You figured one of the tech titans would get into live sports in a big way at some point.
You just didn’t think it would be Amazon going big into the old school cable business.
But that’s what would result from Amazon snatching up the 22 regional sports networks that Disney has to unload as part of its deal to acquire Fox’s studio business. CNBC reported Tuesday that Amazon is one of several players (mostly banks) to have put in a bid for the RSNs, which include the YES network in New York, Fox Sports Detroit, and Fox Sports South.
If a deal happens, Amazon would get 22 cable networks, and all the baggage that goes with that. Yes, it gets Amazon a much bigger footprint in sports. But it also puts Amazon in business with the regional cable giants that distribute these networks, like Comcast and Spectrum and Verizon Fios and so on.
It’s a deal that could be a game changer but also raises lots of huge questions. Frankly, we don’t know all the answers (and welcome your feedback, seriously, this is confusing!) For example:
Can Amazon just start streaming the games these channels carry on Amazon.com like it does Thursday Night Football?
That’s highly doubtful, since cable distributors pay big bucks to carry these networks, and use them as a huge hook to get people to pay for cable?
Could Amazon just start selling these networks direct to consumers?
It’s not clear, but the bet here is the that the sports leagues and teams don’t want that, and have contracts in place with cable systems that won’t allow for this? Wouldn’t the leagues like Major League Baseball or teams want to control their first foray into selling sports access directly to fans?
Ok, but can Amazon use these networks to do all sorts of innovative things with advertising?
Well, Amazon could sell national ad packages across all 22 networks. That’s no different than what Fox does. And Amazon could theoretically insert more targeted ads into these games’ digital streams (like when a paying cable subscriber streams games via YES).
However, unlike services such as Hulu Live or YouTube TV, RSNs don’t provide Amazon two minutes of ad time per hour to play with, and to test more targeted ads with. That’s not how RSNs work.
Plus, it’s stating the obvious, but just because a cable network is owned by a tech titan, it doesn’t change the fact that most people get that network via cable, not the internet. You can’t just ‘turn on’ addressable or uber-targeted ads on these channels overnight even if you wanted to.
So what does this do for Prime?
It’s, again, not totally clear. The New York Times Ed Lee asked some smart questions about this.
1. Does Amazon think owning these RSNs will drive Prime subs? If so, that suggests it will only carry them on Prime. I can’t imagine leagues would allow that?
2. If not, that means Amazon plans to keep RSNs on cable systems. If so, how does that help them?
Big report from @davidfaber:
Amazon bidding for all 22 regional sports networks Disney is selling.
— Edmund Lee (@edmundlee) November 20, 2018
After all, Prime seems to drive all of Amazon’s media decisions. How does this get more people to sign up for Prime or stick with Prime?
Could you perhaps offer cable subscribers in local markets free access to sports networks if they join Prime for a year? That seems possible, again, if the complicated contracts with sports leagues and teams allow for it.
So what’s in it for Amazon?
It’s debatable. It makes the company a much bigger traditional advertising player. It can learn a lot more about how its customers consume media, and tie that information to its shopping data forest.
Yet owning RSNs is far from the transformative, media-upending move that a FANG company snatching up exclusive NFL or NBA rights would be. It’s not yet tectonic. Yet it is Amazonian.