- Amazon’s exclusive deal for “Thursday Night Football” pushed it into the mainstream in US sports.
- The deal shows how Amazon is using sports to fuel its ad revenue, along with its other businesses.
- Analysts are sizing up how big Amazon’s sports-ad business could be and what it could buy next.
This is the third in a 10-part series publishing over the coming days that examines Amazon’s booming advertising business: The people driving it, the ripple effects on other companies, and what’s next.
Soon, Amazon will be able to lay claim to “Must-See-TV Thursday.”
Come September, Amazon’s CEO, Andy Jassy, might well be having friends over to watch his beloved New York Giants on Prime Video. The e-commerce giant will be the only place Americans can watch “Thursday Night Football” — the company signed a blockbuster $11 billion, 11-year deal with the NFL to show it exclusively.
The move has shifted Amazon from a fringe player in sports to the mainstream in the US. “Thursday Night Football” comes alongside other huge investments, such as the film studio MGM, that are aimed at catapulting Amazon to the heart of the entertainment industry and propelling its ad and retail businesses.
“It’s a great opportunity to make Thursday night must-see programming,” Marie Donoghue, Amazon’s vice president of global sports video, told Insider. “This is a once-in-a-generation opportunity to build a franchise that positions us as a weekly destination for millions of current and future customers.”
Rich Greenfield, a partner with the tech and media research firm LightShed Partners, described Amazon’s partnership as nothing short of seismic.
“They are very happy with their early progress in sports, but they’re just getting started,” Greenfield said. “All these tech companies optimize for one thing and one thing only: winning as much time spent as possible. Time spent is a way they can make money in many different ways, whether it’s advertising, retail sales, devices.”
The online-shopping heavyweight is pulling out all the stops to entice Madison Avenue to spend on its football programming. Jassy touted the new package with a Super Bowl ad. Amazon drafted the anchors Al Michaels and Kirk Herbstreit to call the season, along with experienced network production staffers. Donoghue said the team had added an estimated 60 people this year, not including those in marketing, tech, and product.
It’s also created a new logo and sent advertisers boxes of NFL merchandise. And last spring, Amazon struck a deal with the league to sell thousands of items for the profit-hungry football league.
“It’s a perfect time for them riding the wave of last season to take this over, because interest has never been higher, not just in the NFL or among sports advertisers, but the general market is buying into NFL more and more because they need to find ratings points missing from TV,” said David Campanelli, an executive vice president and co-chief investment officer of the media-investment firm Horizon Media.
Amazon is betting advertisers will pay up
Sports and news have been the two programming genres keeping pay-TV subscribers in the fold, though even that stronghold is eroding. Amazon’s message is clear: It is here to grow the
-sports audience. In marketing materials to ad agencies and marketing partners, Amazon suggests the live-sports streaming audience could reach one third of the US — 107 million people — by 2025, up 71% from 2021.
And it’s betting advertisers will pay up. Ad Age reported in February that pricing negotiations were starting at 20% more than what broadcast partners were charging and that sponsorships could cost a steep $30 million. One media buyer said Amazon is pitching “Thursday Night Football” for a CPM — the cost of reaching 1,000 people — of about $50, versus roughly $40 that traditional TV charged for the football broadcast, and guaranteeing its audience will reach broadcast-TV level. Amazon charged a similar premium to broadcast TV when it debuted its Premier League soccer broadcasts in the UK in 2020. Amazon declined to comment on ad pricing.
Amazon generated an eye-popping $31 billion in advertising revenue last year, making it the third-biggest digital-ad player after Google and Facebook, though growth slowed in the first quarter against a backdrop of challenges related to the pandemic and the war in Ukraine. Insider Intelligence, part of Insider’s parent company, projected Amazon would grow its share of digital advertising by 1.7 percentage points by the end of 2023, at the expense of Google and Facebook.
Sports fuel the rest of Amazon’s businesses
Amazon has created a near perfect flywheel for sports. It uses its homepage to drive consumers to weekly games, then serves them ads pushing them straight from the games to the online store to buy team merchandise, along with everything else.
In this way, Amazon collects valuable data about consumer habits and can pick up subscribers who perhaps were watching football on broadcast TV before. New advertising, merchandise, and subscriber revenue in turn fuels Amazon’s ability to do deals like its $8 billion acquisition of MGM to further grow Prime Video.
“It may not generate $2 billion of incremental sales, but if they can generate $1 billion and a couple hundred million in advertising and sell an extra billion dollars in merchandise — and keep it away from a competitor — that has value,” said Ed Desser, the president of Desser Media, a sports-TV consultancy.
Sports have also driven new Prime subscribers. In the UK, where Amazon acquired Premier League broadcasts, an additional 635,000 subscribers signed up for Prime Video in the fourth quarter of 2020.
The NFL and Amazon have considerable drawing power. In 2021, NFL games dominated the top 20 prime-time telecasts, according to Variety, garnering about 20 million viewers to 42 million viewers, excluding the Super Bowl. The NFL averaged 17.1 million viewers for a regular-season game last year, up 10%.
As for Amazon, it said that as of April 2021, Prime had more than 200 million subscribers, 175 million of whom had watched a movie or TV show on Prime Video.
‘A watershed moment’
The sports marketplace hopes Amazon will bring not only scale but innovation to the presentation of NFL games, which typically have two sports broadcasters and a former player calling them. The league already has its own channel on Amazon’s gaming platform,
introduced the first all-women NFL broadcast team of Hannah Storm and Andrea Kremer., and four years ago it
Donoghue, a vet of ESPN, laid out Amazon’s big plans to attract fans and advertisers while underscoring how Amazon can pick up cord-cutters to boost its audience.
Fans will be treated to graphics, stats, and the like to provide a fuller understanding of the game. Feeds will feature coaches and celebrities, some geared toward specific demographic groups. Pre- and post-game coverage and content will offer additional opportunities for advertisers. And the games will also be on Twitch.
“They’re trying to find out just how many people will come over: What does that audience look like? How can we market potentially other things to that audience?” said Tim Scanlan, a vice president of sports broadcast and media at Octagon, a sports sponsorship and management company that represents Storm and Kremer.
Greenfield expects Amazon to bring innovation to advertising, too, with ads customized to individuals in the stadium, for instance. One media buyer said Amazon was looking at letting advertisers tailor their message to different groups instead of having to share a 30-second period with other advertisers.
And the NFL could be just the start. Amazon just signed a deal with One Championship to bring MMA fights to Prime Video. It has a stake in the regional sports network Yes and began offering exclusive streaming access to 21 New York Yankees games in four states in April. It could try to get a piece of NFL Media’s own ventures, which include NFL Films, NFL RedZone, and NFL Network; the league has tapped Goldman Sachs to look at strategic partners, The Wall Street Journal reported last year. In the next two years, NBA basketball rights will be up for grabs.
Other media giants such as Warner Bros. Discovery and Apple, alongside Comcast and Paramount, won’t be sitting on the sidelines. Apple is reportedly dueling Amazon for NFL’s $2 billion “Sunday Ticket.”
“They don’t seem to have made many errors so far,” said François Godard, a senior media and telecoms analyst at Enders Analysis. “We have seen them buying a little package, then buying a bigger package, careful to not feed price inflation for rights in Europe.”
Patrick Crakes, a sports-media consultant, wondered whether Amazon could eventually make a major acquisition, perhaps of Fox or Paramount Global (formerly ViacomCBS), both of which house a broadcast network with huge sports-rights agreements.
But Amazon’s ownership of “Thursday Night Football” is already plenty big.
“The second-most-popular TV series each year, every year, is now only going to be on Amazon. If that’s not a watershed moment, what is?” Greenfield said. “This is putting a stake in the ground saying, ‘We’ve arrived.'”