The Prime Play for Sports Rights

0:04Congratulations! You made the Varsity, the podcast. My name is John Arand and I am Puck's sports correspondent and the host of this pod. And today, Charlie Neiman joins the pod. Charlie is the head of sports partnerships at Amazon and just this week, he signed what I think is a huge deal with Augusta National. Starting next year, Amazon Prime will carry four hours of programming from the Masters each year. Two hours on Thursday and two hours on Friday. Sure, that doesn't seem like a huge deal, just four hours in the middle of a weekday afternoon. But I'm telling you, it is hard to get Augusta to bring in a new partner.

0:47Amazon Prime, just the fourth media partner in the history of Augusta National. So we're going to spend a lot of time talking about that. But I'm also particularly interested in getting Charlie on the pod just so we can talk about how Amazon is incorporating AI into its sports telecasts. That's really a conversation that you won't want to miss. But before we get to Charlie Neiman, today is Sunday, September 21st, and here's what I'm watching. I spent last week in the Cotswolds, a beautiful area of rural England. In fact, back in the 1990s, they have something called the Cotswold Way, and I hiked it 100 miles with my wife.

1:27It took us about a week. We ended in Bath. It was great. It's great to be back here. It really is beautiful. Anyway, I'm here because I was invited to speak for the IMG Redbird Summit. And I'm here to tell you the optimism that I heard around sports and the growth prospects for sports. It felt real. and not just for the big guys like the NFL and the NBA. Mark Shapiro is the head of WME and TKO. In fact, he was on this very pod just last week talking about the business. If you haven't yet, you really should listen to it. Mark is full of energy and smarts, and I had a ton of good feedback from his appearance.

2:04But Mark was on hand to kick off the conference by talking to all the attendees about how sports, live sports, is the most important programming category for all media companies nowadays. Now, look, I know that's hardly a novel concept. People have been saying that for years. I mean, NFL games made up 93 of the 100 most watched shows on TV a couple of years ago. But it was really the way Shapiro said it that resonated with me, because it hasn't always been this way. Shapiro talked about when he worked at ESPN through the 90s and the early aughts, other divisions at Disney would look down at the network.

2:43I mean, make no mistake, ESPN at the time was the most valuable part of Disney, but because it dealt in sports, it was never taken seriously. It was always considered the toy department. But that's not the case anymore, Mark said on stage. If you don't have sports, you're not winning. And that's why Mark believes that traditional media companies still have a lot of runway. We keep talking about cord cutting. We keep talking about the rise of streamers. But the media companies have a lot of runway, Mark said. And he should know. He got Paramount to buy UFC rights. And he got ESPN to pick up WWE rights just about a month ago.

3:22Two legacy media companies. But Mark also spoke about the unmistakable move towards streaming. Do you remember when media executives touted the best available screen? That essentially meant that people would watch games on their phone if that's all they had. But if the same game is available on a big screen TV, that's where people are going to watch it. They're going to go to the big screen. That view of the business seems quaint now. It's just no longer accurate. Well, to be honest, it's still accurate for me. But younger consumers don't seem to care where they're watching. In fact, influencers are buying rights for some sports on their YouTube channels and inviting people to come and watch alongside of them.

4:04Now, because of this, Shapiro doesn't see rights fees going backwards anytime soon. They're still valuable for traditional TV, and streamers want more sports, which should keep rates high. I find it very, very difficult to disagree with that take. Now, let's get to Charlie Neiman, the head of sports partnerships for Amazon. So, Charlie, thank you for joining the pod. We are in the Cotswolds right now speaking about I'm most interested in the deal. Congratulations on this deal. And I rarely say congratulations about a deal. But Amazon is the fourth media company to do a deal with Augusta for the Masters.

4:49And I can tell you, whenever new executives come into a TV network over the past 20 years, they've always had a conversation with me about, oh, well, the CBS deal is only for one year. And so one of the things we want to do is try to get into Augusta. And Augusta is a very loyal club. They rarely do deals outside of the partners that they already have. when you started getting into sports rights with Amazon, when did you start to fantasize about doing this type of deal? Well, first of all, thanks for having me. And I appreciate the congrats. I would say the entire company, all of Amazon is excited.

5:33By the way, before you go on, my pet peeve is when reporters congratulate executives on deals. I almost never do it. It happens so rarely. We'll take it. If it's a one-time thing, I'll bank it. But look, I think anyone in my seat who looks after partnerships and acquisitions, you know, is has is and has paid attention to what Augusta National has done. It really is the most premium property, not only in golf, but but in sports up there. And and, you know, I would say so. I've thought about it a long time and I've known the team there, you know, a decade or so. And and again, super impressed with what they've done.

6:10We've been impressed and all credit to what CBS and ESPN continue to produce and put out there as well. And I think more than anything, we are super honored and humbled to be a new partner. And we're going to we're going to treat the property with the respect it deserves. We're going to innovate together. And I think there's going to be some exciting times to come for golf fans. When you would talk to Augusta, what was your basic pitch about Amazon? I think it's less a pitch and more of the more discussions we had. You're such a good salesperson. It was a pitch. Come on. There really is. It was more alignment on how we approach our customers.

6:47And I'd highlight a few things. One is, you know, there is both at Augusta National and at Amazon, an obsession with customers and attention to detail. And that goes to every feature that we build. It goes to how we think about production. It goes to how we market. There's a long term thinking. So you mentioned, you know, they haven't had a ton of new partners in their history. I think what we've done over the last, you know, now eight years is really build a portfolio of sports of tier one properties, but also prove that we can execute the biggest properties at the highest level. And so if you look at what we've done with Thursday Night Football, what we've done with NASCAR, UEFA Champions League in Europe, I think the product we put out there, both in streaming quality, our talent, the production, again, marketing and customer touch points, I think that's resonated and something they took notice of.

7:37And then third, I think, look, a culture of innovation. I think we are excited like we have with other properties to think about how we can engage and enhance the experience for golf fans. And that's something that Augusta National is always focused on is their patrons and how to keep them front and center and experience top tier for them. That kind of dovetails into my next question, which is Amazon sports strategy. And I'm going to ask you a two part question here. One is, how would you define like the elevator pitch? What is Amazon's sports strategy and how does it differ from others? And how does the Masters fit into that?

8:18Yeah, I think it all comes back to Prime. So if you think about Prime for us, which is the largest membership program in the world, 200 million plus members. And that number is now a few years old. So you can imagine it's grown since then. we are focused on how are we delivering the most value for prime members and if you think about an audience of that scale a membership base of that scale you want to acquire content that's going to be scaled and actually impact meaning be interesting to a big portion of that base and so we're after we are interested in kind of the biggest properties in each respective country we operate on we want a tier one property we want a portion of that exclusively and we want to innovate together long term with the partner.

9:07And so putting, I guess, the national side, if you think about, again, any of our big territories, and we're in 200 plus around the world, but you can see we've taken an approach where we have taken a package that is the most popular sport or league in that country. It doesn't have to be everything. We have brought our unique approach from a talent and production standpoint, and then we've used the power of Amazon to lean in from a marketing point of view. And so in the U.S., that's the NFL, that's NASCAR, that's our upcoming NBA package, that's the Masters. In Canada, that's the NHL. In most of Europe, it's Champions League.

9:43In Brazil, it's Copa de Brazil. And so we're very much programming on a country-by-country basis because the tastes of our customer base are different. What resonates and is popular in the U.S. might be different than India, and so we're going to make programming decisions that reflect that. Later on in this pod, we're going to talk about some of the innovative technical bells and whistles that Amazon brings out in its NFL programming. One of the things I love about the Masters, it's one of my favorite television events of the year, is that they make ESPN and CBS get rid of that bottom line and get rid of all the clutter on the screen.

10:22And so for me, you know, I just have my big screen with the beautiful pictures that are going on. This is going to be kind of new for you because I'm assuming that they're not going to want all your shot tracers and everything that you would overlay on top of that. Yeah, I would say you can expect, and my promise is that the pristine experience that customers expect will continue. you. And I think across our properties, if you look, our approach to innovation when it comes to on-screen graphics or AI features or overlays is always an opt-in model. And so for fans who want additional optionality on, say, Thursday Night Football, we have a prime vision feed.

11:05We have X-ray where you can enable additional stats. But we always recognize that the primary, the product is what is actually happening at the live match or the live game. And so you don't need to worry there. Take me through some of the particulars of the deal. It's going to be the CBS talent, right? You don't have to hire a whole bunch of golf announcers. Yeah, I think we're not quite ready to talk about any of the details on the deal side outside of what I will say is where, you know, and I think fans have been clamoring for this for a while. Our window that we'll kind of be expanding coverage to is 1 to 3 Eastern on Thursday, leading into ESPN's coverage, one to three Eastern on Friday, leading into the Friday ESPN coverage.

11:47And so we'll have much more to announce in, I would say, between now and the tournament. And we're excited about that. Let me take a quick break here. First segment, all on the Masters, but you were in the market and you're talking to everybody. And I just want to get your sense of what the market is like right now for sports that are out there. We'll be right back.

12:15so it's charlie it's great having you on here because you are the point person uh that's out there sort of uh doing a lot all all of these deals with uh with the the leagues i've been writing so much about you know the you know the nfl is strength upon strength the nba you know more than doubled its annual rights fee and the big leagues are doing uh are getting a lot of money. The smaller leagues are partnering and sort of figuring out the, and then there's all the people in the middle and I'm trying to figure out where the line, I think everybody is, you know, where that line is. Give me your sense of what the market is right now.

12:52Look, I think broadly sports rights, unsurprisingly, or I would say sports content in general and live sports content, it still is something that customers really want. And whenever there's content that has demand from customers, there's going to be platforms and services that want that content on their air. And so, you know, in this fragmented world of diminishing appointment viewing, let's call it across entertainment, I think sports is continues to be a pillar where platforms like ourselves who have massive scale, see value in offering that to our customers. I can't speak to sort of the business model or thoughts of others, but the ability to aggregate an audience, the ability to strategically have sponsorship and ad inventory for Amazon ads, the ability to drive that unrivaled passion and irreplaceable content, I think is why you're seeing so much interest in any of the properties that are out there today.

13:51We're about a month from the launch of the NBA on your platform. What should we expect from that? First off, I think it's a multifaceted deal. And by that, I mean, we have global rights. And so we're super excited about basically bringing that to prime members worldwide. I think you can expect a similar approach to what we've done with other major properties. And again, I'd highlight NASCAR or Thursday Night Football. And by that, I mean, we're going to have a top quality broadcast. We're taking our approach to talent, meaning a mix of established voices like Kevin Harland and fresh off the court faces like Dirk Nowitzki and Blake Griffin.

14:33And I think you're going to see us do two things. We're going to educate and we're going to celebrate the game of basketball. I think you can expect the high quality stream, the low latency, all of the streaming features features that our fans and customers at Prime have come to expect from our big broadcast. And then, you know, we're not quite ready to announce it all, but I think you'll see some unique features. And we'll talk a little bit later about some of the things we're doing with AI. And, you know, you can imagine that starts to cross over into some of the things we're doing with the NBA.

15:05Yeah. Artificial intelligence. The buzzword of the year. Totally. That's going to be the most downloaded pod he's under where um night one of the amazon's nba um launch you know when your very first game where are you going to be oh i got a hard choice to make because we got a we got a double header with a game in new york and a game in la and i'm based in seattle so um you know for ease i may end up manning that manning the west coast war room let's call it uh in LA. But I definitely, I definitely will be on site at one of our games because I think it's a historic moment for the company and there's a lot of excitement among all of us.

15:49And where are you going to be? Are you going to be in a suite watching the game? Are you going to be in the production truck? I like, I like to move around, but I would, I definitely will spend some time in the production truck to, you know, frankly, see the, see the producers at work. That's fun. We'll probably spend some time with the NBA. Hopefully they'll come out for launch and then And yeah, see the atmosphere in the stadium. You mentioned, you know, the NFL and you mentioned NASCAR. Amazon, you really got started over here in England, you know, with the Premier League and doing some things over there.

16:23What were some of the things that you learned from launching over here? I mean, such different TV markets, of course. I think we learned a lot. The first one is on the technical side. I think people take it for granted now that you can stream to, you know, over 17 million concurrent user or viewers that we had last week on Thursday Night Football. But the infrastructure and technological investments we had to make to scale our infrastructure to where it is today really started back with the Premier League in the UK. And at the time, there was there was multiple questions. And, you know, A, can Amazon produce a broadcast that, you know, is actually high quality?

17:07Can we stream anything to millions of devices? And then can you actually drive audience and market given kind of the linear habits? And I think we kind of answered all three of those. And look, there were growing pains where we had to dedicate a ton of resources and make sure our teams were ready, especially from an engineering and product perspective. You know, I'll never forget the couple hundred folks we had in a war room, you know, technical engineers in a war room for our Premier League launch. But I think what we did learn is, A, customers actually loved it. There was great reception. B, the infrastructure we built and the investments we made, and we can talk a little bit more about them to make sure latency was low and that device availability was on every device you could imagine, worked.

17:53And then I think three, you know, if you look back at the viewership, we are actually outdrawing the pay TV broadcasters that are premierly in our first year. And we really had a limited sample of games. We just had two fixtures, one of them being Boxing Day. And so our ability to prove that we can migrate an audience for, you know, a big, important set of games was proven out. Yeah, when I was talking to NASCAR before they were with you, they used cable viewership as sort of the benchmark, like with your six-race package. They wanted the viewership, not that they wanted, they expected the viewership to pretty much be in line with what it was on FS1, what it was on TNT, and it was.

18:41Do you look at it the same way? We, to be honest, we don't really comp to cable or broadcast or anything particular. I think we look at, is the reception we're getting from customers what we want to hear? Is it positive? Does our broadcast look good? Is the technology working? And I think the reception on NASCAR has been far as blown us away, both from, you know, I think the traditional audience, like when you think about sports, NASCAR has maybe one of the most diehard traditional audiences who are used to consuming their content in a certain way. So having a new entrant like us come in with our own production, being on site, new talent, some of the AI and advanced features we unveiled, you know, the question was like, how would they feel?

19:29And we heard from literally team owners, fans, NASCAR executives about how strong their reception was because our broadcast and the show we put on was so strong. I think the other thing we look at is more, okay, these are multi-year deals. And so the goal is you're going to establish a strong baseline. And again, what is the product like? And are fans happy? And then you're going to grow from there. And obviously in year one of NASCAR, we were happy. But if I look at our other properties that we've had for multiple years, we've had double digit growth. And you can pick almost any of our big properties in any country.

20:04You know, TNF is up 40 % since our launch year. It was up double digits last year. And so I think that's a great trend. It shows that what we're doing is working and resonating with fans. And then the other piece is, you know, a lot of the reason any of the entities around the world are interested in working with Amazon is because they want to get younger. And they want to reach the younger viewers. They want to develop the next generation of fans. And consistently, what we've shown, again, across NASCAR, NHL in Canada, TNF here is that we're bringing in a younger audience. You know, it's about seven to eight years younger than linear for a comparable viewer on, say, NFL or NASCAR.

20:45But also in terms of sheer audience, we are growing. And so I think our first TNF game this year, which, again, did over 17 million AMA, it was the most viewed broadcast of any kind, entertainment or sports, since the Super Bowl this year between the 18 to 34 demo. And so, again, the ability for us to not only appeal to the core fans, but also grow into new demos, I think is an important one for us. You know, it did. It started over with the Premier League in England. It was part of Thursday Night Football. The increase from year one to year two in terms of viewership has been really big. Why do you think that is?

21:27Is it people just finding? Is it people understanding what streaming is more? Give me sort of the qualitative answer to why you think that happened. I think there's two reasons. One is I think people need a little bit of time to get something new. And I would feel that way about even a property moving from one cable channel to another. You know, you get in, depending on how long the previous deal was, you get in the habit of going to X, Y, and Z for a piece of content. And so I think there was a little bit of muscle memory. And along with that, hey, okay, Amazon STNF now, let me try it out. Oh, it's a great broadcast.

22:07I really enjoy this. You start telling people there's a little bit of kind of word of mouth that helps grow, you know, what the brand means to customers. So I think that's part of it. I think the second is, look, we spend a ton of time and energy on our marketing efforts. And Stacey Rosenson leads that for us. And I think the combination of optimizing how we think about marketing and we are laser focused on learning from what we've done in the past and also across properties to figure out what's the best way to reach fans? How do they want to be engaged? How do we drive tune in? I think that's the other big reason for the growth.

22:42I also liked your answer just about the feedback. You know, when you said that you talk to people, people in the sport, you talk to sponsors. I'm sure you check out social media as well. I know it's not your property and you don't work for Netflix, but the Canelo fight, the Canelo Alvarez, that is his actual name. Canelo Crawford fight was what I was amazed by is that nobody talked about Netflix. It was it was just like it went out without any technical problems and people just streamed it and watched it and talked about the fight afterwards. And that to me seemed to be almost a win. Would you consider that a win too, or you'd rather people saying like, boy, they really, you know, the broadcast was top notch.

23:31Yeah, I can't, I don't know about that specific one. I think it's a unique one because it's boxing and, you know, other dynamics. I think for us, it's less about talking about Amazon. Like if our customers are happy with the product and by product, I mean the broadcast we are putting on screen and delivering to them. Like that's what matters. And I think, you know, one thing, you know, this better than anyone in sports is the fan base is not shy about giving criticism, whether that's on X, whether that's sending emails, et cetera. And so we monitor that all not because we're interested in hearing great things about ourselves.

24:12It's to make sure that we are actually quickly addressing feedback that we may have. And so. Well, if you're hearing it from X, you're not hearing great things about yourself, Charlie. Well, look, that's why you got to screenshot the positive ones that you get and remind yourself that, you know, what you're doing matters to some folks sometimes. But no, I think, yeah, I think so. I think I do think it's more about, again, it is. Did you treat the event and the property in the right way? And look, if it was an incredible game, like our job is to tell that story. It's not about any brand recognition.

24:50One more quick break. Come back and I'm dying to talk to you about AI and what you're doing with it.

25:05Like you said earlier, the buzzword of sports media for what, the past at least three years? Not even sports media. I would say any company, tech, media, et cetera. If you're not talking about AI right now, it feels like you're behind. Yeah, the robots are taking over the world. Yeah. How do you approach using AI in your, in your, because I'm assuming your answer is going to be solely about the production, right? Yeah, I mean, look, I would say broadly at Amazon, we're all in our AI. And that is impacting everything from the way we think about work and efficiency of like, hey, how can we be faster at internal processes?

25:47How are we communicating with each other better? And then all the way to, you know, the advancements we're doing at AWS and serving clients. And then obviously on Prime Video and in sports, the features that we are actually bringing to customers. We can talk about some of that like Prime Vision. So Prime Vision, for those who don't know, it is an alternative feed that you could run, take on TNF, for example. And it's really focused more on bringing an additional layer of advanced statistics and overlays and engagement in their activity to a customer. And so we have things like, again, advanced stats and the ability to shop NFL merchandise.

26:25But I think the most interesting things that we are working on as related to AI are really broadcast innovations. And so we have a team that is a combination of data scientists, AI experts, computer vision specialists who are then paired with our broadcast team. So our actual talent that we'll sit with, think of Ryan Fitzpatrick or Andrew Whitworth, and our producers, our production team. And we come up with ideas and we'll take TNF and I'll give an example there about, hey, based on what former player like Ryan Fitzpatrick saw as a quarterback, what are some of the interesting things and storylines he would like to educate viewers on?