Amazon Just Scored a Touchdown With Thursday Night Football

By Adam Levy Markets Fool.com

Amazon.com (NASDAQ: AMZN) just won the streaming rights to 10 of the NFL's Thursday Night Football games. The online retailer will be taking over the rights from Twitter (NYSE: TWTR), which paid $10 million for the rights last year. Amazon will pay about $50 million this year, which is as much as Twitter generated from selling ads during the games last year.

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Part of the reason for the hefty premium is that Amazon will limit the games to subscribers of Amazon Prime. Last year, anyone -- even people without Twitter accounts -- could stream the games on Twitter. The move is a great win for Amazon and should accelerate its efforts to attract customers to Prime around the world.

Image source: Getty Images

Nobody watched games on Twitter last year

It's worth noting that Thursday Night Football viewership on Twitter last year was pretty underwhelming. It averaged just 266,000 viewers per minute across the 10 games, while the corresponding television broadcasts attracted at least 10 million viewers per game, sometimes reaching 20 million. The average game saw 2.7 million unique viewers on Twitter who watched at least 3 seconds.

And that's for a free stream of the game -- no registration required.

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Instead of going online, most people watched the TNF games on their television broadcasts. Twitter did release apps for various set-top streaming boxes, so people could watch the game on their big screen, but it didn't make a difference.

Why Amazon is different

A couple hundred thousand streams isn't going to make a big difference for Amazon. It already has around 70 million Prime subscribers. But Amazon has the potential to attract more people to its streams for a couple of reasons.

First of all, Amazon has about as many, if not more, customers as Twitter has users. Amazon served over 300 million customers in 2015. (It didn't give an update for 2016.) Twitter, by comparison, reported 319 million monthly users as of the end of 2016.

More importantly, Amazon is really good at pushing users toward the behavior it wants them to exhibit, like signing up for Prime. The popularity of its Fire TV devices could help as well. Twitter, by contrast, has tried and failed on several occasions to guide user behavior.

While Twitter was able to attract only a few hundred thousand viewers, Amazon should be able to do better. And that's important as Thursday Night Football could help it attract more global subscribers to Amazon Prime.

Winning global Prime Video subscribers

Amazon isn't going after the American market with the NFL rights. As mentioned, most Americans still watch football the old-fashioned way -- on a TV with a beer (not a tablet) in hand. Besides, Amazon's Prime subscriber base is already heavily concentrated in the U.S. TNF won't bring in many more subscribers in America.

But American football is an increasingly international sport. There's broad global appeal for Thursday Night Football, so the games could help Amazon get its foot in the door with a lot of international households -- something the company is after as it just expanded Prime Video globally last December.

Indeed, Barclays analyst Kannan Venkateshwar suggests Amazon won't sell any advertising time during the game, keeping it for itself. Amazon can promote its original Prime Video series and films, as well as its other services like Alexa, which are made better by Prime. That way people who sign up for a free trial just to watch a few football games are more likely to stay subscribed throughout the full year.

For Amazon, $50 million is a small price to pay. The company is spending heavily after its global expansion, with at least one analyst estimating it will spend more than rival Netflix this year, which budgeted $6 billion for content.On this scale, $50 million is just a drop in the bucket, but the streaming rights to TNF could produce much better returns for Amazon than they did for Twitter.

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Adam Levy owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Twitter. The Motley Fool has a disclosure policy.