Why Amazon is bidding for NBA international rights

The North American Basketball association (NBA) is currently negotiating for the renewal of  of its live broadcast rights. The deals, spanning the next 11 years, are estimated to work out at a combined $76 billion (some way below the NFL’s 2021 $100 billion 11-year deal).

Prominent among the bidders is Amazon, which is looking to add to its current $1 billion per year NFL coverage by paying an estimated $1.8-$2B. This new deal would likely include the Emirates In-Season Tournament (soon to be the Emirates NBA Cup), the SoFi NBA Play-In Tournament, first-round playoff games, the WNBA, and international rights. The key here is the international rights. Ifsuccessful, it will transform Amazon’s ability to deliver a compelling global sports proposition to rival Fox / Disney and Warner Bros. Discovery’s joint venture Venu Sports, a US-focused sports subscription service due to launch in Q3 2024.

The money may still be in the US, but the opportunity is now global

As MIDiA explored in our report “The Roaring Sporting 20s”, the future of sports engagement is now outside of the US. Just under a third of Indian consumers aged 16+ regularly watch live sports, compared with just 9% in Japan. Even in the US – the powerhouse of sports monetisation – just under one quarter of all 16+ consumers now regularly watch live broadcast sports matches. Not only are emerging markets leading consumption, they are also driving innovative engagement with fantasy sports leagues, such as Dream11, synched with live broadcast to maximise engagement and monetisation opportunities for low margin but large volume sports fans.

If it is successful, Amazon’s bid for the global rights to the NBA will reshape how sports rights are monetised for the remainder this decade. Unlike film and non-sports TV content, Sports broadcast has maintained its practice of slicing and dicing broadcast rights on a territory-by-territory basis. While lucrative, this behaviour no longer makes sense for global streaming TV propositions such as Amazon Prime Video, which expect a return on investment based upon global exploitation of licensed content. 

Amazon is in a unique position to be able to soften the impact of this collapsing of regional rights monetisation through paying above the odds for content (its renewal and expansion of the NFL Thursday night football rights was a 15.4x increase on the previous rights valuation secured with the NFL). Amazon’s ability to leverage this financial firepower comes courtesy of video revenue being a bio-product of the core ecommerce focused Prime membership. And of course, paying above the market rate has the added appeal of taking the rights out of the reach of legacy media majors such as Warner Bros. Discovery. These companies are struggling to deliver upon their streaming potential due to being hamstrung by debt (close to $40 billion in Warner Bros. Discovery’s case) as well as the need to protect their core yet decling pay-TV business revenue streams. This prevents them from focusing exclusively upon streaming exploitation of the rights, which involves lower subscription and advertising profit margins compared to their pay-TV legacy sports monetisation.

Ultimately, Amazon is likely to not only secure these rights but make itself indispensable to the NBA, as it seeks to future proof revenue through partnering with one of the few truly global streaming TV operators. This means a slam dunk for streaming TV at the expense of traditional TV business models (and companies).