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This Sport Could Turn Amazon Prime Video Into a Goldmine (Hint ...

May 17,2017 11:21

The company's recent bid to stream Thursday Night Football games got plenty of attention, but there's a sports contract up for grabs on the other side of the world ...and more »

Amazon.com (NASDAQ:AMZN) made waves with its recent deal to stream Thursday Night Football. 
In the e-commerce giant's first foray into live sports streaming, it paid the NFL $50 million for rights to the package of weekly games this season. That seems like a smart move for the company. With Prime memberships priced at $99, it can justify the spend with just half a million new subscribers, and the deal is sure to delight plenty of its current members.
Amazon CEO Jeff Bezos. Image source: Amazon.

However, Amazon's biggest opportunity in the sports world isn't with the NFL but in a sport that has virtually no fan base in the U.S. -- cricket.
Cricket is the world's second most popular sport after soccer, with an estimated 2.5 billion fans around the world. The 2015 Cricket World Cup between India and Pakistan drew more than a billion viewers, and the sport's popularity in India could prove particularly enticing to Amazon, which has already spent $5 billion investing in the Indian market.
Winning the streaming game
Amazon launched Prime Video in India just five months ago, but it is already the third most popular streaming app in that country, behind YouTube, which is free, and HotStar TV, owned by local Fox subsidiary Star India. Netflix is currently No. 5, but it charges the same for one month of streaming (500 rupees, or about $7.75), as Amazon Prime does for its first year. It's clear then why Amazon is already outpacing in just a few months. HotStar, meanwhile, charges 199 rupees (about $3.09) per month.
According to Duckju Kang, head of Asia-Pacific research at Value Penguin, HotStar's principal advantage over Amazon Prime is its contract to air live cricket, which gives it unique content that's valuable to the local population -- something both Amazon and Netflix lack.
Image source: Getty Images.

However, the streaming rights for the Indian Premier League, the country's top cricket league, are set to go up for auction later this month. Starting on May 21, the league will accept bids over a 45-day period for digital and broadcast rights to show live games for five years. Amazon, Facebook, and Twitter have already expressed interest. 
In its previous contract, Hotstar paid $750 million for six years of rights -- the winning bid is expected to be much higher in this upcoming auction. 
A tipping point
Cricket rights could be just the thing Amazon needs to propel it to leadership in the Indian market. After losing out to Alibaba and other competitors in China, the company has made a priority of India, a fast-growing market still in its early stages where the Kindle-maker is up against local rivals like FlipKart and SnapDeal. India will soon pass China as the world's most populous country, and it is expected to have 730 million internet users by 2020. 
India's population density also makes it well suited to e-commerce, as shipping is easier and cheaper over shorter distances.
In Amazon's recent earnings press release, CEO Jeff Bezos' quote was entirely focused on the company's activity in India. He noted that Prime selection has increased 75% since it launched there nine months ago and that Amazon has announced production of 18 original Indian TV shows. Amazon.in is also the most visited and fastest-growing marketplace in the country.
The company has shown in the past that it's not afraid to spend big to fuel growth and win market share. The company is already set to spend $4.5 billion for video content this year, which the company sees as an effective means of growing Prime membership.
Cricket is by far the most popular sport in India, and the upcoming auction is a rare opportunity for Amazon to snag what could the biggest piece in the Indian streaming puzzle. Bezos has long promoted the power of Amazon's flywheel of services, saying, "When we win a Golden Globe, it helps us sell more shoes."
Don't be surprised to see Amazon bid heavily for the Indian Premier League streaming rights later this month. It's the best way for the company to ensure its leadership in a key emerging market.
Jeremy Bowman owns shares of Netflix. The Motley Fool owns shares of and recommends Amazon, Facebook, Netflix, and Twitter. The Motley Fool has a disclosure policy.

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