Amazon And Apple: The New Digital Duopoly

In the past decade digital media has been dominated by two companies Facebook (Meta) and Google
GOOG
(Alphabet). From 2015 through 2021 this digital duopoly accounted for over half of digital media ad spending before falling below 50% last year. Recently another digital duopoly Amazon
AMZN

AMZN
and Apple
AAPL
has emerged, both have a market valuation of over $1 trillion and both have been expanding beyond their core business, disrupting legacy industries in live sports, entertainment and advertising.

Sports: in a first, Amazon will be streaming an NFL game on Black Friday in 2023. Black Friday traditionally marks the start of the holiday shopping season and a busy day for Amazon. Also, Amazon announced the game will be available to everyone including non-Prime Video subscribers.

Also, with Amazon Prime’s first season of Thursday Night Football resulting in a sizable decline in viewers, the NFL, citing a number of lackluster matchups involving teams with losing records, looked into a flex schedule for 2023. With players and coaches opposed to a TNF flex schedule, the plan was nixed. The NFL however, approved a rule change allowing for teams to play two TNF games instead of just
just
one.

Amazon also streams 16 WNBA games each season and will stream 20 New York Yankees games in 2023.

Moreover, it’s been reported Amazon founder Jeff Bezos may be interested in acquiring the NFL’s Washington Commanders. As owner of the Washington Post, the newspaper has published a series of exposés critical of the NFL club’s toxic work environment, the articles helped to pressure current owner Daniel Snyder to put the team up for sales. It remains questionable whether Snyder would be interested in selling the team to Bezos or use the billionaire to drive up the cost. There have been some reports the price tag may reach $6 billion. Forbes estimates the worth of the Washington Commanders at $5.6 billion, the sixth most expensive NFL franchise.

Apple has also been active in streaming live sports. Last February Apple TV began streaming MLS games worldwide. Also, for the second straight season, Apple TV will be streaming MLB games on Friday night. This season, a new wrinkle was added requiring fans to have an Apple TV subscription to watch the games.

A sport Amazon and Apple have expressed an interest in live streaming has been English soccer. Both digital giants are reportedly interested in streaming the English Premier
PINC
league games in the U.K. Currently, in a deal that expires in 2025, Amazon has rights to stream 20 Premier League matches each season. Bloomberg reports the next round of media rights negotiations would include any matches run by the English Football League. Already Amazon shares the U.K. streaming rights with telecom giant BT for soccer’s UEFA
EFA
Champions League.

Both Apple and Amazon have been rumored to pick up the expiring media rights for Pac-12 sports which expires in 2023-24. A more impactful pickup however, would be the NBA. The current media rights deal expires after the 2024-25 season, incumbents Disney and Warner Bros. Discovery
WBD
will have exclusive negotiation rights until April 2024. CNBC reports Amazon and Apple may be interested in negotiating a streaming package of games beginning in 2025. It is widely speculated the media rights could triple from the current agreement. Amazon already has rights to stream NBA games in Brazil.

Entertainment: Apple and Amazon have had an effect on Hollywood. Both are actively streaming and producing a number of critically acclaimed films and television shows.

For example, Amazon Studios has won Emmy Awards in Outstanding Comedy for The Marvelous Mrs. Maisel and Fleabag. Last September Amazon released Lord of the Rings: The Rings of Power, the price tag for the first season was a staggering $715 million making it the most expensive TV series to date. Amazon Studios has also produced the Oscar winning Best Picture Manchester by the Sea released in 2016. Furthermore, last year Amazon acquired MGM Studios for a reported $8.45 billion. The deal gave Amazon rights to their extensive film and TV library including all past and any future James Bond movies.

Last November, Amazon announced they would invest $1 billion per year to produce 12 to 15 theatrical films. In April Amazon will release theatrically Air from Ben Affleck before it is streamed on Prime Video. Also, in March it was reported Amazon was considering acquiring AMC Entertainment
AMC
. AMC is the world’s largest cinema chain with about 600 movie theaters worldwide. Similar to other movie theater chains, AMC Entertainment has been struggling financially post-pandemic.

Apple TV+ has also won several prestigious entertainment awards including winning an Oscar Best Picture for CODA. Ted Lasso has won an Emmy Award for Outstanding Comedy in its first two seasons with a number of best acting wins.

In March it was reported Apple would also be investing $1 billion each year to produce theatrical films. Among the titles for 2023 to be released in theaters are Killers of the Flower Moon, directed by Martin Scorcese and starring Robert DeNiro and Leonardo DiCaprio. With ownership in no major or legacy studio, Apple will be partnering with Paramount
PARA
in releasing the film. Other possible releases from Apple this year include Matthew Vaughn’s Argylle and Ridley Scott’s Napoleon.

The $1 billion annual commitment by Amazon and Apple is comparable to the movie budgets of Warner Bros. and Universal. Besides making their movies eligible for Oscar nominations, the films will also promote Amazon’s and Apple’s streaming services.

Advertising: Last year Amazon generated nearly $38 billion in ad revenue, a figure greater than any traditional media company and trailing only Alphabet (Google) and Meta (Facebook and Instagram). In the fourth quarter alone, Amazon generated $11.6 billion in ad revenue, a year-over-year increase of 19%. Driving Amazon’s increase has been its retail media network. RMNs have become the fastest growing digital media segment.

Apple’s estimated ad revenue in 2022 was a more modest $4 billion. Nonetheless, Apple is ramping up their capabilities to generate advertising revenue. It has been speculated an ad supported tier for Apple TV is coming. In February Apple hired Lauren Fry to build out an ad sales team for its video division.

Despite its expansion, both Amazon and Apple recently reported personnel cutbacks joining several other digital and traditional media companies. In March Amazon announced a new round of layoffs affecting 9,000 employees. This follows earlier layoffs totaling 18,000 employees. Even Apple is reportedly laying off a small number of staff members.