As a consultant for small and medium-sized businesses, I analyze major company investments to find takeaways for entrepreneurs. Amazon‘s recent purchase of Thursday Night Football (TNF) rights is an intriguing case. Here, I‘ll go beyond the headlines to examine how much Amazon paid, whether it was worth it, and what it means for the future of streaming sports.
The Background: NFL Media Rights Overhaul
In early 2022, the NFL renegotiated media deals with Amazon, ESPN/ABC, CBS, Fox, and NBC totaling over $100 billion. As part of this, Amazon won exclusive TNF streaming rights for 11 years starting in 2024.
Previously, Fox paid around $660 million per year for TNF rights. According to CNBC, Amazon will pay $1 billion annually – over 50% more than Fox. The total deal is worth $11 billion through 2033.
How Does This Deal Stack Up for Amazon?
For a company of Amazon‘s size, $1 billion per year is substantial but not exorbitant. For perspective:
- In 2021, Amazon generated $386 billion in total revenue
- They spent over $71 billion on research, development, sales, marketing and more
- Amazon‘s net income was $33 billion
So while TNF represents a major investment, the $1 billion yearly fee equates to around 3% of Amazon‘s annual net income.
According to my analysis, Amazon‘s potential upside outweighs the costs:
- TNF viewership averages 15 million per game
- Advertising revenue could reach $500-$600 million annually
- New Prime subscribers drawn in by exclusive TNF access
- Data on viewing habits and consumer behavior
- Opportunity to innovate sports streaming technology
As an entrepreneur, I believe Amazon smartly invested for long-term growth despite the hefty price tag. Exclusive access to marquee live content is a proven driver for streaming services.
How Does This Deal Compare to Other Sports Agreements?
To fully evaluate Amazon‘s deal, it helps to compare it to other recent sports streaming agreements:
- MLB on Apple TV+: $85 million for Friday night games
- MLS/Leagues Cup on ESPN+: $250 million for 10 years
- NHL on Turner Sports: $225 million per year
- Champions League on Paramount+: $250 million per year
At $1 billion annually, Amazon‘s TNF deal dwarfs these agreements. However, the NFL is by far the most watched league in the U.S., justifying the higher premium.
My Perspective as an Entrepreneur
As a consultant for small business owners, I believe there are some key takeaways from this deal:
- Invest boldly when the upside justifies it – Don‘t be afraid to spend big if data shows it will pay dividends.
- Look beyond short-term costs – Focus on how investments will strategically grow your business for the long run.
- Premium content is king – If you can acquire exclusive, high-demand content, it can provide a sustained competitive advantage.
- Innovate constantly – Use new technologies or delivery platforms to differentiate your product.
Although the majority of businesses can‘t spend billions like Amazon, the strategies behind this deal provide valuable insights for entrepreneurs in any industry.
The Bottom Line
After closely analyzing the details, I believe Amazon‘s $1 billion annual expenditure for exclusive TNF streaming rights is a smart, calculated investment in the company‘s future growth. The far-reaching benefits for Prime and Amazon‘s ad business should outweigh the sizable costs over the long term. This deal signals that live sports remain a huge priority for streaming platforms, and will likely lead to further innovation in how fans experience NFL games. While risky, I applaud Amazon‘s bold approach as an entrepreneur.
