What NBA’s broadcast rights mean for Amazon

In July 2024, the National Basketball Association (NBA) announced the renewal of its partnership agreement with The Walt Disney Company and the signing of new contracts with NBCUniversal (NBCU) and Amazon. ¹⁾

The three companies have acquired the broadcasting rights to the NBA from the 2025-2026 season to the 2035-2036 season, and the total contract amount for the 11 seasons is 76 billion dollars for the three companies combined. ²⁾

According to Sportcal, the annual contract amounts for each company are $2.6 billion for Disney, $2.5 billion for NBCU, and $1.8 billion for Amazon. ³⁾

In this article, we will consider why the giant IT company Amazon decided to acquire the huge sum of money for the NBA broadcasting rights.

Issues facing Amazon

　1. Decline in advertising business growth rate

In January 2024, Amazon introduced streaming ads to Prime Video, which reaches over 200 million users per month in the US, UK, Germany and Canada. As a result, sales in the advertising division increased from $10,683 million in the second quarter of 2023 (April to June) to $12,771 million in the second quarter of 2024 (April to June). This was a 20% increase compared to the same period last year, and the highest growth rate of all Amazon’s businesses.

However, in reality, the growth rate of the advertising business has been declining for the last two consecutive quarters, and it is in need of a boost. ⁴⁾

　2. Low Prime Video usage among Prime members

According to an online survey conducted in 2022, it was found that around half (45%) of Prime members do not use Prime Video at all. ⁵⁾

In subscription services, it is important for business stability and growth to get inactive members to use the service again. For this reason, it is necessary to provide content that will retain regular viewers and increase the usage rate of Prime members.

　3. The Z Generation has a low usage rate

Looking at the rate of Amazon Prime usage among US internet users in 2022, Generation Z tends to have a relatively low rate. The rate for the Generation Z is around 5 percentage points lower than the rate for the Millennial Generation, which is over 80%. ⁶⁾

Generation Z will be the largest generation in the consumer market in the future. The low usage rate of Generation Z means that Prime membership and usage rates may struggle to grow in the future, so it is necessary to provide content that can attract young people.

 These are the issues that Amazon faces with Prime Video, but we will now consider why acquiring the broadcast rights to the NBA will solve these issues, and the effects that are expected to come from acquiring the broadcast rights.

The expected impact of the acquisition of the NBA broadcasting rights

　1. Increase in Prime Video users and advertising revenue

One of the most popular programs currently available on Prime Video is ‘Thursday Night Football’, which began streaming in 2017 and has been broadcast exclusively since 2022.

According to the US research company Nielsen, the total number of viewers of the program in 2023 increased by 24% compared to the previous year ⁷⁾, and the Dallas Cowboys-New York Giants game on September 26, 2024 attracted an average of 16.22 million viewers, making it the most watched game on Prime Video ⁸⁾. The NFL is emerging as a key content on Prime Video in the US.

However, looking at the number of followers on social networking sites, the NBA seems to attract more attention than the NFL.
When comparing the number of followers of the US professional sports leagues, the NBA has 44% more social media followers than the other four major US leagues (NFL, NHL, MLB, MLS) combined, and has 2.5 times more followers than the NFL. In addition, when compared to the major sports leagues around the world, the NBA has a total of 210.2 million followers across all social media platforms, making it the most popular content. ⁹⁾

Also, on the international market, the US professional sports league with the highest broadcasting rights fees is the NBA.
Looking at the broadcasting rights fees for US men’s professional sports leagues outside the US, the NFL is worth 351 million dollars (about 51.2 billion yen), while the NBA is worth 715 million dollars (about 104.3 billion yen), showing that the NBA is worth more. ¹⁰⁾

When you consider the number of followers on social networking sites and the broadcasting rights fees outside the US, the NBA has the potential to attract more viewers than the NFL. By acquiring the broadcasting rights to the NBA, Amazon will be able to increase the number of Prime members and improve the value of its advertising.

　2. Improvements of Prime Video’s usage rate

Sports content can improve the active usage rate because it can secure viewers on a regular basis.
For example, the Japanese IT company CyberAgent broadcasted all the matches of the Qatar World Cup on their platform, AbemaTV, for Japanese viewers. As a result, the weekly active users (WAU) increased from 12 million to 30 million. Furthermore, even after the World Cup ended, the decrease in WAU was small, and it remained between 17 and 19 million, and they succeeded in acquiring continuous active users. ¹¹⁾
Unlike the World Cup, the NBA is not a temporary content, so it is expected to lead to the acquisition of continuous users even more than AbemaTV.

　3. Attracting Z-generation viewers

The age group of 13 to 34 years old accounts for about 48% of all NBA fans.
Therefore, by acquiring the broadcast rights to the NBA, it is possible to approach the younger generation, who have relatively low viewing rates. ¹²⁾

　4. Acquiring new members outside the US

The countries covered by this agreement include countries outside the US. The countries covered by this agreement include all countries except mainland China, Poland, Finland, Sweden, Norway, Denmark and the Netherlands, and the rights in Canada are scheduled to be granted from the 2026-27 season.

By broadcasting the NBA in each country through Prime Video, the NBA will be able to attract members in emerging regions where the NBA is popular but Prime membership is low. In fact, in Brazil, which is listed as a focus emerging region in Amazon’s Annual Report (2023) ¹³⁾, NBA games have already been broadcast live on Prime Video since the 2022/23 season. The country has approximately 45 million NBA fans ¹⁴⁾ and it is expected that acquiring the broadcast rights to the NBA will lead to an increase in Prime members.

It is still unclear what will happen with broadcasting rights in Japan in the future, but the number of B.LEAGUE fans in 2023 was 8.29 million, a significant increase of 3.28 million from the previous year ¹⁵⁾.Given the trend of increasing basketball fans in Japan, it is possible that Amazon will acquire NBA broadcasting rights in Japan in the future.

Summary

Based on the popularity of the NFL on Prime Video and the potential of the NBA, which boasts the highest level of attention in the world, it is expected that acquiring the broadcast rights to the NBA will encourage an increase in the number of users and usage of Prime Video, and further increase advertising revenue. Regarding this agreement, Mike Hopkins, Head of Prime Video and Amazon MGM Studios, said, “The acquisition of the broadcast rights to NBA and WNBA games will be another cornerstone in the solid sports business that the Prime Video team has built over the past six years.16) The addition of the NBA to Prime Video’s sports lineup will not only diversify its content, but also establish it as a leader in live streaming sports services.

We will continue to observe how Amazon and the NBA move forward in the future.

Reference

1) NBA Communications. “NBA signs new 11-year media agreements with The Walt Disney Company, NBCUniversal and Amazon Prime Video through 2035-36 season”．2024-07，https://pr.nba.com/nba-walt-disney-company-nbcuniversal-amazon-prime-video-media-agreements/
2) Calculated at 146 yen to the dollar
3) Sportcal．”Deal Focus: NBA completes 11-year rights deals with Disney, NBCU, Amazon”．2024-07，https://www.sportcal.com/features/deal-focus-nba-completes-11-year-rights-deals-with-disney-nbcu-amazon/?cf-view&cf-closed
4) Amazon．”AMAZON.COM ANNOUNCES SECOND QUARTER RESULTS”．2024-08，https://s2.q4cdn.com/299287126/files/doc_financials/2024/q2/AMZN-Q2-2024-Earnings-Release.pdf
5) Statista．”Frequency of watching Amazon Prime Video in the past month in the United States in 2022, by gender”．2023-11，https://www.statista.com/statistics/1278161/tv-consumption-amazon-prime-video/
6) Statista．”Amazon Prime usage penetration among internet users in the United States as of October 2022, by age group”．2024-2，https://www.statista.com/statistics/304940/amazon-prime-us-age-distribution/
7) Amazon Ads．”Premium Live Sports content, no matter the season”．https://advertising.amazon.com/live-sports-on-prime，（Refer to 2024-10-08）．
8) FOX Sportst．”Cowboys’ win over Giants draws 16.22 million viewers, an NFL streaming regular-season record”．2024-09，https://www.foxsports.com/articles/nfl/cowboys-win-over-giants-draws-1622-million-viewers-an-nfl-streaming-regularseason-record
9) RunRepeat．”NBA Popularity Stats”．2023-10，https://runrepeat.com/nba-popularity
10) SportsPro Media．”Why the NBA is America’s most globally relevant sports property”．Ampere Analysis．2023-10，https://www.sportspromedia.com/insights/analysis/nba-tv-rights-revenue-global-popularity-data-ampere-analysis/
11) CyberAgent．”1Q FY2023 Presentation Material”．2023-12，https://pdf.cyberagent.co.jp/C4751/fhjD/qdYS/uPih.pdf
12) SponsorPulse．”The SponsorPulse Guide to NBA Fan Demographics”．2023-4，https://www.sponsorpulse.com/insights/the-sponsorpulse-guide-to-nba-fan-demographics
13) Amazon．”Amazon Com Inc 2023 Annual Report”．2024-2，https://s2.q4cdn.com/299287126/files/doc_financials/2024/ar/Amazon-com-Inc-2023-Annual-Report.pdf
14) CSM Live．”BRAZIL SET TO WELCOME NBA’S LARGEST FAN DESTINATION”．2022-9，https://csmlive.com/news/brazil-set-to-welcome-nbas-largest-fan-destination/
15) Mitsubishi UFJ Research and Consulting Co., Ltd. “[Flash Report] 2023 Sports Marketing Basic Survey”.2023-10，https://www.murc.jp/wp-content/uploads/2023/10/news_release_231030_01.pdf
16) Amazon Ads. “Prime Video and the NBA announce a landmark 11-year global media rights agreement starting in 2025”. 2024-7, https://advertising.amazon.com/ja-jp/blog/prime-video-nba-2025-deal

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