For the first time in its domestic market, an NFL game was broadcasted exclusively on a streaming-only platform on December 26, 2020. The San Francisco 49ers vs. Arizona Cardinals game drew a worldwide average viewership of 4.8M across Prime Video and Twitch. Even though we will not see any meaningful domestic NFL package exclusively on Prime Video anytime soon for a multitude of reasons (think: technological challenge of live streaming at scale, UI/UX challenges, NFL's preference for max-reach distribution, the urgency of current broadcasters to retain NFL programming), it inevitably sparked the conversation about when, not if, Amazon would take over the NFL broadcasting packages in particular and the sports rights market in general. 🙄

Disregarding those challenges and that NFL probably will not have to rely on Amazon to sustain their growth in media rights revenues in the short-term, the single-biggest reason why I do not believe that Amazon will come to the rescue to a seemingly flattening-out sports rights market: Amazon does not need to. 🤷🏽‍♂️

In contrast to pure-sports broadcasters/streamers, there is no need for Amazon to build up a critical mass of live sports programming. Instead, there is optionality for Amazon to opportunistically tap into the sports rights market and super-charge their already existing (video) value proposition. 🚀 Unfortunately for sports rights owners, Amazon will do so on a selective basis (think: diminishing return on investments in live sports programming) and is much more likely to do so if there are bargains available 🤑 instead of when right owners can still demand market rates.

With Amazon acquiring sports rights at scale being out of the room of possibilities, this blog focuses on the content acquisition strategies of (pure-sports) streamers/broadcasters instead: Those pure-content players that have traditionally already bought sports rights and will also determine the future trajectory of the sports rights market — currently standing at +/- USD 50BN. 💰

⬇️ ⬇️ ⬇️ ⬇️

PORTFOLIO THEORY: Building a sustainable subscription business with the right puzzle pieces for customer acquisition and engagement/retention to achieve a stable, gradually growing subscribership over time — amidst sports' inherent seasonality and challenging OTT economics (ARPU📉, CAC📈, Churn📈). 

COPING MECHANISMS: Overcoming imperfect portfolio compositions and practical limitations to master the fundamental challenge of subscription businesses — the constant exchange of value between two parties (think: content/services for disposable income) and a renewed commitment for such value-for-money 💵 🔄 🎥 proposition on a periodical basis:

• 🔒 Long-term lock-in at heavy discounts for countering sports' susceptibility to seasonality and more active subscription management, as well as maximizing ARPU per annum.
• 📺 Re-packaging and accessibility for the traditional distribution system to close the technology gap — creating and capturing value from incremental segments of the addressable market. 
• ⛓ Re-bundling of digital entertainment to achieve pricing power, stickiness, and strategic scale for a sustainable sports-only subscription business. 

CASE STUDY - PORTFOLIO VS. COLLECTION OF RIGHTS: In the United States, DAZN's attempt at disrupting the pay-per-view model for marquee event-driven sports events is one example of how the portfolio approach can be stuck in the middle and somewhat incomplete. Put differently, offering PPV-level events at subscription-level prices without (or even with) the ability to retain customers is not sustainable. Secondary paywalls and price discrimination can serve as a bridge until the market has consolidated and pricing power / stickiness been exercised. 💡

🏁 To conclude, Amazon does not need a portfolio of live sports programming; a collection of such is sufficient and fits the purpose. Such featurization of sports is not necessarily bad for rights owners as it expands the set of interested parties in their IP 👍🏼 but it is not a replicable approach for the majority of rights buyers. 👎🏼 The latter has to either master the cable-to-streaming transition (in case of incumbents 📺) or must find ways to address the traditional distributions systems (in case of new digital-only/first players 📱) to create a sustainable — and being able to pay rights-owning leagues and organization the rights fees they y have accustomed to. 

I would appreciate any feedback or a follow on Twitter (@yannickramcke), where I share my thoughts regarding current developments in everything "Sports Business, Media & More" on a regular basis.