Amazon.com Inc has reportedly agreed to fork out $65 million a year to renew its streaming deal with the NFL for Thursday night fixtures, while at the same time announcing a price hike to its subscription service.
Amazon and the NFL issued a press release on Thursday announcing the agreement, but did not disclose the figure.
A person familiar with the deal told Reuters it was approximately $130 million over the 2018-19 seasons, a 30% annual increase on the $50 million Amazon paid for the rights in 2017.
The e-commerce giant is understood to have beaten out Facebook, Twitter and Google’s YouTube.
And with Amazon Prime boasting 100 million subscribers around the globe, Jeff Bezos clearly sees sports streaming as an effective way to attract new members to the loyalty club that offers video and free shipping.
Prime’s sports content also includes Tennis TV in the US, and 37 ATP World Tour events for members in the UK and Ireland from 2019 to 2023.
It also has a documentary series which showcases the full seasons of certain gridiron franchises called “All or Nothing”.
Prime price hike
After the NFL announced the partnership with Prime, Amazon revealed it would be increasing the cost of its membership from $99 to $119 after June 16.
Hmmm. NFL announces new streaming deal with Amazon and then Amazon announces it's prime annual fee increasing by $20!
— Joe Flint (@JBFlint) April 26, 2018
Using the 100 million figure as reference, it will result in Amazon pocketing an extra $2 billion in revenue.
With rival Netflix raising its content budget to $8 billion this year, Amazon may be looking to invest more heavily in Prime than the $4.5 million it committed to non-sports content in 2017.
It’s highly anticipated Lord of the Rings series is set to cost somewhere in the vicinity of $1 billion alone over five seasons.
It also offers a music streaming service but is a fair way behind market leader Spotify, which recently went public, and Apple Music at this stage.
Amazon smashes Wall Street expectations
Wall Street was predicting earnings per share of $1.27 on revenue of $49.96 billion, but it returned earnings per share of $3.27 on revenue of $51 billion.
As a result, shares surged more than 6% in after-hours trading.
The share price rise has ballooned Jeff Bezos wealth substantially too.
On Thursday, the world’s richest man made $12 billion. That takes his personal fortune to $134 billion.
What makes this all the more incredible is that US President Donald Trump issued a series of tweets earlier this month that besmirched the Amazon brand.
Trump was successful in wiping $45 billion from its market value at the time, but Amazon is now right back on track to soon be a trillion dollar company.