Last week, history was made when Amazon became the first non-traditional broadcaster to pick up one of the Premier League’s domestic rights packages.
The landmark deal means that the US ecommerce giant’s Prime Video streaming service will show 20 games from English soccer’s top flight each season for three years from 2019/20, including the full complement of popular Boxing Day fixtures.
The coverage, which also comprises another full round of midweek games each December, will be available free to Amazon Prime’s UK subscribers, but is also likely to drive a host of new consumers towards the platform.
Speculation had been rife that one of the tech giants would make a play during this year’s auction, but now that it’s happened, what does it actually mean for the future of Premier League rights, and could it represent a tipping point going forward?
How did it happen?
Five of the seven available packages – which accounted for 160 of 200 live games available each year - had already been sold back in February, when the Premier League’s existing domestic broadcast partners, Sky and BT, secured the majority of the rights for a combined UK£4.464 billion.
The remaining two packages, however, went unsold, and stayed that way for another four months as the Premier League failed to get close to recuperating the record-breaking UK£5.136 billion it had scored last time around.
On this occasion, Premier League chiefs specifically tailored those two packages to smoke out a deep-pocketed Silicon Valley rival in an attempt to drive up prices, but each of those lots ended up proving particularly unpopular with traditional broadcasters due to the way they were structured.
“I think it boils down to the fact that the Premier League made a slight misstep in how they reorganised the packages,” explains Julian Aquilina, a TV research analyst at Enders Analysis. “They made it very unattractive for the likes of Sky, BT or any other traditional broadcaster that relies on a monthly subscription model.”
What’s more is that under the rules of the auction, Sky would only have been able to purchase one of the two left over packages in any case, which prevented the Premier League from then bundling all 40 remaining live games together due to the risk of taking one of its biggest buyers out of the equation.
“There’s no real reason to bid on these packages because a lot of the games take place simultaneously,” adds Aquilina, “so you’re not going to generate big audiences for 20 simultaneous matches as you would for 20 games at different times. Also, they’ll all be taking place over a two-day period, so it doesn’t have the same sort of attraction for a continuous monthly subscription model.”
The key to Amazon’s involvement then, wasn’t a lucrative bid which blew Sky and BT out of the water, but rather the lack of interest shown in the final two packages. This meant the sales process ultimately rumbled on far longer than the Premier League would have liked, paving the way for Amazon to make its highly anticipated entry into the market.
What’s in it for Amazon?
The general consensus is that this represents a low-risk, opportunistic move for Amazon, given that it is likely to have secured the rights at a significantly cut-price, although exactly how much that is has not been confirmed.
A clue to that sum, however, might lie elsewhere. BT, which claimed the other remaining package, announced that it will pay UK£30 million per season for the additional 20 games, which equates to UK£1.5 million per match. That figure pales in comparison to the price of the games in the major packages, which have both BT and Sky coughing up about UK£9 million for each fixture.
With its foot now firmly in the door, Amazon has three seasons to test the waters – from both a production and cost perspective - before deciding whether it’s worth staking a claim for the main packages next time around.
More significant for now, perhaps, is that all 20 of Amazon’s live games take place in December, which is a crucial period of time for the company’s retail business in the build-up to Christmas. Amazon will be banking on a flurry of new customers signing up to Prime for a 30-day free trial to watch the Boxing Day matches, and while a number of those consumers might not stay beyond that first month, there will be plenty who buy into the service and remain wedded to it.
“I think it’s quite a specific scenario this time around,” says Aquilina, “and they [Amazon] have done well to get a deal that involves December games, and it’s a package that’s particularly unattractive to the other broadcasters.
“If I was at the Premier League, I’d restructure the packages next time around so that the broadcasters actually value them and bid for them again. Depending on how it’s structured next time, maybe the likes of the digital players will come back to the table.”
Is it a good deal for the Premier League?
Premier League chiefs had hoped that interest from the likes of Amazon and Facebook would spark a bidding war in February’s auction, but it has wound up with significantly less than it had envisaged. So in a way, the league got what it wanted by getting one of the streaming companies onboard, but not for the financial gain it was after.
It is also important to account for the fact that a record 200 games were up for grabs after Premier League clubs agreed to include an additional 32 fixtures in the latest rights tender, meaning more has been sold for less.
But if nothing else, the decrease in value of the Premier League’s domestic rights is indicative of just how unique the circumstances were for the last auction in 2015, when the league benefited from an unprecedented 70 per cent uplift.
Back then, BT was emerging as a real threat to Sky, which went all out with an eye-watering UK£4.18 billion bid to keep its new rival at bay. Now, that rivalry is less intense thanks to a content-sharing partnership signed in December, giving viewers on the Sky platform access to BT Sport channels and BT users access to Sky Sports.
This year, the Premier League might have tried to replicate similar conditions by sounding out the titans of the tech industry, but it proved to be too early for those companies, which might remain skeptical of exactly how live sport can benefit them.
“I think for a while now leagues will have been wanting to explore deals with digital players,” says Aquilina, “but the Premier League just didn’t envisage that Sky and BT wouldn’t bid anywhere near the sums of money that they wanted, and then it seems like the last four months they’ve been desperately trying to work out a deal.”
Beyond that, though, all is not lost. The Premier League has maintained throughout the process that it expects the biggest boost to its coffers to come from the burgeoning value of its international rights, with the league’s popularity continuing to boon in the Asian and US markets.
On top of that, and despite the decrease, the Premier League’s domestic rights remain the most valuable in world soccer, and partnering with Amazon gives it an opportunity to get out in front of future trends.
Should Sky and BT be worried about Amazon?
Not just yet. Sky has paid less to keep the live sports content which forms the cornerstone of its business, while BT has also emerged unscathed, adding further games to complement its exclusive Uefa Champions League coverage. Amazon, meanwhile, has only a tenth of all available matches, meaning fans subscribing to Sky and BT actually get a net gain in the number of Premier League games available to them despite the entry of a third party into the picture.
Another saving grace for Sky and BT is that these rights are for the UK only, which makes up just one of Amazon’s many markets. As a global company, Amazon is more suited to multi-territory or global rights deals, such as its agreement for the National Football League’s (NFL) Thursday night fixtures, meaning it will need to be convinced that it is getting value for money from its Premier League coverage before coming back with a bigger offer for one of the major packages at the next auction.
When the rights do next go to tender, however, more fans are likely to be consuming live sports across an array of devices, such as their smartphones, laptops and tablets, which will only play further into the hands of the streaming companies.
And by that time, Amazon will also have a better idea of whether live sports can drive consumers towards its retail business. The Premier League will now sit alongside Amazon’s NFL coverage, as well as its exclusive rights in the UK and Ireland to the US Open Grand Slam tennis tournament and ATP World Tour. In short, the company’s content offering is expanding, which makes a Prime subscription a far more attractive proposition for sports fans.
The likes of Facebook, Google and Twitter are sure to be watching on with interest, and if Amazon does deem its first Premier League experiment to be a success, last week’s deal will be looked back on as a breakthrough moment in how the league’s rights are sold.