Amazon.com Inc., taking its first steps into live sports video, plans to draw on its early experiences to devise its next attack on Netflix Inc. and traditional broadcasters.
The online-retailing giant, which announced an offering of 37 live tennis events to British and Irish video subscribers, will analyze how users react as it plans further expansion of its web-TV service, said Jay Marine, Amazon’s European head of Prime Video.
“It’s very early for us in sport,” Marine said in a phone interview. “We’re going to learn from this. The approach we take is to see how customers respond.”
With live sports, Amazon is seeking programming viewers can’t get from rivals like Netflix, while taking on media companies including Sky Plc that have long relied on content such as soccer to attract TV subscribers. Seattle-based Amazon already spends billions of dollars a year to offer TV shows and movies on demand and has been exploring the creation of a live online pay-TV service since late 2015.
Amazon’s sports deals so far have focused on tennis and NFL football, not the biggest draws for a U.K. audience. It recently reached a pact to produce a docuseries with Manchester City, the current Premier League leaders, fuelling the idea that it might acquire live soccer rights.
Asked whether Amazon might bid for one of the packages in the next Premier League rights auction, the most valuable of its kind in Europe, Marine said the company won’t speculate on what it might do in the future.
“I’m very excited about Manchester City,” Marine said. “We’re constantly asking how can we offer more value to Prime customers and bring them new things.”
Each of the packages in the Premier League auction are set to cost more than £150 million ($198 million) a season, estimates Richard Broughton, an analyst at research firm Ampere Analysis. Broughton said he expects Amazon to bid, adding it’s difficult to predict whether it will succeed.
Tennis push
The tennis contract, which Amazon outbid Sky for earlier this year, gave the company live and on-demand rights to the ATP World Tour in the UK and Ireland. In addition, Tennis TV, ATP Media’s direct-to-consumer streaming service, will be available to Amazon Prime members in the US starting next year.
“We’re getting great customer feedback from this,” said Marine, who expects Prime members who are tennis fans to renew their subscriptions at a higher rate.
Ampere’s Broughton described the fan base of ATP as relatively small. Only 2 to 3% of respondents in a survey of 28,000 internet users in 14 markets, including the UK and US, said they enjoyed watching ATP matches, he said. Still, the viewers who do follow the competition are generally “high-spending and high-earning,” he said.
Ampere estimates that Amazon currently attracts 33% of the UK’s internet users to its Prime service — just under 7 million subscribers. As part of Prime, customers pay an annual fee to receive the video service as well as free shipping on goods from Amazon’s online store.
Every 1 percentage point increase in Prime’s penetration would bring in more than £16 million in annual subscription revenue to Amazon, according to Ampere. And that’s before any additional revenue it might make from goods purchases by the new customers taking advantage of the various delivery options.
Amazon’s Marine says he will be tracking the tennis fans to see how many of them renew their subscriptions. “Content will be more easily available across different time-zones,” he said. “We will show every match on every court. For all these reasons we think it’s super-interesting.”
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