The Dangers of Relying on Sports Rights

Back in February, the NZ Commerce Commission declined clearance for the proposed merger between Sky and Vodafone, citing in particular its concern that:

Specifically, the Commission cannot exclude a real chance that the merged entity would leverage its market power over premium live sports content, foreclosing competition in the relevant broadband and mobile services markets over the medium to long term.

Turns out that Sky’s “market power over premium live sports content” may not be as “long term” as the Commission thought.

How so?

Last year, Twitter scored online streaming rights for ten US National Football League (NFL) games for around $5-$10 million.

As the NFL observed at the time:

For the NFL, this is a chance to experiment. The league is aware that a growing number of households are comfortable streaming video over the Internet, and this is an opportunity to appeal to so-called cord-cutters, as former cable-TV subscribers are known. The NFL has streamed selected games, but this is its first season-long streaming deal.

That was 2016, this is now. Earlier this month, Variety reported that NFL streaming rights for those ten games for 2017 had been picked up by Amazon for a cool $50 million:

The 2017 NFL games will be available to Amazon Prime subscribers, on the Amazon Prime Video app for TVs, game consoles, set-top boxes and connected devices. The ten games will also be available to Prime Video members internationally in over 200 countries.

As always, Amazon is playing the long game. Its Amazon Prime service already has at least 66 million subscribers, each paying around $100 a year for a bundle of benefits that include free shipping and plenty of free streaming video content. That’s 6.6 billion dollars worth of income, much of it from the US. Bound to be a few dollars spare to overpay for sporting rights.

In late 2016, Amazon expanded Prime Video globally, largely on the back of the ex-Top-Gear renegades, Jeremy Clarkson & co. And what drives video? Sports and movies. So we can expect Amazon to be on the prowl for even more sporting rights, not just in the US but globally as well.

Down our way, Amazon is scaling up in Australia, reportedly opening up distribution centres across the ditch for a full-scale launch in 2018. Major retailers in both Australia and New Zealand are gearing up to compete with the ecommerce giant when it steps up its efforts down under.

And our broadcasters need to prepare as well. SANZAAR (South Africa, New Zealand, Australia and Argentina Rugby) broadcast rights deals reportedly expire in 2020, which is just around the corner.

This time, the bidders won’t just be broadcasters. As streaming becomes ever more entrenched, Amazon, Netflix, Facebook, Google and Apple just might be looking for fresh video content.