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Was This $50 Million Purchase the Right Move for Amazon?

By Motley Fool Staff - Apr 11, 2017 at 9:52PM

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The e-commerce giant adds yet another reason for consumers to subscribe to Prime.

In this segment from the Motley Fool Money radio show, the cast digs into the latest deal in live-sports streaming as Amazon (AMZN -0.73%) announced it would pay $50 million for the rights to Thursday Night Football. What is the company actually getting out of this?

A full transcript follows the video.

This video was recorded on April 7, 2017.

Chris Hill: Amazon is getting into live sports. This week, Amazon agreed to pay the NFL $50 million for the rights to livestream Thursday night games this fall. That is five times what Twitter (TWTR -1.60%) paid last year, Jason. But something tells me Amazon just wanted this and said they were going to pay up for it.

Jason Moser: Yeah. My money was actually on Facebook, to be quite honest with you. I was a little surprised they didn't get it. Video is a massive opportunity here. But it's really exclusivity that's going to drive meaningful return on investment when it comes to this stuff. I mean, I actually respect that the folks at Twitter didn't try to overpay for something that wasn't going to have a material impact on their business.

Hill: Right, the games are still going to be on television.

Moser: And that's just it. It's not exclusive. It wasn't exclusive with Twitter, it's not going to be exclusive with Amazon. It served as a great opportunity for Twitter to learn how they might be able to integrate live video into their platform. This is going to be something that Amazon is going to use to advertise itself a bit more. It is going to be behind the paywall, you're going to have to be a Prime member to get this stuff. But you can watch it a number of different ways. CBS, NBC, NFL Network. If you are a Verizon wireless customer, you can stream it. So there's not any exclusivity here. I think that's ultimately where the real value lies in live sports.

Simon Erickson: Is it a brand building or a merchandising play? I would think you could buy a whole bunch of football merchandise on this small company called Amazon that I've heard of.

Hill: Yeah, when I saw the news of this deal, I thought to myself, "They're going to get 10 weeks of NFL games, I think they can sell $50 million worth of NFL gear in that time alone."

Erickson: Probably.

Moser: Amazon spends a lot of money to build that business, to grow that business. This is another investment in that Prime platform. I think it'll work out fine for them, because their numbers are closer to the vest, and ultimately, we know how they run the business anyway.

Chris Hill owns shares of Amazon. Jason Moser owns shares of Twitter. Simon Erickson owns shares of Amazon and Facebook. The Motley Fool owns shares of and recommends Amazon, Facebook, Twitter, and Verizon Communications. The Motley Fool has a disclosure policy.

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