NFL Thursday Night Football coverage on Amazon.

Amazon Prime is about to become more expensive. The company announced Thursday as part of their fourth-quarter earnings report that that they’re raising the price of that membership service, which includes free shipping, Prime Video, and more, by $20 to $139 annually (or by $2 to $14.99 a month). This will be their first price increase since 2018. As Alex Weprin writes at The Hollywood Reporter, Amazon cited their expanded NFL deal (which goes from alternate Thursday Night Football feeds to exclusive TNF rights this fall, and might also include a playoff game if they hit certain viewership metrics) as part of the rationale here, but also discussed their boosted spend on several expensive TV series, from the current The Boys and The Wheel of Time to the upcoming The Lord of the Rings: The Rings of Power.

“Since 2018, Prime Video has tripled the number of Amazon originals,” CFO Brian Olsavsky told analysts on the company’s earnings call, adding that “the continued expansion of Prime member benefits, and the increased use we have seen, along with increased costs and inflation,” played into the decision.

…Amazon is set to pay the NFL about $1 billion per year for Thursday Night Football rights while also launching a number of high-profile shows through Amazon Prime Video, including the Lord of the Rings series, which is expected to cost about $500 million for its first season alone. The company has also rolled out shows like The Boys and Wheel of Time, which have also contributed to its growing entertainment expenses.

The company said that more than 200 million Prime members worldwide had streamed Prime Video shows or movies.

Update: Amazon says a “rise in wages and transportation costs” and other new Prime benefits were also contributing factors in the price increase. The full statement they provided in response to this is in a piece here.

Weprin notes that Amazon beat analysts’ sales and net income expectations for this quarter, posting figures of $137.4 billion in net sales and $14.3 billion in net income respectively. That’s a jump up from their Q3 2021 earnings, which missed analyst expectations. So they were doing fine even without this price increase. But the NFL deal in particular is a significant cost boost for Amazon: their previous streaming deal was estimated at only around $50 million annually in rights fees, with another $30 million in marketing and promotion credits for the NFL. Even if you include that $30 million at full value, $1 billion a year would be a 92 percent increase from $80 million. So it makes some sense that they’re looking to recoup some of that.

Something else that’s interesting here is that it seems so much easier for Amazon to recoup new programming costs than it is for cable networks like ESPN or regional sports networks. Amazon can just unilaterally raise their Prime price; absolutely, some users will leave over any hike, and more will leave if it’s deemed to be outrageous, but a lot will stick around, and some new members will come in specifically for the new content. But most importantly, their relationship with their subscribers is a direct one: by contrast, cable networks need to negotiate per-subscriber fee increases with multichannel video providers (cable, satellite, or virtual) individually, and that’s tricky considering how those contracts come up at different times and how any fee increase often becomes key to a carriage dispute (which we see a whole lot of in sports).

At over-the-top streaming outfits like Amazon, Netflix, or DAZN, the price is paid directly from the consumer to the content owner, and the content owner can change that price without going through middlemen. (It’s notable that Netflix has had several price increases of its own recently.) The various conventional broadcasters are gaining some of this flexibility themselves with their own associated streaming services, but they still have a lot of eggs in the conventional basket. And this particular case shows an advantage for Amazon in recouping those costs. And that further adds to Amazon’s existing edge of being able to blend e-commerce with content, an edge they have over even other direct-to-consumer streamers. But this new NFL deal is certainly the biggest live sports content play Amazon has made so far, and the response to it (and the reaction to this price hike to help pay for it) may well determine if they continue to make more and more moves like that or not.

[The Hollywood Reporter; top graphic is from Amazon’s first non-exclusive TNF streaming deal in 2017]

About Andrew Bucholtz

Andrew Bucholtz has been covering sports media for Awful Announcing since 2012. He is also a staff writer for The Comeback. His previous work includes time at Yahoo! Sports Canada and Black Press.