Amazon dominates DTC TV network subscriptions
May 16, 2018
Research from The Diffusion Group (TDG) finds that Amazon Prime Channels accounts for more than half of all direct-to-consumer (DTC) subscriptions in the US. Its dominance is especially prominent among premium DTC apps including HBO, Showtime, and Starz.
More than half of HBO DTC subscribers used Amazon Prime Channels to purchase their service. Rates are even higher for Showtime and Starz, with seven-in-ten DTC subscribers using Prime Channels, and only three-in-ten using the TV network’s website or app.
“While Amazon Prime Video continues to receive the lion’s share of attention from industry media, Amazon has quietly built a stronghold in the burgeoning direct-to-consumer market,” notes Michael Greeson, President of TDG. “Even with Apple’s pending entry into this space, we expect this dominance to expand further in the next five years.”
According to recent reports, Apple plans to launch a new feature in its TV app that, instead of pushing interested viewers to download and purchase individual network apps from the App Store, will sell a la carte DTC apps directly to consumers. Put simply, Apple plans to mimic Amazon Prime Channels by allowing Apple users the opportunity to subscribe to third-party streaming services from within the TV app now included on Apple TV set-top boxes, iPhones, and iPads.
Amazon gets a slice of subscription revenue from DTC sales and owns the consumer relationship, while the broadcast partner shoulders the costs of hosting, streaming, and customer support. If Apple can repeat this formula, notes Greeson, it could be successful, especially given that TV Network DTC subscriptions will increase four-fold in the next five years.
“And Apple would have a key advantage over Amazon Channels: it would not require a $120/year membership before one can aggregate a la carte purchases through its TV app,” added Greeson.