The billion-dollar content play: Why Amazon is intentionally overpaying for its NFL rights
Last Thursday, the sports ecosystem breathed a collective sigh of relief. The NFL, the world’s most valuable sports league, secured an 11-year broadcast deal worth a staggering $100 billion. This huge sum was secured despite the increasing disengagement of younger demographics with live TV sports viewing; less than 10% of US TV sports audiences are now 16-19 years old (source MIDiA Research Q4 2020 consumer survey). It also occurred despite a severely impaired live sports spectacle, with broadcast sports events devoid of fans due to the ongoing global pandemic. The rights bonanza has also occurred despite the pivot of mainstream TV audiences towards cheaper contract-free streaming alternatives to traditional pay TV. The big question has to be, why?
D-day for sports rights has fatefully entwined with D2C ‘Big Bang’ market dynamics
MIDiA has described the 2021-2024 period, when the most valuable global sports broadcast deals are being renegotiated, as D-day for sports rights due to the market-shaping convalescence of expiring rights, collapsing younger demographic engagement, and a migration of mainstream entertainment to the digital sphere. The result should have been a rationalisation of premium sports rights valuations which had been inflated by four decades worth of pay-TV over-bidding to secure valuable ad-optimised live fandom content. However, the opposite happened, and we now have the most lucrative US sports deal in history. The reasoning is simple. Tech’s doubling down on digital media provision is resulting in the tech majors (in this case Amazon) over-paying for traditional TV content at the exact same time that the big D2C disruptors of 2019-2020 are battling for audience engagement. The result is a further inflation of the sports rights bubble at the exact time that market fundamentals would otherwise be kicking in.
Click here to read the full article on the MIDiA Research Blog.