Apple and Amazon could ‘destroy the streaming business’, analyst says

Apple (AAPL) and Amazon (AMZN) have invested billions of dollars in sports media rights over the past few months, outbidding their traditional rivals and taking the streaming war to its next battle stage.

A Wall Street analyst thinks tech giants’ spending sprees could potentially cannibalize the streaming industry.

“They can actually destroy the streaming business because they have other businesses that will make a profit or a higher profit,” Laura Martin, senior media and internet analyst at Needham and Company, told Yahoo Finance Live (video above). “The iPhones cost $1,300. They can make a profit on another part of their business that justifies spending that money on sports rights.

Amazon and Apple hold billions of dollars in cash on their balance sheets, and so the payback schedule, if there is even one, is very different from broadcasters and other streamers like Netflix (NFLX), explained Martin in a recent note. to customers. For Apple and Amazon, the expenses are not about being directly reimbursed through subscribers, but the goal is to bring more people into the various channels of the ecosystem.

Apple recently spent $2.5 billion for MLS streaming rights and reportedly in talks spend at least $2.5 billion annually on NFL Sunday Ticket.

And this fall, Amazon is entering the first season of its $11 billion bet over 11 years on sports streaming with the NFL’s Thursday Night Football. Google (GOOGL) and Amazon have also contacted America’s biggest sports league over Sunday broadcast rights while airing battles for international soccer and college football are also taking place.

The latest round of NFL broadcast rights, which have been led by traditional tech giants rather than streaming conglomerates, marked a significant shift in the streaming wars from broadband dominance to an industry-driven one. on Silicon Valley. Martin noted that Apple and Amazon would be the winners in the streaming war because they have “virtually unlimited resources.”

“They never have to break even in their streaming business,” Martin said. “A lot of times they do that, they do these rights deals to drive iPhone sales or to drive prime signups, because that’s doubled average e-commerce sales.”

Disney (DIS), owner of ESPN, could also maintain its position as a player in the space due to its ability to market local brands, she said. From Disney characters like Cinderella to ESPN’s prominence in the world of sports, the company knows consumers well.

A man walks past an Amazon Prime Video logo during a launch event in Mumbai, India, April 28, 2022. REUTERS/Francis Mascarenhas

With Hulu offering binge-worthy offerings similar to Netflix, Disney can combine three services into one with its ESPN+, Disney+, and Hulu combo. Analysts have told Yahoo Finance in the past that ESPN+’s impending price hike will likely drive more subscribers to the package.

This bundled package could be a positive catalyst for Disney, according to Martin.

“Part of their case is that they can regroup,” she said. Churn is what kills you. As competition increases, consumers stay on your service for less time because they watch what they want, they turn it off and sign up or another service to watch what they want to watch this month. Churn kills you. What’s great about The Walt Disney Company is that they have sister affiliates.”

Josh is a reporter and producer for Yahoo Finance.

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