Amazon’s Football Experiment is about Data
Amazon’s foray into streaming live sporting events is about digital data. It was never about audience size, new activations, or subscriber retention.
Last night Amazon streamed their second NFL Thursday Night Football game. Bloomberg reported Amazon’s first NFL live streaming event last week attracted 372,000 viewers who watched the game an average of 55 minutes while 1.6 million viewers initiated streaming of the game at some point. That may feel like a paltry sum compared to the 14.6 million viewers who tuned in to watch the game on CBS or the nearly 500,000 who watched on other digital platforms like NFL.com, but Amazon’s investment was never about audience size.
Amazon paid more than $50 million to air 11 Thursday night games this season. This was a significant increase from the $10 million Twitter paid to live stream 10 NFL Thursday Night Football games on their platform last year. Many have written that Amazon’s strategy here is to diversify content, gain new subscribers, and retain current subscribers. I argue this investment is purely about data.
Traditional media measures the success of these investments on a per-viewer basis, but Amazon’s investment is decidedly different. This isn’t about Amazon “catching-up” in terms of viewers tuning in. It isn’t about the lack of exclusivity “hurting” Amazon. This isn’t the litmus test to see if NFL games will move away from traditional broadcasting platforms. They won’t. Not anytime soon. The traditional broadcasting deals will be renewed when they begin to expire in 2021. Google, Facebook and other digital platforms won’t likely take over for ESPN, CBS, NBC, and Fox.
The games are only available to Amazon Prime members. Critics have suggested this limits Amazon’s potential audience size whereas Twitter made last season’s games available to individuals both with and without an account. But this experiment isn’t about driving new Prime memberships. Most Prime member households likely have access to some type of paid TV service so streaming the game isn’t their only watching option. And certainly not their default option. By making the games available exclusively to Prime members, Amazon is able to focus their data collection on those already using the platform.
Amazon can now build information about live sporting event audiences – something they’ve lacked until now. Amazon can know know what these households were watching before and what they turned to after. This information will help inform other content investment decisions. Not only will it make existing content investment decisions more data driven, but it might also help investment decisions in adjacent markets. For example, this could help inform Amazon’s potential entry into the $2 billion annual U.S. pay-per-view (PPV) market. A market dominated by sporting events mind you.
This is also an investment to hone Amazon’s advertising platform. You don’t hear much about it today because it’s small compared to other’s Google and Facebook. But in the coming years Amazon will seek to grow its ad revenue significantly. Barclay’s estimates Amazon generates around $1.4 billion a year in adverting revenue. As part of the agreement with the NFL, Amazon can sell a “limited number of advertisements” in addition to ones aired from CBS and NBC. Amazon can charge millions for these 30 second spots. The nature of Amazon’s digital platform enables them to specify who sees which commercials. This drives ultimate ad customization.
Sure Amazon is bringing other things to the digital table. The game will be available in 200 countries. There will be audio feeds in Portuguese, Spanish, and even an English language one positioned specifically for the UK market. Amazon also tied in Alexa with features like football trivia. But this is less about driving new audiences to the platform, connecting with chord-cutting millennials, or diversifying content. This is first and foremost an investment in data.