German Soccer

Amazon’s Next Target

  • Why it matters

    Why it matters

    Amazon could severely disrupt the German soccer broadcasting market, affecting markets shares of US, British and domestic broadcasters.

  • Facts

    Facts

    • As of this week, Amazon will broadcast live audio coverage and discussion of all German premier league soccer games.
    • The Seattle-based company is rumored to have paid about €5 million for audio rights, in what is widely seen as a first step toward capturing full broadcasting rights.
    • Currently German soccer broadcast rights are jointly held by satellite broadcaster Sky and two German public television networks, ARD and ZDF.
  • Audio

    Audio

  • Pdf
main 55281678 AP – soccer Bayern Munich Thomas Mueller scores Darmstadt Feb 2016
For Amazon, audio broadcasting is only the first half of the game. Source: AP

Listen up hard this weekend and you might hear a huge collective sigh of relief as millions of Germans greet the return of the country’s professional soccer league, the Bundesliga, after its summer break. No other sport is so beloved by German fans. And no other sport is so sought after by broadcasters, including London-listed Sky, partially owned by Rupert Murdoch’s media empire, and Eurosport, a subsidiary of US-listed Discovery Communications.

This season, a very familiar name will enter the soccer broadcasting market – Amazon. Not content just to sell books, groceries, and nearly everything else besides, the company is using German soccer to take its first steps into the sports broadcasting business.

Beginning on Friday, Amazon will broadcast live audio commentary on every single game in the Bundesliga, Germany’s top soccer league, which generated €2.7 billion in turnover in last year’s season – see graphic below. The online retailer bought the rights last year, when the soccer organization auctioned off broadcasting rights for four seasons to several broadcasters for €4.64 billion.

“Amazon’s new broadcast product is an attack on German public radio.”

Dieter Lange, partner and media specialist at consultants EY

Amazon’s move into sports broadcasting will strike fear into its rivals’ hearts, because audio streaming is seen as a first step into the lucrative soccer market. Live video broadcasts could follow, turning the retailer into a direct competitor to Sky, which is 39-percent owned by Rupert Murdoch’s 21st Century Fox, Eurosport and other broadcasters.

The market is already being disrupted. Until recently, Sky has had a monopoly on the live broadcast market but this is under threat, after Eurosport bought some rights, a change which also takes effect this weekend.

Amazon’s offering is in line with its strategy of boldly seizing new business opportunities. Its audio broadcast quality is likely to be high: the company has a team of 50 people working on its German soccer broadcasting operations, made up of technicians, commentators and well-known pundits.

“This will permanently change the sports broadcasting business,” said Markus Kreher, a partner and head of media at consultants KPMG.

Since taking its first tentative steps into online book retail twenty-two years ago, Amazon has bulldozed through one market after another. Today it dominates online retail in dozens of countries worldwide. With its Amazon Fresh service already making inroads into grocery shopping, the company recently announced its takeover of the US organic supermarket chain Whole Foods. It produces television series and sells business services. Through its “intelligent personal assistant,” Alexa, the company has a central place in an increasing number of networked households.

16 p21 amazon – Soccer on TV-01 Bundesliga premier league tv rights revenue

Although as yet confined to audio, the sheer scale of its commitment to German soccer means that, in terms of hours broadcast, Amazon will immediately become an important source of soccer coverage and news. The company’s product will pique the interest of German soccer clubs too, which are often frustrated by the limited radio coverage offered by ARD, the public broadcaster which transmits highlights of many games. “Amazon’s new broadcast product is an attack on German public radio,” said media expert Dieter Lange, a partner at consultants EY.

ARD is a network of Germany’s regionally-based public broadcasters, which offer television, radio and online programming individually and as a group. The network, which is the world’s largest public broadcaster, is funded by a compulsory annual license fee for all German households, around €200 or $235 per year.

Each week, eight million people listen to ARD’s soccer coverage on the radio, according to surveys carried out by Media Analysis, a working group. ARD refused to comment on whether it feared listeners switching to Amazon. Since the end of July, Amazon has already been audio-broadcasting games from the Bundesliga’s second division, whose season begins slightly earlier than the top league.

Amazon said it is “very happy” with its coverage so far, although it refused to provide listener numbers. The company has rights to audio broadcasting until 2021 and is rumored to have paid €5 million for the privilege.

Live audio broadcasting is broadly seen as a first step into sports broadcasting and observers agree that Amazon has its sights set on full broadcasting rights. In the United States, Amazon has already made a start: US media reports suggest the company paid $50 million for the right to broadcast 10 NFL American football games when the new season begins this fall.

It is an open secret that Amazon is considering bidding for rights to broadcast Bundesliga footage. “Our customers love video content. There is no reason not to pursue broadcast image rights,” Amazon’s head of German operations, Ralf Kleber, recently told the Berlin newspaper Tagesspiegel. “We still have no announcement to make. You’ll have to wait and be surprised,” he added.

“Our customers love video content. There is no reason not to pursue broadcast image rights.”

Ralf Kleber, head of German operations, Amazon

Currently, subscription cable company Sky broadcasts live games, while ARD transmit highlights. Their image-rights contracts continue until the season 2020–21: at that point, Amazon will be in a position to launch a formal bid for video broadcasting rights. The company, which ran up a profit of almost €2.4 billion last year, is thought to be in a position to directly pay the fees for German television rights from its own cash reserves.

The company’s motives are not hard to guess. It hopes to gather in-depth data on soccer viewers, sell highly-targeted advertising and boost its own premium offerings, including its annual subscription service Amazon Prime and other premium products still in development.

“If it is just a question of financial resources, then ARD and [German public broadcaster] ZDF would definitely have no chance against Amazon,” said ARD’s sport director Axel Balkausky. With regard to broadcasting rights for sporting events, public television is often under pressure to justify spending taxpayer money on fees that increase every year. Sky, on the other hand, pays for rights through subscriptions and advertising.

A Sky spokesperson told Handelsblatt: “We know the value of football rights to us. We will always offer as much as we can, as long as it still makes business sense for us.” This is also true of Amazon, which will also have to find a viable broadcast business model for its sports broadcasting. “But Amazon has deep pockets and can outlast its competitors,” said Mr. Kreher, the media expert.

Outgunned financially, public broadcasters are likely to pin their hopes on their long years of experience. “A lot of rights owners are putting increasing weight on the quality of reporting,” said Mr. Balkausky, the ARD spokesman. But it seems unlikely that Amazon will fall short in this area. “Amazon should have no trouble developing very good sports reporting and commentary,” said Mr. Kreher.

Broadcasters might want to start calling around the world’s bookstores for hints about their possible future.

 

Michael Scheppe is an intern at Handelsblatt. Brían Hanrahan and Gilbert Kreijger, editors with Handelsblatt Global, contributed to this article. To contact the authors: kreijger@handelsblatt.com

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