Amazon focuses on live sport: the streaming giant on the hunt for profit

Amazon Prime Video is taking a new direction: away from expensive in-house productions and towards live sport. This is reported by The Information, quoted by the international news agency Reuters.

Amazon wants to generate more profit and fewer losses. While Prime Video is certainly growing in terms of plans - over 200 million people use the streaming service - Amazon is struggling with the harsh realities of the industry behind the scenes: the streaming division is still in the red.

Disney showed last year just how difficult it is to assert itself as a streaming service alongside Netflix. Despite the appeal of brands such as Marvel and "Star Wars", it took almost ten years for Disney+ to finally become profitable:

Amazon has no shortage of supposed charisma. However, with record-breaking billion-dollar investments in content such as "The Rings of Power", Prime Video has not yet yielded the hoped-for profit. The ambitious agent drama "Citadel", for which Amazon put 300 million dollars on the table, also proved to be a painful flop. In addition, there are ongoing expenses for sports rights - the NFL's American football rights alone cost Amazon around one billion dollars a year.

Amazon has to turn things around. Somehow.

Netflix as a role model - and warning

A look at competitor Netflix shows why Amazon is now changing course. Two years ago, the Californian streaming giant saw its subscriber numbers fall for the first time - a shock for the otherwise successful company.

Netflix then embarked on a radical change of course: live sports. However, with a targeted strategy: Netflix wants to focus less on long-term and extremely expensive broadcasting rights, for example football, and more on individual, major events with global appeal.

A prime example of this new approach was the extremely spectacular boxing match between Mike Tyson and Jake Paul, which attracted 108 million viewers worldwide and brought Netflix a massive increase in new customers. The event played a key role in helping the streaming supplier achieve a new record turnover in the fourth quarter and break the 300 million plan brand for the first time.

Amazon goes on the offensive

Amazon wants to learn from these developments. The new Prime Video sports strategy will continue to rely on expensive sports licences, but will also increasingly focus on individual events. But that's not all. The strategy will now be based on two pillars:

1. Exclusive live sport
2. Targeted advertising

Amazon already holds major sports rights with event character, including the Thursday night NFL game in the USA. The company wants to massively expand this offering for future profitability.

Amazon reportedly became part of a 77 billion dollar deal that the NBA concluded with ESPN, NBCUniversal and Amazon. Amazon secured an exclusive package of streaming rights for selected basketball games. This will cost Amazon almost two billion a year - over the next eleven years.

Live sport as advertising gold: Amazon's strategy for higher revenues

However, the real recipe for success lies not only in the content, but also in the sources of revenue that live sport brings with it: targeted advertising. Amazon wants to perfectly combine the classic sports spectacle - beer, nachos and fast food - with customised advertisements. For example, a viewer watching an NFL game could be targeted with ads for jerseys of their favourite team or a discount on delivery services.

Or as it is called in the trade: targeted advertising. After all, Amazon is sitting on a veritable treasure trove of data that makes it possible to display customised adverts to users. The online retailer expects the combination of real-time sports content and targeted advertising to generate significantly higher advertising revenue, which in turn would reduce its dependence on pure subscription fees. Another thing that Amazon is increasingly looking to copy from Netflix.

The rocky road to profitability

CEO Andy Jassy has a clear goal: Prime Video should be profitable by the end of 2025. To achieve this, Amazon is building on the strengths of its ecosystem. Live sport should not only attract new subscribers, but also encourage existing Prime members to use the service more intensively. After all, millions of people pay the Prime fee primarily for faster deliveries - the company hopes to keep them glued to the screen with exclusive sports offers.

It remains to be seen whether Amazon will be successful in the long term. But one thing is certain: the streaming world is no longer just about series and films. The battle for market share is now being fought on many playing fields - including cloud gaming. And Amazon is ready to go into overtime.