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Amazon Seeks to Become a Hub for OTT Video

by User Not Found | Dec 31, 2015

Earlier this month, Amazon launched a new initiative called “Streaming Partner Program” that allows Prime members to add subscription VOD services from close to 20 partners for an added fee to their Prime video service. Strategy Analytics expects this move will better position Amazon Video to attract new subscribers, and as the market continues to mature, cannibalize subscribers from other services.

Initial content partners include streaming providers across indie movies, TV shows, documentaries, and premium services such as Starz, Showtime, Smithsonian Earth, and Comedy Central Stand-Up.

amazon blog picPicture from Amazon.com

While the standard Prime subscription includes access to Amazon’s own library of movies and TV shows, subscribers can now subscribe to premium OTT video services like Showtime through a Prime membership for $8.99 a month, compared to the $10.99 a month a user pays when subscribing through Apple’s iTunes store or Google Play. For Starz, this is the first time the channel made its programming available over the top. 

The partnership is a win-win for both Amazon and the third-party providers. With so many online video services available and the big players like Netflix and Amazon owning such rich video libraries, it is hard for smaller services to catch audiences’ attention.  According to Strategy Analytics’ Consumer Metrix Survey, more than 3 quarters (77%) of SVOD households subscribed to Netflix (see the exhibit below). Multi service subscriptions are fairly common in the U.S. with more than a third (39%) of SVOD households subscribing to 2 or more services. By partnering with Amazon, these lesser known SVOD services will be exposed to Amazon Prime members without the need to deal with billing and customer service.  In exchange, Amazon takes a cut of the subscription fee. Consumers then can pick the programming all within Amazon’s system and change their lineup freely month to month.
share of svod households in the U.S.Amazon’s move to include more services, and essentially more content, will make its video streaming service more attractive. Today, Amazon Instant Video is more of a complimentary service. Thirty eight percent of SVOD households subscribe to Amazon Instant Video; however, only 12% of SVOD households subscribe Amazon Instant Video exclusively. An additional 15% of SVOD households use both Amazon Instant Video and Netflix. (To discover more about SVOD service subscription share and multi service share, read the report: Examining SVOD Market Adoption in the U.S., U.K., Germany and France) Amazon Instant Video is an important feature for Amazon Prime members, but it’s not necessarily a go-to service for SVOD users. The unique content from third party providers, which already has a small but well-defined fan base, will enrich Amazon’s video library and make Amazon’s video service more appealing. Partnering with third-party video services also puts Amazon Instant Video in a better position to compete with the SVOD market leader Netflix, especially when the two Internet giants are in an arms race for both content and subscribers. 

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