How Netflix Views Amazon’s Entry into Sports Programming
Amazon’s bid for live sports
As a competitor to Netflix (NFLX), Amazon (AMZN) has made its foray into the world of sports programming. Forbes reported earlier this month that Amazon had paid $50 million to the NFL (National Football League) and won the rights to stream ten Thursday Night Football games.
In 2016, Twitter (TWTR) won a bid to stream Thursday Night Football after paying ~$10 million for the rights.
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According to a FierceCable report, Amazon expects to make the games available only to its Amazon Prime members in the United States (SPY) as well as in international markets.
Netflix’s view of Amazon’s foray into sports
Live sports are an extremely popular and lucrative revenue stream for media companies such as Amazon, helping them to generate revenue from advertising. So far, Netflix has stayed away from live sports.
Netflix stated in its 1Q17 earnings letter to shareholders that it doesn’t believe in spending on sports programming rights, as this money could be better spent on original content.
According to a PricewaterhouseCoopers report, the cost for sports telecasting rights is expected to rise at a compound annual growth rate (or CAGR) of ~5.3% between 2015 and 2018. The cost is expected to reach $19.3 billion in 2018.