LOS ANGELES — More than a decade after Apple disrupted the music industry and Amazon upended retail, the tech heavyweights have set their sights on a new arena ripe for change: live sports.
Emboldened by their deep pockets and eager to boost viewership of their streaming-subscription services, Apple and Amazon have thrust themselves into negotiations for media rights held by the National Football League, Major League Baseball, Formula One racing and college conferences.
They are competing to replace DirecTV for the rights to N.F.L. Sunday Ticket, a package the league wants to sell for more than $2.5 billion annually, about $1 billion more than it currently costs, according to five people familiar with the process. Eager not to miss out, Google has also offered a bid from YouTube for the rights beginning in 2023, two people familiar with the offer said.
reported by the SportsBusiness Journal.
Fans will still be able to access all the games on Sunday, regardless of who wins the rights, but they will probably pay a premium to add the service to their Apple, Amazon, ESPN+ or YouTube service, some of the dozen people said. It is not yet clear if that premium would be more or less than the $294 that DirecTV charges for a year, they added.
The Race to Rule Streaming TV
Apple and Amazon are trying to position themselves for a future without cable. Since 2015, traditional pay television has lost a quarter of its subscribers — about 25 million homes — as people traded cable packages for apps like Netflix and Hulu, according to MoffettNathanson, an investment firm that tracks the industry.
But the price of live sports rights is only projected to increase. The biggest media companies, including Disney, Comcast, Paramount and Fox, are expected to spend a combined $24.2 billion for rights in 2024, according to data from MoffettNathanson, nearly double what they spent a decade earlier.
The fragmenting of a decades-old distribution model has created an opportunity for Apple and Amazon. The companies want to expand deeper into media by selling subscriptions to Apple TV+ and Amazon Prime. Besides containing their own exclusive shows and sports, those services double as portals selling additional streaming offerings like Starz and HBO Max, which pay Apple and Amazon 15 percent or more of each subscription sold.
Amazon generates more than $3 billion annually from third-party subscription sales, according to estimates by the investment bank BMO Capital Markets. To make the business model work, Apple and Amazon must attract more viewers, and sports are the most powerful draw in media. The companies may be willing to lose money on Sunday Ticket to expose new customers to other parts of their business, the same calculation that DirecTV historically made.
For all their disruptive potential, though, Apple and Amazon have yet to win a marquee rights package in the United States. That is reminiscent of 20 years ago, when sports leagues feared they would lose viewers by shifting games from network television to cable. But the change gradually became standard.
Traditional television companies are trying to stave off Apple and Amazon by starting their own streaming-subscription services. Last year Comcast, which owns NBCUniversal, shuttered NBC Sports Network to bolster its USA channel and to encourage people to pay for Peacock, where it exclusively aired some English Premier League soccer games. Similarly, ESPN struck a deal with the National Hockey League to televise some games on its ESPN+ service, and CBS has shown marquee soccer games on Paramount+.
But those services have a fraction of the more than 100 million cable subscribers the media companies once reached. As a result, the bulk of sports programming goes on traditional pay-TV channels where they can guarantee leagues and advertisers larger audiences.