Amazon’s Daring Move Could Mean the End of Cable Subscriptions (AMZN)

Amazon may be introducing something that would convince audiences that live streaming is the way to go. If they succeed, it could mean the end of the cable & subscription programming industry.

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Amazon.com, Inc. (NASDAQ:AMZN) is looking to offer a new benefit to its Prime members. The world’s largest online retailer plans to get live video rights in a variety of sports that have a more global appeal. These include soccer, tennis, golf, rugby, and auto-racing. The company is also looking to offer live streaming of more popular US sports like basketball, baseball, football, and hockey. If Amazon closes its deals, it could entice new customers to sign up for its online TV service.

Numbers have shown that live sports are some of the few reasons people remain subscribed to cable networks. The introduction of live sports channels by Amazon may pave the way for the audience to go with live online streaming instead. This offers people the chance to save more since they do not have to subscribe to the entire cable service just so they could watch two or three channels. Amazon is in the talks with some sports leagues that may not have a large following in the US but draw big numbers from other countries.

Live streaming of sports events gives Amazon a huge advantage over its major rivals in the industry. Netflix (NASDAQ:NFLX) for example, has refused to live stream sports channels. Ted Sarandos, Chief Content Officer for Netflix Inc., has repeatedly said that his company does not intend to broadcast live sports events. The video streaming giant’s executives claim that the live nature of sports does not match the nature of what Netflix has created.

It is still uncertain if and when the plan will push through. But, Amazon is clearly intent in bringing in sports into the wide array of services it offers to its subscriber base. In fact, the online retailer has already hired former Sports Illustrated executive James DeLorenzo to manage the sports division. Amazon also brought in former YouTube executive Charlie Neiman to lead the sports partnerships and business development.

The primary obstacle for Amazon however, would be the cost to secure the rights to live sports games. Sports are the most expensive assets when it comes to media. Here’s are a few numbers as reference. Twitter paid $10 million for the rights to stream broadcasts of Thursday night NFL games, two new NBA shows, 150 games from the Pac-12 conference, and the weekly games of NHL and MLB.CBS and NBC spent $45 million to broadcast just the Thursday night NFL games in the 2016 and 2017 season. ESPN annually forks out ‘only’ $2 billion just to broadcast the NFL games.

Bringing in the deals for sports channels will give Amazon’s audience a chance to watch games even if they are not in front of the television set. They do not have to worry about getting stuck in traffic because they want to watch a championship game. Amazon gives its subscribers the chance to watch game wherever they are.

Amazon is hoping that this move could help boost their international reach. Domestic sales during recent years have grown at a rate of 25%. On the other hand, the international sales of the Seattle-based company increased less than 6% on a year over year basis. The Prime membership is now being offered to 12 international markets but there is a very small amount of subscribers from other countries. The addition of live sports streaming may help Amazon attract more customers from the European countries. Aside from selling the sports viewing service, this also gives the other products of Amazon more visibility.

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