It’s still early in the proverbial first quarter, but streaming companies can’t be doing touchdown dances over their investments in live sports.
Two new data points released in the past 30 hours poured more cold Gatorade on the excitement surrounding the shift from linear TV to streaming for live sports, adding to questions about the short-term financial outlook of the strategy.
First, Amazon released mixed Nielsen and internal viewership data on this season’s “Thursday Night Football” (TNF) broadcast, the first full slate of NFL games shown exclusively on a streaming platform.
Nielsen’s research pegged the average TNF audience at 9.58 million viewers over 15 games, while Amazon said its metrics showed an average audience of 11.3 million. Both numbers marked a significant drop from the 16.2 million people who tuned in, on average, to watch Thursday night games last season on Fox and the NFL Network. National broadcasts of Sunday NFL games often draw 20 million-plus viewers.
Amazon officials on Wednesday did tout the broadcast’s more advertiser-friendly audience this year, which skewed younger and more affluent than last season. They also noted that Amazon viewers stayed glued to the telecast slightly longer. Still, Insider reported Wednesday that viewership fell 25% short of company expectations, forcing Amazon to compensate advertisers with more ad space on other shows and platforms.
Amazon doesn’t release financial performance data related to TNF or its broader Amazon Video ventures (company officials also see TNF as a gateway to signing up Amazon Prime customers). But it’s hard to see how Amazon, which is paying $1.2 billion annually for TNF, emerged a financial winner from the deal this year. For context, consider that Fox paid $660 million annually last season for TNF and shed minimal tears about losing the rights package.
Patrick Crakes, a former Fox Sports executive who now provides media consulting services, told The Athletic that Amazon’s viewership numbers were “a pretty amazing achievement” for a streaming platform, but the tally represented “a pretty big decline” from linear broadcasts.
Across the pond, the results were decidedly more disastrous for London-based DAZN Group, the global streaming company focused on soccer and combat sports.
Bloomberg reported Thursday that DAZN (pronounced “da-zone”) totaled $2.3 billion in losses in 2021 and has now burned through at least $6 billion, according to financial records reviewed by the outlet. The enormous losses stemmed from massive investments in sports streaming rights—DAZN exclusively broadcasts some soccer matches between teams in the top-flight Italian and Spanish leagues—and comparatively modest subscriber revenues.
The latest reports build on underwhelming returns to date for companies that have invested heavily in live sports broadcasts.
Disney continues to rack up losses from its ESPN+ offering, which includes some exclusive combat sports, hockey, and soccer broadcasts, among other sports, according to annual financial reports. The company doesn't break out operating losses tied to ESPN+, but available data suggests it represents a small fraction of Disney's $4 billion in streaming losses in fiscal 2022.
Live sports also haven’t been enough to prop up teetering streamers Peacock and Paramount+, which broadcast English and Italian soccer games in the U.S., respectively. Both platforms are expected to post losses in the neighborhood of $2 billion this year, leading to speculation about industry consolidation. (In fairness, neither platform’s parent company reports sports-specific financial results, and the vast majority of losses are tied to other programming.)
Industry analysts still argue it’s too soon to deploy the mercy rule on live sports streaming—and they make a few fair points.
On a micro level, the sports streaming experience should improve in the coming years, as video quality gets better and telecasts mature. (A good first step for Amazon: breaking up the surprisingly dull TNF broadcast pairing of Al Michaels and Kirk Herbstreit.)
On a macro level, streaming should keep growing in popularity as younger viewers spurn traditional cable subscriptions. The growth of mobile sports gambling, particularly in the U.S., also bodes well for rights holders.
But even if there’s a lot of game left to play, sports streamers are starting way behind the profitability sticks.
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Jacob Carpenter
Editor's note: This article has been updated to correct information about Disney's operating losses related to ESPN+.
