Issue No. 164: On Amazon and Sports

Last Word: On Amazon and Sports

By Ben Thompson via Stratechery.com

Moreover, sports rights make sense for Amazon in a way they do not for many other tech companies; one thing that is unique about Amazon is that their e-commerce business in particular is relatively geographically constrained, thanks to the massive fixed costs that make the whole thing work. This, though, means that investing in geographically relevant sports may make more sense for Amazon than for, say, Apple: the latter would spend a lot of money for rights that are only relevant to a slice of its customer base, whereas for Amazon the applicability and long-term payoff would be much higher.

That said, I wouldn’t get too excited yet; as the article notes nearly all significant sports rights deals are locked up well into the next decade, leaving Amazon scrounging around for long tail content like unaired games by other networks (including Univision, ESPN, and ONE World Sports), smaller college conferences, and niche sports like lacrosse. That, though, is its own revolution; I wrote last year in Beyond Disruption:

The Internet has completely transformed business by making both distribution and transaction costs effectively free. In turn, this has completely changed the calculus when it comes to adding new customers: specifically, it is now possible to build businesses where every incremental customer has both zero marginal costs and zero opportunity costs. This has profound implications: instead of some companies serving the high end of a market with a superior experience while others serve the low-end with a “good-enough” offering, one company can serve everyone. And, given the choice between a superior experience and one that is “good-enough,” of course the superior experience will win.

See more of the issue here.

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