This year Amazon and Netflix are buying movie rights – sports next year?

By January 26, 2016Amazon, TV

I wonder if history will look back on Netflix’s 2013 screening of House of Cards as a watershed moment. It was an incredibly brave bet at the time – an investment of $63m in production costs from a company whose previous success had principally come from re-running TV shows that had premiered on traditional TV channels. Netflix was following a formula that had worked well at cable and satellite companies around the world – buy exclusive content to drive subscriptions – but they were the first streaming service to do it at scale.

Fortunately for them, House of Cards was (and is) a massive success, winning 3 Emmy awards, drawing millions of views, and most importantly, is widely perceived as having made a significant contribution to Netflix’s subscriber growth.

On the back of that success Netflix doubled down on their original content strategy and Amazon has gotten in on the game.

I think of these early moves as Netflix and Amazon camping out on the lawn of traditional TV. They stood up and were noticed, and they won some battles, but it wasn’t clear how much of a threat they were to incumbents.

Now I read that Netflix and Amazon are buying up the rights to indie films at the Sundance Festival whilst traditional TV companies are scaling back their investment. If those investments prove successful in increasing their subscriber numbers they will be back bigger and bolder next year following the ‘content begets audiences’ playbook to profitably buy audience share from their competitors. Meanwhile, assuming those competitors don’t want to cede the market they will face the difficult task of rebuilding sufficient confidence to outbid Netflix and Amazon.

Remember also that most cable companies are encumbered with legacy data networks and are struggling financially whilst Netflix and Amazon Prime are growing nicely, and it’s easy to think that the cards are now stacked in favour of the new entrants.

The next logical step is for Netflix and Amazon to move into sports rights. When that happens we will know the battle has entered its final phase.

  • Sanjit

    Interesting post Nic. Lots of people betting big on OTT in sports – namely Perform who are aggressively investing in their new ‘Netflix for Sport’ proposition. They started making moves as soon as they had delisted suggesting they had it front of mind for a while….

  • Matt Millar

    Sports rights comes with an additional technical challenge for OTT “broadcasters” – principally that it’s far more valuable LIVE than on-demand (Drama & Film retain value on demand). Now while this is a technical challenge, it’s certainly solvable (BT Sport have solved it)

    But worth remembering that there are two challenges with getting sport running OTT – first the rights (though I suspect there are MANY minority sports that could be picked up and televised cheaply – and valuably) – but also the operational challenge of putting cameras at live sports venues, hosting and broadcasting that.

    With a studios operation buying in pre-recorded film and TV, you have none of those ongoing challenges of running a live sports channel.

    This also begs the question of “what other live TV” would Netflix/Amazon move into – live entertainment formats? Live streaming of music gigs? News?