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Speculation about an Amazon Premier League bid continues, but would the numbers really stack up?

November 22, 2017 - Martin Hoscik@seenituk

As the shareholders of Sky and, more recently, BT can attest, success in the UK’s pay-TV sector has been largely built through deep investment in the broadcast rights to major sporting competitions, including the Premier and Champions leagues.

With the costs of rights growing substantially at every auction, both companies have been looking to boost the return on their investment by maximising the number of fans who can watch their favourite teams.

To achieve this, broadcasters would traditionally buy up the rights, create their sports channels and then sell those channels to rival pay-TV operators to include in their own channel packs.

This produced additional subscription revenue while also bolstering audience figures, thereby allowing the channel owner to charge more to advertisers and sponsors.

Over time customer habits started to change and fans wanted to be able to catch up with the action wherever they might be, prompting Sky to introduce its popular Sky Go app which offered mobile viewing of its subscription channels.

When BT launched its own sports channels and made them free to all of its broadband customers, most of whom didn’t have its then fledging TV service, the ISP used an app and online streaming to maximise the potential audience.

Today streaming is a core part of both firms’ monetisation efforts, with BT bundling free Sports to its BT Mobile customers and selling the channels to its EE customer base.

In addition, the company offers live coverage of the Ashes as well as the Champions League and its football results show for free on various platforms.

For its part, Sky has moved with the market and launched the low cost, contract-free streaming service Now TV which is available over broadband on a range of smart TVs, mobile platforms and its own streaming set top boxes.

Allowing fans to dip and and out of channels without any long-term commitment has seen Now TV become the UK’s biggest commercial streaming service and it’s believed to account for most of Sky’s new TV sign-ups.

In helping to meet customer demand for easy access to their favourite sports, it’s possible that Sky and BT have made it easier for non-broadcast rivals to pick up Premier League games without suffering a consumer backlash.

Rumours abound that US streaming giant Amazon is looking to enter the next rights auction to help boost take-up of its Prime Video service. However the hype of such a bid shouldn’t be allowed to ignore the serious challenges the firm would face.

While Amazon does hold the rights to some smaller sporting events, these tend to be ones where it gets an official ‘feed’ of the game. But as a Premier League broadcaster it would be expected to place its own cameras in the stadiums and produce a high quality product of its own.

It would also need to spend a lot of cash to secure even a small foothold in the sport. The last auction saw BT and Sky commit to a combined £5.1bn investment in the sport. BT, the smaller of the two broadcasters, paid just under £1bn to show 42 matches per season.

Amazon would need at least that many matches to ensure it was only one of two broadcasters showing the competition but with Sky and BT certain to bid big to keep their rights, would probably need to pay between £1.5-2bn to secure them.

With Amazon Prime costing just £79 per year and already committed to several expensive new shows such as the upcoming Lord of the Rings, it’s not easy to see how it could recoup that investment, not least because many fans who watch for free or close to free from BT, may be unwilling to pay out.

Yet a monster bid to oust Sky as the main Premier League rights holder – a move which would guarantee Amazon a raft of new sign-ups – would cost it considerably more, making it even harder to break even.

And why would it want to spend all that cash for the rights to a sport in a single country when it could instead invest in content for its entire global customer base?

Football clubs and owners such as Nottingham Forest’s Vangelis Marinakis would no doubt welcome their arrival in the auction as higher broadcast rights fees means more money to invest in players and stadiums.

But it’s entirely possible ‘Amazon scoops Premier League rights’ remains a story people predict and speculate over but which never materialises.

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