Why Might Amazon Be Considering Streaming Live Sports?

Amazon (AMZN) is on the verge of putting a major distinction between its Amazon Video service and rival streaming services.

According to a Wall Street Journal report last month, Amazon has been plotting a move to live sports streaming as part of its Amazon Video expansion. The company is already working to take its streaming video service to international markets, following Netflix’s (NFLX) recent completion of a 200-nation global expansion.

Amazon Video is offered as an add-on service for the $99-per-year Amazon Prime subscription, a major contributor to Amazon’s e-commerce revenue.

Live sports broadcasts are hugely popular among viewers. For pay-TV providers, broadcasting live sports events provides an opportunity to attract new pay-TV subscribers. However, according to a Digitalsmiths 2Q16 Video Trends report, pay-TV subscribers seem to be increasingly moving away from sports packages.

According to the report, and as the above chart indicates, 46.1% of subscribers reduced their levels of pay-TV service or opted for lower-priced packages, while 18.7% of subscribers opted out of premium sports packages.

Considering this trend and the rising costs of pay-TV packages, viewers increasingly prefer to view content online. Amazon could be trying to take advantage of this trend by considering broadcasting live sports events.