Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone
Following the launch of Amazon Prime Video, IHS Technology created country level forecasts for Amazon Prime Video subscribers, revenues and views, with Richard Cooper, Research Director, IHS Technology and Irina Kornilova, Senior Analyst, IHS Technology, suggesting the global launch will see active users of the service increase to 64 million worldwide by the end of the 2020.
Similar to Netflix’s move, Amazon’s global rollout has launched without a localisation process, with a limited library consisting mostly of Amazon’s original programming, few international languages, and blanket pricing in dollars and euros.
Services without localisation have struggled to achieve the same level of success as more territory-specific offerings. Netflix, which will see a full year of Global operations in January 2017, is a prime example of this.
“We expect new territories where Netflix has launched in January 2016 to account for fewer than 5 per cent of total number of subscribers by the end of 2016,” they say. “Netflix had over 50 countries and territories launched between 2011 and 2015 before its global rollout to remaining 130 territories in January 2016. At the time of the global launch, Amazon Prime Video has only been available in Austria, Germany, the UK, the US and Japan.”
Amazon Prime Video is launching with a limited selection of original content, including the widely promoted new automotive entertainment show The Grand Tour. More content, including some of the original programming will be added to the service through 2017.
IHS Technology TV Programming Intelligence services analysis indicated that, this year, Amazon has significantly increased its investment in original content, will which increase to an estimated $337 million from $176 million in 2015. Original productions include the dramas Transparent, Good Girls Revolt and the upcoming Z: the Beginning of Everything and The Last Tycoon. However, Amazon lags well behind, Netflix, which we estimate will spend $1.2 billion on original programming in 2016.
Amazon Prime Video’s low launch price serves to plant the perception of value proposition in potential customers, and to compensate for limited content proposition. Amazon is seeking to avoid the backlash from customers that Netflix experienced in territories where the service launched at a full, non-localised price that was deemed too expensive for the amount of content available. Amazon Prime Video, even at full price, remains cheaper than Netflix: $5.99 (or €5.99) vs. $/€7.99 for Netflix’s basic tier subscription.
Future: Video as the bait for ecommerce
The ultimate purpose of Amazon Prime has always been to drive ecommerce sales, as Prime customers are understood to spend significantly more per year than non-Prime customers. Video was initially one of the many benefits of the Prime bundle of which the most notable was discounted shipping. Four years in, Amazon Prime Video has become one of the major drivers for the uptake of Prime subscriptions. But the core purpose of Prime remains unchanged and the subscription was still tied to the company’s ecommerce footprint, which in some cases was available without video.
With the global launch of the video service, Amazon is inverting a go-to-market strategy for Prime. Leading with video allows Amazon to establish a brand associated with value, on which can be then built an ecommerce business at a later date. Importantly, while the go-to-market might have changed, the core purpose of Prime remains unchanged: long term Prime Video’s international roll out is positioned to drive ecommerce sales. This is reminiscent of Amazon’s initial launch which built out from entertainment (in that case books, and later DVDs) eventually becoming the ‘everything store’.
Initial uptake is expected to vary across markets. Countries where Instant Video is a part of Prime subscription are expected to gain a strong, immediate uptake in users, while other countries are unlikely to get strong uptake until the proposition is updated with local and localised titles.
The global launch of Amazon Prime Video will see active users of the service increase to 64 million worldwide by the end of the 2020. Amazon Prime Video subscriber and revenue forecasts by country to 2020 are now available through IHS Technology’s Broadband Media Intelligence Trax service.