part because "they take such a view of
the long game, while near-term financial returns drive the agenda
for most companies," one senior sports executive said. Amazon
executives are keenly aware that the premium NFL Sunday Ticket
package of afternoon football helped DirecTV acquire subscribers
when it launched as a new rival to cable, people familiar with
their thinking say.
Amazon even asked to exclusively license the NBA's League Pass,
which offers live out-of-market games, one of the people said, but
the NBA demurred, having long preferred selling it through many
outlets.
Amazon also is seeking sports packages like NFL Game Pass, which
shows replays of matchups, to sell to Prime members as add-on
channels, the people said.
Leading the talks is Amazon's head of sports, James DeLorenzo, a
former Sports Illustrated executive hired in March. Also on
Amazon's acquisition team: Sunil Dave, a former Dish Network Corp.
executive who negotiated with sports networks.
Amazon is racing to compete against rival tech giants like
Facebook and Twitter, as well as BAMTech, the spinoff of Major
League Baseball, which are seeking sports rights to beef up their
video offerings.
One big hurdle: many premium rights are tied up. The NBA's deal
with ESPN and TNT stretches until the 2024-2025 season, while the
NFL's pacts with ESPN, CBS, Fox and NBC run through early next
decade. Many college conferences' rights lie with various TV
networks. And Disney's recent investment in BAMTech means ESPN's
extra sports rights likely will land in its forthcoming multisport
streaming service with BAMTech, one person familiar with ESPN's
thinking said.
Amazon has the firepower and willingness to bid for top-tier,
exclusive sports rights when they become available, people familiar
with its thinking say. Coming up next year: the NFL-Twitter deal
for streaming 10 games. Amazon had bid for those rights this year,
a person familiar with the matter said.
Amazon would be wagering that sports will attract enough new
Prime members to offset potentially large yearslong costs. Rival
Netflix Inc. has long said viewers don't care to watch sports
on-demand after the fact, making it an unattractive investment
compared with shows or movies. Already, Amazon's ballooning
investments in video are a drag on its meager profits.
The company may first grab a toehold in the "long tail" of
sports, like lacrosse, gymnastics or surfing, sports executives
say. Amazon executives believe the e-commerce giant can uniquely
target a lacrosse viewer with lacrosse gear, for instance, allowing
Amazon to land a greater return on a sports investment.
"Amazon's ability to aggregate information about individual
consumers is without peer," said Alexander Brown, chief executive
of TV network ONE World Sports.
The ability to re-target consumers could be key to justifying
expensive sports rights as traditional networks grapple with
declining ratings for some events, like NFL games this season.
It isn't uncommon for Amazon to float various ideas and
retreat—a potential outcome of its sports foray as well, media
executives cautioned. At times there are several overlapping video
efforts going on at once—a model that Amazon Chief Executive Jeff
Bezos encourages for a bit of "business Darwinism," one person
close to Amazon said.
There is debate internally about whether a sports package should
be available free with Prime or as a premium add-on subscription,
the people said. It is still possible Amazon may just opt to
license channels, like traditional cable distributors do, rather
than acquire sports rights.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
November 21, 2016 15:25 ET (20:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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