How much did Amazon Pay for Thursday Night Football?

How much did Amazon Pay for Thursday Night Football? For the 2022-23 NFL season, Thursday Night Football has found a new home in the form of Amazon’s Prime Video. Amazon secured the exclusive rights to stream NFL games on Thursday, marking a new era for football fans.

For the next 11 years, Prime Video will continue to stream NFL games on Thursdays. The streaming giant showcases live-action games and subscribers get their commentary from veteran callers Al Michaels and Kirk Herbstreit.

How much did Amazon Pay for Thursday Night Football?

Amazon had previously shared Thursday Night Football games with Fox and NFL Network. However, in March 2021, the NFL announced that Jeff Bezos’ company would be the first streamer to have exclusive rights to an NFL package commencing from the 2022-23 season.

The streaming platform has had immense success so far, especially with the transition from traditional telecast to online services.

Amazon Pay for Thursday Night Football

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Viewership in the first season of the deal fell short of expectations.

The NFL regular season is now in the books, which means we not only know who’s going to the playoffs but also how many people tuned in.

In the media, the biggest move this season was Amazon’s (AMZN 0.64%) decision to purchase the exclusive rights to broadcast Thursday Night Football games outside of local markets. The company paid $11 billion to carry Thursday Night Football for 11 seasons, streaming it on Prime Video to entice more sign-ups for its membership program and as a retention tool.

With just 15 Thursday Night Football (TNF) games in the season with a preseason game thrown in, Amazon paid $67 million per regular season game this season, comparable to the budget for a Hollywood movie. With a steep price stage like that, did Amazon get its money’s worth?

Amazon Pay for Thursday Night Football

The early results

According to a report in Business Insider, the answer seems to be no. Viewership for TNF was 25% lower than Amazon had estimated, and the company has been looking for ways to pay advertisers back for the shortfall in audiences, including giving them replacement ad inventory elsewhere.

Data from Nielsen showed that TNF games averaged 9.6 million viewers on Amazon, the lowest total since the NFL began selling the package in 2014.

Since this was the first year that games were exclusively streamed, the slide wasn’t such a big surprise, though Amazon did bring in a modestly younger viewer than typical NFL games, at a median age of 47 versus 54.

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Not only did the company see football as a way to increase Prime membership, it also hoped to recoup its spending for the package with advertising and burnish its relationship with advertisers, as advertising has become one of its most profitable businesses.

In some ways that makes sense for Amazon. Unlike competing platforms, it also offers the benefit of an audience that presumably shops on Amazon. If you’re an advertiser that sells on Amazon, then it’s a natural fit.

A pretty penny

While the logic in streaming NFL games holds, the price tag may not. Broadcast networks such as CBS, Fox, NBC, and ESPN all paid more than $2 billion per year for NFL games, but they get significantly more for their dollar than Amazon.

CBS, Fox, and NBC host games on Sunday, while ESPN has the established Monday Night Football franchise, which typically has better teams playing than Thursday Night Football.

Additionally, all four networks air playoff games and rotate to host the Super Bowl each year. They also have the ability to show games both through linear TV and streaming, unlike Amazon.

Alphabet’s YouTube also just shelled out $2 billion for NFL Sunday Ticket, a subscription that allows viewers to watch out-of-market games of their choice.

Sports media rights have inflated significantly in recent years and that’s likely to continue as big tech companies like Amazon, Alphabet, and even Apple vie for a piece of the live sports audience.

Amazon’s contention that spending on video is a worthwhile way to drive Prime membership still seems dubious, especially because the company, more than 25 years after its founding, doesn’t seem to be making money from e-commerce. Through the first three quarters of the year, Amazon lost $8 billion outside of Amazon Web Services.

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The company spent $15 billion on Prime Video last year, more than any of its streaming peers, including Netflix, which represents roughly half of the revenue it brings in from Prime.

It’s too early to tell if Amazon wasted money on the NFL deal. After all, the contract lasts for 11 years, and audiences and advertising could grow over that period as they get more accustomed to streaming live sports.

But a 25% miss in viewership is a clear disappointment. It’s also evidence that Amazon seems too willing to spend money without a clear return on investment, one reason why the stock plunged 50% last year.

Although the company has been cutting costs across the business, it still seems to have a lot more opportunity to trim the fat. The $15 billion budget for Prime Video and $1 billion budget for Thursday Night Football show that bloated costs are hiding profits in high-margin businesses. The company could still be a lot more profitable.

Amazon Pay for Thursday Night Football

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