Let’s be clear: Amazon’s purchase of a package of Premier League rights is, for now, simply a foot in the door — a way to test the waters rather than a full-scale takeover.
When the major broadcasting deals were announced in February — with Sky and BT Sport taking the main packages for £4.464 billion — two smaller rights packages remained unresolved. Many expected Amazon might take one of those smaller packages as part of a cautious entry into live football, while others were more skeptical. Regardless, the question now is what this means for Sky and BT.
BT is a particularly interesting case. CEO Gavin Patterson, who was revealed last week to be leaving the company, told attendees at Mobile World Congress earlier this year that he was pleased with BT’s progress in its sports initiatives.
“We’ve been in the market four and a half years, and we’re happy with where we should be,” he said. “We find it’s a way of creating true differentiation for our broadband service — and I think what we’ve been able to demonstrate is that by close integration of content and technology we can bring the content to life more, and really push the envelope in terms of the customer experience.”
However, that promised “differentiation” has not translated into subscriber growth. For the quarter ending December 31, BT reported a loss of 5,000 television subscribers. As noted in this publication following the news of Patterson’s dismissal, Amazon’s move into Premier League rights will likely boost sales of its Fire TV devices and Prime subscriptions, strengthening Amazon’s ability to invest in exclusive original content.
Neil Wilson, chief market analyst at Markets.com, argued that the push into football was “a mistake” for BT and suggested it reflected a lack of strategic focus under Patterson. “Fundamentally, the TV foray seems to have failed as the number of new subscribers each quarter has collapsed and — critically for the strategy — has not produced the broadband customers that it was supposed to,” he said.
Still, some analysts see potential upside for BT. Even if the TV strategy has been imperfect, BT has managed to challenge Sky on several fronts.
Pablo Pescatore, VP of multiplay and media at analyst firm CCS Insight, described the outcome as “disastrous” for customers, positive for the Premier League, and potentially beneficial for BT. “This is also great news for BT with its TV platform the only place where users can watch all the Premier League matches from 2019, thanks to its content relationships with Amazon and Sky (for Now TV),” he said. “And let’s not forget it has secured more games and the cost per game has come down.”
Pescatore offered a warning as well: “With Amazon as a rival, this could well be the last time that both BT and Sky own the live Premier League rights in the UK.”
On Amazon’s strategy, Pescatore echoed the view that the company is likely to expand its sports offering through different routes: a dedicated sports channel bundle for Prime members, event-based advertising, or even advertising-driven moves into linear TV.
“Despite having deep pockets, Amazon’s current business model is unsustainable to support the acquisition of costly live sports rights in the long term,” Pescatore added. “Prices will increase, but Amazon will have to do more.”
Given these dynamics, some observers wonder whether BT and Sky should have done more to block Amazon’s entry. “With the final package presumably going for a song, we might look back and wonder if it would’ve been strategically advisable for either Sky or BT to step in and block Amazon at this point,” said Kieren Mills, head of broadcast at comms agency Bray Leino. “The two main players have overpaid, and given their recent ‘frenemy’ arrangement they could have carved up the Premier League rights in the face of this threat. They might try this next time, but by then it could be too late.”
“This time Sky and BT have left the door ajar for the big bad wolf,” Mills added. “They might be surprised next time round when that door gets booted wide open.”