Amazon’s NBA deal raises the stakes of its media ambitions
Last week, Amazon revealed that it closed a deal to make it one of three partners of the NBA, adding to the tech giant’s burgeoning sports business.
The NBA also announced new rights agreements with Disney’s ESPN and Comcast’s NBC. The financial terms were not disclosed, but reports indicate that the combined deals will cost the companies about $77 billion over 11 years, with Amazon reportedly forking over about $1.8 billion annually. The NBA announced the new agreements after rejecting a last-minute bid by incumbent Warner Bros. Discovery to match Amazon’s deal that would have kept the games on its TNT network.
Prime Video’s package will take effect with the 2025-26 season and includes the league’s in-season tournament, regular season and playoff games, and conference finals. The deal also includes some WNBA games.
This isn’t Amazon’s first foray into the sports business. This year, the tech company is going into its third season as the exclusive partner for the National Football League’s “Thursday Night Football package, which is costing Amazon $1 billion per season. In April, Amazon extended its deal with the WNBA for at least two more years. Prime Video will also stream NASCAR races next season.
It’s all part of Amazon’s ambition to turbocharge its highly lucrative and rapidly growing advertising business by building a sports media empire. Amazon’s advertising business grew 24% to $47 billion in 2023, driven mostly by product ads. The tech giant’s advertising unit is expected to earn more than $58 billion in revenue this year, per eMarketer, and its NBA deal will help bolster those sales even more by attracting new big-name brands that typically wouldn’t advertise on Amazon.
“Make no mistake, this is not just a play for live TV programming — it’s really about a play for big brand ad dollars,” said Mike Proulx, a research director at Forrester. “Live sports can draw big, captive audiences – the exact kind of audiences that brands crave in an era of fractured attention.”
With more than 200 million monthly viewers, Amazon’s Prime Video has the power to bring new audiences to the NBA and create new opportunities for advertisers.
“Part of Amazon’s interest in expanding into live sports is so it can bring new audiences to those sports, especially younger audiences who might not be willing to or might not be able to pay for an expensive cable package,” said eMarketer analyst Sky Canaves. “These young viewers are also very attractive to advertisers.”
The deal also presents an opportunity for Amazon to attract new Prime subscribers in international markets. As part of the agreement, Prime Video will be the global distributor for the NBA’s subscription service for streaming live and on-demand games in the U.S. and internationally.
“The ability to monetize the rights of NBA streaming internationally is immediately scaled based on their existing ad tech properties that they already own and operate,” said Adam Epstein, co-founder and CEO of Gigi, a startup that helps brands buy and measure streaming video ads with Amazon. “Not only is this the first dedicated streaming rights deal for a top sports league globally, but it’s also one of the first immediately international sports rights deals, and I think no company is in a better position to monetize that than Amazon.”
Sports broadcasting also helps the Everything Store test out and implement more of its shoppable ad formats, which Amazon has said will become more prevalent on its streaming platform. Earlier this year, Amazon unveiled three new interactive and shoppable ad formats, and Canaves said the NBA deal will likely spur further innovation and new formats when it comes to shoppable ads on Amazon.
Thursday Night Football, in particular, has served as a testing ground for Amazon to woo big-name advertisers by pitching them on its trove of first-party data that can be used to better target ads to viewers, an area where traditional TV has historically fallen short.
The company has also tried to bring smaller brands into the program as well. Amazon has offered free creative agency services, making it a cost-effective way for smaller brands, in particular, to reach a wider audience. Shoppable ads as a way to boost site traffic have been a crucial part of its pitch to advertisers. For example, many brands featured QR codes on their Thursday Night Football ads, which generally lead viewers to Amazon product listings. All told, basketball programming on Amazon stands to be leveraged in a similar manner.
According to Robert Avellino, Tinuiti’s senior innovation and growth director, the agency is upping its ad spend on Amazon’s “Thursday Night Football” programming by 700% this year year over year, and he said he sees similar potential for advertisers with Amazon’s NBA deal, as well.
“We’re doing a very substantial amount of “Thursday Night Football” buying in this upcoming season,” said Avellino. “It’s definitely something that we as an agency are over-indexing very heavily in live sports, and Amazon, with their unique measurement capabilities, is allowing us to really provide more insights to our advertisers.”
The deal isn’t without risks. For one, it’s historically more expensive than previous NBA deals. There’s no guarantee that Amazon will be able to make up the $1.8 billion it’s spending a year for the rights on increased advertising, according to Greg Portell, senior partner and global markets lead at strategy and management consulting firm Kearney. That’s also not including the additional money Amazon will need to spend on production costs, from securing broadcast talent to putting on half-time shows, said Portell.
Amazon will have to be careful about how it integrates ads into the viewership experience. “Viewers watch for the sport and maybe for a little bit of the pageantry,” said Portell. “They’re willing to tolerate some intrusion from ads, but if you get that line wrong, you’re going to turn off consumers.”
For an online retailer like Amazon, its NBA deal is also just as much about attracting new and retaining current Prime customers. Amazon launched its streaming service Prime Video in 2011 to help drive up Prime subscriptions, which cost members $139 a year and gives them access to fast shipping and exclusive discounts. Data from Consumer Intelligence Research Partners, which has tracked and analyzed U.S. Amazon Prime memberships for the past decade, shows that Prime members shop more than twice as often as non-Prime customers. By putting more ads in front of viewers tuning into a nightly game of basketball on Prime, Amazon is also reminding everyone about its core business: selling stuff.
“It’s adding incentives to the Prime membership, which adds value to it, and then that, in turn, fuels more advertiser interest in Prime Video,” said eMarketer’s Canaves.
In that way, Amazon’s NBA deal presents a challenge for more traditional retailers who don’t have their own streaming platform to strike similar partnerships. “Retailers are locked out, and that gives Amazon a competitive edge,” said Portell. “Competitors are going to have to figure out a way to respond.”