This video was recorded on April 5, 2017.
Chris Hill: Twitter has lost Thursday night NFL games to Amazon, and it’s understandable why, because Amazon ponied up five times the amount of money for the Thursday night games that Twitter did a year ago. Amazon is paying $50 million for 10 Thursday night NFL games.
David Kretzmann: Which is essentially the same deal that Twitter had last year.
Hill: Right, although they were only paying $10 million for it.
Kretzmann: Yeah, besides that.
Hill: And it’s not exclusive, they’ll still be on the broadcast networks. This comes at a time when Amazon shares broke through the $900 barrier and hit another all time high this week. It seems like, while Amazon is the headline here, in sports, there are games where it’s like, did one team win it, or did the other team just lose it? I look at this story and I know the headline is, “Amazon has won the right to stream these games.” I look at it as, “No, Twitter is the loser.” That, to me, is the headline.
Kretzmann: Especially with Jack Dorsey coming on as CEO over the past year and a half. The company is focusing on being the live events platform, and this NFL deal seemed to be a pretty big piece of it. And it’s not like Twitter is struggling for cash. I’ve been critical of the company, I’m a disappointed shareholder, like a lot of people, but they have over $2 billion in net cash. And this seems like the type of thing where you don’t want to focus so much on immediate ROI here. So, I’d be curious to see, what was the max price that Twitter went up to and they said, “At this point it’s not worth it.” It reminds me of the Costco and American Express deal, where Charlie Munger at Berkshire Hathaway … I guess he’s vice chairman under Buffett, he basically said comments along the line of, “If you’re American Express, you pay a little bit more and you keep that deal. Clearly, that’s valuable to your brand and your competitive position.” I think, if you’re Twitter, you needed the NFL deal far more than Amazon needs it. But, I think it makes sense for Amazon. It beefs up their video platform. I’ll be curious to see, because, they will have some time for ads during the game, so I’ll be curious to see what that mix of ads looks like. Will they just be promoting Amazon NFL gear? Will they be promoting other Amazon products and services? Or will they open it up to outside advertisers? If I’m Amazon, I think this is a great opportunity to test promoting your own products and services. I would be surprised if that isn’t a pretty big focus of theirs.
Hill: Yeah, that was one of my thoughts when I saw the price tag. I thought, “Can they sell $50 million worth of stuff on 10 consecutive Thursday night this fall?”
I think they probably can.
Kretzmann: We’ll find out. And, they’ll bring in more Prime memberships. It makes that Prime offering, especially the video aspect. I think more people are waking up to the fact that Amazon has some quality original shows. I just found this out today, they have a partnership with the NFL already with one of their shows where they follow an NFL team through the season. Apparently, that’s one of their most popular shows. I think they feel pretty good that this will be a hit. They have that data. I think this is a golden opportunity for them to venture into that live TV market and figure out how they can integrate the Amazon experience with live TV.
– Stock investment