Amazon recently beat out Twitter, Facebook, and YouTube for the rights to stream 10 of the NFL’s Thursday Night Football games. By making a $50 million bid to get the rights, they easily beat Twitter’s $10 million offer from 2016.
Some people might be thinking that streaming sports is more of a Facebook or Youtube strength. After all, both companies already have a structure in place for it (e.g. Facebook Live and Youtube is founded off of videos). Others of you (most likely the Prime members) might be excited to find out this news. Either way, this deal shows the trajectory of both Twitter and Amazon’s future, and also a major insight about consumers that Amazon fully understands.
What this deal says about Twitter
One of Twitter’s major strategies is to become a leader in streaming content. This decision is not a bad strategic move on their part, considering that streaming is a young, but rapidly growing market. But, losing this deal causes Twitter to lose a target market that they need, the sport people.
One major fact to keep in mind when looking at this loss is that, Twitter’s COO/CFO is Anthony Noto. What is the significance of this and how does this tie into the deal? Prior to joining Twitter, Noto was the NFL’s CFO.
This is a big deal because, as common knowledge in business, relationships are crucial. People often use their network when looking to close deals, make strategic hires, and bring brand value to a company. Twitter had the understanding of this principle when hiring Noto and, it is safe to assume, that they planned on Noto using his network when in the role.
So, if Noto did leverage his network in 2016 to get the deal, the obvious question then is why did Twitter not get the deal in 2017 considering Noto is still the CFO at Twitter? Could he only pull the “network” card once at his time at Twitter or is there another issue? Is Twitter’s business struggling so badly that if the NFL continued with Twitter, they would essentially be shooting themselves in the foot?
It is no secret that Twitter is struggling, but this loss signifies something much larger than a normal business defeat. Their stock is currently below $15 per share and was almost $25 in October of 2016. Their leadership is running away in droves. As seen in the picture below, the majority of the executive team departed in 2016. Lastly, their key investors are getting restless. Chris Sacca, one of Twitter’s earliest and most influential investors stated that he had not owned the stock for multiple years and actually “hated the stock”.
Twitter’s 2016 in a nutshell. pic.twitter.com/E43vJ8CXrG
— Seth Fiegerman (@sfiegerman) December 20, 2016
These losses show that Twitter can pull out all the tricks, including their own network, the best investors, and a prior partnership with the NFL and still lose a deal. With relationships not working, strategy being defeated, and on tight budget, the future for Twitter looks bleak.
What this deal says about Amazon
So where does Amazon differ from Twitter? What is the key differentiator that made Amazon win over two other powerhouses in the streaming industry? Over the last few years, Amazon has made a tremendous investment into producing content that competes in the media industry.
By producing originals, streaming movies, and TV shows on their site, they declared war on Netflix. Now, they shifted their target to pull content out of the hands of Twitter and it is assumed that they will not stop now. With the live streaming content, they will grab content and viewers away from Youtube by offering more quality live streaming videos.
But, how does Amazon win these deals? Why does every company want to partner with or hate competing against them? The answer comes down to a core principle that Amazon functions off of, which ultimately gives them success. It is one of their leadership principles that each employee focuses on from the minute they get hired: customer obsession.
Every product that Amazon produces is focused on making the customer happy and it makes sense why: if the customer is happy, they will continue to use the product, speak highly of it, and ultimately create a better brand for Amazon. On the other hand, if the customer is upset with the product, they will tell their friends and family about the horrible experience, leading to a decrease in brand value. So how does this deal help Amazon be more customer centric and generate more income for their business?
Amazon Fire Stick: Amazon fire stick is their way of grabbing some of the TV market. The fire stick plugs into your TV and allows you to surf different movies, shows, and media content. By offering different types of content, Amazon accomplishes two things: they learn more about you as a customer and build more value for their fire stick business.
Amazon Prime: As most Amazon products require, you have to be a Prime member to enjoy the product or content (including the new NFL deal). Amazon’s main goal as a business is to make a person become a Prime member. Research shows, that when you pay for a membership, you are more likely to “get your money’s worth” on the site. In other words, since you are spending $99 a month on Prime, you want to make sure that you are taking advantage of all their benefits that they offer.
Amazon.com: If you have ever searched for a product on Amazon, it is obvious that they track your shopping history. For example, if you search for a tent, you will see different tents for sale on Amazon’s homepage, in your emails, and on Facebook ads. And when you finally make that purchase, chances are you decide to add something else to your cart or, at minimum, click on a few other related products. Each of these actions that you do on their site, give them a more accurate picture of who you are as a customer, which allows them to give you a better experience.
In conclusion, this was a major loss for Twitter and a massive win for Amazon. While it might not necessarily be surprising that Amazon won this, it is a shock that they beat out the other bidders such as Facebook and Youtube. With Amazon’s heavy investment into the media realm, you can rest assured that they are just getting started.
Their customer centric business model will get a large boost for the Prime members who are also football fans. In turn, their other businesses (e.g. Fire Stick, Amazon Prime, and Amazon.com) will increase their brand value and ultimately, increase the appeal of more customers. All of this will result in more deals with Amazon, which will correlate to a more inclusive customer experience for you.
