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Although attention will be on Netflix as it launches its first major original series, House of Cards, revolutionising content distribution by giving consumer all the content at once, which is exactly what consumers want, with virtually every traditional media outlet rooting for the releasing strategy’s complete and utter failure, Amazon’s progress in the online video space should not be overlooked, suggests Richard Greenfield, Media Analyst at BTIG Research.
Writing in the BTIG blog, Greenfield says that while Netflix gets all of the attention as the clear leader in over-the-top (OTT) streaming video, it is increasingly hard to ignore the progress Amazon has made in a relatively short amount of time. “Amazon appears increasingly serious about being a real player in online video including the launch of original programming, albeit, we do not sense they are currently denting Netflix’s subscriber growth prospects, akin to how HBO and Showtime co-exist and flourish,” he advises.
He notes that unlike Redbox Instant by Verizon, which is trying to lead with subscription streaming and upsell iVOD/EST, Amazon is using streaming to augment the value of its existing Prime subscription, which leads with free-shipping, while at the same time increasing engagement within the Amazon ecosystem to drive iVOD and EST transactions. In addition, he draws attention to comments made during the Amazon Q4 earnings conference call, which suggest that Amazon still believes this is very early in their streaming video strategy:
CFO Tom Szkutak: “Prime instant video…we think we have a very interesting selection right now and you should expect that we’ll be spending more on content as it relates to Prime over time and we’ll continue to add selection on Amazon instant video”
“We’re seeing prime customers certainly the percentage of Prime customers who were watching free content through Prime instant video has gone up dramatically year-over-year. We’ve also increased Prime membership dramatically year-over-year. They are also purchasing paid content. Those customers that are using the service, they watch free, but they are also paying for new content, which is great…the business is making good progress on the video content side and again, it’s still very early.”
Greenfield notes that despite subscription video streaming not being the lead component of an Amazon Prime membership pitch, Amazon has significantly increased the content offered and device access to Prime Instant Video streaming in the past 15 months (apps added include PS3, XBox, iOS and Wii). “While Amazon is not spending the $2 billion or more that Netflix is expected to spend in 2013 on video content, Amazon is likely spending more than $500 million and, like Netflix, is growing increasingly focused on both exclusive syndicated programming and original programming,” he advises.
Other factors of note, according to Greenfield: