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Amazon’s football play for UK holiday shoppers

Amazon store use by UK consumers

Amazon will once again be the exclusive provider of 20 Premier League live football games in the UK in December. If you want to see them, you’ll need to be a Prime Member, which is, of course, the point. Looking at the numbers, Amazon should make a good return on the money it spent on the game license.

Amazon’s December soccer binge

Once again, Amazon is taking advantage of the popularity of Premier League soccer in the UK to boost its share of holiday spending. Last year, the company struck a three-year deal with the Premier League to stream two blocks of 20 football matches in December. This year, the company will be the only place British fans can watch live football on December 26th (Boxing Day in the UK.) It also has ten mid-week games between December 3rd and December 5th.

The license gives Amazon the exclusive right to deliver the games live. So, if a UK fan wants to watch Manchester United versus Newcastle or Leicester versus Liverpool live on the 26th, they will need to be an Amazon Prime member.

Growing Prime membership is the goal

From Amazon’s perspective, the two blocks of games couldn’t be more perfectly placed. The first block should attract new Prime members in time for them to spend money in the Prime Store for Christmas. The second Boxing Day block should help boost Prime’s share of post-Christmas sales.

With 9-in-10 UK consumers already using Amazon’s online store, is there that much to be gained by spending big on an exclusive license for Premier League matches? Getting people into the Prime program is a critical priority for Amazon because members spend so much more than non-members. In the U.S., people in the Prime program spend 4.6-times more than non-members. Over a year, that difference translates into spending $2,500 rather than $500.

Only 26% of UK Amazon store users are Prime members and another 13% share access through a family member or friend’s account. So, there is much room for growth for the Prime program.

7-in-10 watch Premier League in the UK

The Premier League offers an unmatched opportunity to convert Amazon store users into Prime members. 70% of the UK population watch at least a part of a match in the 2018/19 season. Also, big games draw huge audiences. Sky, the UK satellite TV provider, attracted audiences of two million viewers or more to 16 games last season. It’s safe to say that many people will want to catch one or more of the Boxing Day matches carried by Amazon.

How much is it worth to Amazon?
Let’s assume Amazon captures 500,000 new Premier League fans as Prime members in December. We’ll also assume that the average UK shopper spends £40 in the Amazon store in that month (remember, almost everybody uses Amazon in the UK.) Prime Members spend 4.6 times as much, or £184.[1] It costs £7.99 to join Prime for one month, so the incremental revenue to Amazon for December due to the Prime lift is £76 million (£4M in dues and £72M in spending.)

Further, let’s assume half of those new members stick around for the full year, spending half what they spent in December every month during the year. Amazon receives £290 million in additional revenue (£20M in dues £270M in spending.)

It’s hard to know how much Amazon paid the Premier League for the right to stream the games. However, at the time Amazon bought its license, the Premier League sold the rights to another block of 20 games over three years for £90 million. So, the 20 games Amazon will show in December likely cost it around £30M. In other words, the new Prime Membership dues almost cover the cost of licensing the football matches.

Why it matters

Amazon is using exclusive live premium sports to grow the Prime membership program.

It is worth the high price of licensing the games as the incremental spending and Prime dues people pay will more than compensate for licensing the games.

Amazon is only interested in competing for live sports if it furthers the company’s sharp focus on retail.

[1] UK shoppers spent an average of £567 each last Christmas.


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