Analysis: Has Amazon scored with its Premier League package?

For the first time, a non-pay TV broadcaster has won the rights to the EPL in one of the world’s most contest television auctions.

Previously in the sports rights world, Amazon paid an initial $50 million for 10 NFL Thursday Night Football games and purchased US Open and ATP Tour tennis rights in the UK, but the English Premier League (EPL) deal for three years of broadcasting rights in the UK is more expensive, longer-term and is truly trail blazing for the FAANG - aka Facebook, Amazon, Apple, Netflix and Google – who are now in the centre of the sports rights world and here to stay.

Just like BT Sport, whose entry into this market claimed an offer of free sports TV as long as the consumer bought BT broadband, it is expected that Amazon will start their relationship with English football followers by giving away its 20 EPL games to anyone with a £79-per-year Amazon Prime subscription.

Year one of Amazon’s deal begins in 2019 and there is already speculation that fans could be asked to make small micro payments for some live games in years two and three.

Amazon’s EPL purchase was not a surprise for Stephen Nuttall, commercial and strategy advisor on sports and former senior executive at YouTube and BSkyB. “Amazon knows that Prime subscribers spend more money more often, so they can use that data to boost retail sales of all kinds of products.”

For Richard Broughton, Research Director at Ampere Analysis, it was always going to be Amazon of the tech giants who made an EPL move. “Amazon is testing the water and, with all the data they collect in the three years of this deal, they’ll definitely be in a very strong position next time,” he says.

“Amazon is testing the water and, with all the data they collect in the three years of this deal, they’ll definitely be in a very strong position next time” Richard Broughton, Ampere Analysis

Ampere forecasts that Amazon will need around 400,000 fans to sign up for the Prime service between 2019 and 2022 for the deal to break even. “For Amazon, £100 million over three years is not a huge spend and the EPL is very glad to have a third group bidding which will mean more competition at the next auction,” says Broughton.

Sports broadcasting consultant Phil Lines was once a senior EPL executive and says that the real loser in this year’s biggest football auction has been BT Sport which announced that Chief Executive Gavin Patterson was stepping down from his job within days of the final two packages being sold off last week.

“BT Sport has not had a good auction,” says Lines, “because they’ve paid more money for fewer games and it’s difficult to know where the company goes from here in terms of its sports channels.”

Patterson’s removal comes at a time when BT stock is still around a six-year low and there is no successor lined up. Plus, in the British and Irish markets at least, BT no longer has the deepest pockets now that the FAANGs are involved and EPL has done its job for BT by delivering hundreds of thousands of broadband customers (its current BT Sport subscriber number is around 1.75 million).

So, without its sports loving CEO and after the recent announcement of 13,000 BT job cuts, questions remain as to the future direction of BT Sport.

Lines sees the tech giants becoming stronger, but also points out the growing strength of aggregators like Perform, DAZN and Eleven. “We’ve just seen Eleven buy the UK and Irish rights to La Liga in Spain and DAZN may well launch an OTT sports channel soon, while Perform is working with many big sports leagues all around the world.

”The business models of sports broadcasting are changing and direct-to-consumer looks like the way forward with more fans being comfortable making micro payments to watch what they want when and where they want it,” he says.

OTT services operated by leagues or federations are certainly the flavour of the month with Formula 1’s product a good example. Perhaps one of the most underrated is iFollow, the streaming service run by the 72 clubs of the English Football League (the country’s second, third and fourth football tiers) that allows matches from the three leagues to be watched outside of the UK and Ireland.

“I think the EPL learned a lot in this auction,” says Lines, “particularly that they need to think more carefully about how to put packages together.” These comments come after it took almost four months to finalise these final two of the seven EPL packages - in bold below - on offer.

Certainly, the sports broadcasting market is a place for bold, new moves as seen by Discovery’s $2 billion payment for all non-US rights to PGA Tour golf for 12 years. Plus, the other members of FAANG are sharpening their teeth: Facebook made a bid to stream live Indian Premier League cricket last year and now has some MLB baseball; Twitter has streamed both baseball and ice hockey; and Google, via YouTube, has live streamed both the NBA finals and the Champions League final this year.

The big question is now about how much money the FAANGs will pay for the rights and whether the market is on the upswing or not. Amazon’s dip into the EPL auction deflected the football league’s disappointment that total income from its 2018 auction fell short of the previous record of £5.14 billion three years ago.

Add to that Richard Scudamore’s decision to resign as Executive Chairman of the EPL and the fact that Serie A in Italy has only just been able to sign a TV deal for next season (global sport streaming service DAZN and Sky Italia have bought games over the next three seasons for an estimated total of $1.5 billion combined) and the upper hand is suddenly with the buyers not the sellers.

Like some kind of sports reality TV show, the EPL auction is a story that becomes increasingly more fascinating and is a strong litmus test for the sports market in general. Once again, there were winners and losers this year, plus this time the introduction of a new face to make the next episode yet more anticipated.

“It’s a tricky market at the moment,” says Stephen Nuttall. “But while Netflix and the others have a strong international focus for rights, Amazon is a nationally focused brand with its Prime offering, so their involvement in EPL makes the most sense of any of the FAANGs.

“Was this auction a pause before more growth or was it a sign of a levelling off? It’s hard to tell,” says Nuttall, “but the tech giants are here which will definitely make things spicy for the future in all sports rights deals.”