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Volume 22 No. 19
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Will digital companies pony up in early 2020s?

or the better part of a decade, the sports media industry looked to the early 2020s as the time when deep-pocketed Silicon Valley companies finally would make a big investment in sports rights.

Amazon, Google, Facebook and Twitter already have dabbled with various sports packages over the years. The theory has always gone that if these companies follow a similar business plan that cable television used three decades ago, they will use exclusive sports rights to grow their business. The first test of this theory comes in 2021, the year when the NFL, MLB and NHL media rights deals end.

But the view that these companies will compete with TV networks for big-time sports rights in four years is starting to change. TV network executives increasingly believe that the deep-pocketed digital companies will be in the market for streaming packages that complement traditional TV packages in 2021. They believe a league like the NFL will have little appetite for selling exclusive access for, say, “Monday Night Football” to a digital media company.

The NFL’s Vishal Shah calls digital viewership “a small but growing asset for us.”
Head of sports for Amazon Video's Jim DeLorenzo said the company is still deciding how much it wants to invest in live sports.
Much of that reason comes down to viewership. Amazon’s “Thursday Night Football” stream has been much more popular than Twitter’s stream last year. But the number of people watching games via Amazon this season and Twitter last season is tiny compared to traditional television.

“The digital contribution from Amazon is around 2.5 percent of the overall consumption across television plus digital,” said the NFL’s senior vice president of digital media business development, Vishal Shah, speaking at the 2017 NeuLion Sports Media & Technology Conference earlier this month. “It’s a lift. In a world where people are trying to drive as much incremental consumption as possible, this is a small but growing asset for us.”

Amazon has averaged more than 300,000 viewers for its games this year. By contrast, CBS’s “Thursday Night Football” telecasts with NFL Network averaged 14 million viewers for its games. That’s a huge amount of viewership that digital media companies need to make up in three years. The question for leagues like the NFL, MLB and NHL is how willing are they to sacrifice viewers for dollars.

Shah expressed confidence that the gap will continue to close over the next four years and digital media companies will be ready for an exclusive package by 2021.

By 2021 when the NFL renegotiates all of its media packages, Shah believes “the marketplace and the readiness is there for exclusive digital packages. But overall, we want to make sure that we’re driving value for our existing partners.”

But Shah also identified several areas where digital media companies need to improve, starting with their production capabilities.

“The production element is not a minor one,” he said. “A lot of digital companies are investing in content. Live sports production is something that is still relatively new to them and hopefully something that they’re building a skill set around.”

For Amazon’s part, it’s still deciding how much it wants to invest in live sports, even while it touts its “Thursday Night Football” numbers.

“We’ll have to wait and see how things progress,” said Jim DeLorenzo, head of sports for Amazon Video. “There are certain opportunities where we may have to do our own production as opposed to partnering up with somebody like CBS or NBC. That would definitely be a factor that goes into our thinking about whether we want to pursue that.”

The NFL is setting “Thursday Night Football” up almost as a test case for digital companies. Twitter had the rights last year; Amazon has them this year. The league’s “Thursday Night Football” rights deals with CBS, NBC and Amazon end after this season. Shah said the league will start to negotiate new deals once the season ends.

John Ourand can be reached at Follow him on Twitter @Ourand_SBJ.