Amazon Video Direct, the ‘Netflix Killer’? Analysis and Takeaways
Amazon announced last week the launch of Amazon Video Direct.
Most analysts reported that AVD is an assault by the online retail giant on YouTube and its User-generated Video (UGC) platform.
- That, at best, seemed like half the story to me.
- Amazon’s strategy is to dominate Video the way it does book publishing and distribution.
- Just ask former employees at Borders or Barnes & Noble about how that works out…
To learn more, I contacted my valued colleague, distributor Kinonation’s COO Roger Jackson.
First, a recap of Amazon’s video plays:
- Amazon first video initiative was to offer VHS/DVD’s to its retail customers.
- It later launched a video publishing service where it manufactures DVD’s in response to paid orders and ships them to customers.
- Amazon Prime Video came next, offering streamed video as a premium for the $100/year Prime free shipping service.
The Prime Video soon gained in strategic importance versus Shipping:
- Amazon Instant Video was launched as an SVOD service, priced at around $10:00 / month.
- Amazon also announced a huge step up in its commitment to Original Content.
- Unscripted originals were led off by Jeremy Clarkson’s The Grand Tour motoring series, and included Amazon’s first documentary commissions.
More on SVOD Strategies & Deals
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AVD: Ingest and Access
- Ingest to AVD is available to anyone, anywhere, provided they meet the technical standards for their documentary, movie or other content.
- And the video can be viewed by AVD subscribers who are located in an expanding subset of the markets where Amazon has established its physical, warehouse-backed retail and shipping infrastructure.
- Here is the AVD landing page:
ROGER JACKSON’S TAKEAWAYS
- Amazon Video Direct isn’t a YouTube competitor:
- AVD is designed as a Netflix killer.
- And also as a service that supercharges the loyalty and stickiness of Amazon Prime subscribers.
- It is not designed for UGC but for ‘prosumer’ films, TV, episodes, etc.
- ‘Prosumer’ translates as content with a reasonably high professional bar that includes metadata, English closed captions, artwork (3×4 and 16×9), bank & tax data, etc.
- None of these features are required by YouTube, whose consumer content is characterized by lower-quality baby and cat videos.
- If anything, the AVD content standard is more like Vimeo on Demand than YouTube.
- (Read more about Vimeo’s first documentary original here.)
- More than 99% of views for the newly ingested AVD content earn 15 cents an hour.
- This is radically higher return than earned by YouTube’s CPM-based ad rates.
- For example, assuming a $20 CPM, a YouTube video watched by 1,000 viewers will earn $20. That’s for a one hour video, probably with 5 ad breaks each ad getting $4 CPM thus blended CPM for the full hour is $20.
- A one-hour video watched on AVD by 1,000 subscribers for the hour will earn $150… plus viewers don’t have to suffer thru ads.
- Netflix typically offers a license fee which is the equivelent of an MG (Minimum Guarantee).
- (Read more about SVOD deals here.)
Advantages of Working with Kinonation
- Amazon is turning to qualified distribution partners to scale, ingest and QC its content submissions.
- Amazon’s 15+/- launch partners like Kinonation earn a significantly higher hourly rate than independently pitched content.
- The opportunity allows catalog owners to launch their own subscription add on channel.
- The BIG advantage for content owners from using Kinonation is the higher AVD royalty plus direct access to dozens of other VOD platforms globally, plus Kinonation’s marketing expertise to help filmmakers properly position their films.
- Countries that have Amazon Video are USA, UK, Germany, Austria and Japan.
- Amazon Video India launches this year, plus probably France, Canada and Spain, and soon more.
- This is a land grab to grow Amazon Video from current 100,000 +/- titles to 10x that, and much more…
- Then they’ll have more than a million titles, while Netflix will have a few thousand.
- And that’s a big benefit for SVOD subscribers!
- Amazon Video Direct and other Amazon video products are likely to dominate ‘the long tail’ while competing directly with Netflix and others for premium originals and acquisitions.
- Amazon enjoys a huge long-term, strategic advantage versus Netflix and its SVOD rivals in financial scale and server capacity.
- It also brings to the table its huge existing retail customer base (240+/- million) to which it can cross-promote video products.
- Highly qualified, competitive niche ‘players’ will survive amongst the SVOD giants.
- These are the intelligently-scaled and carefully-curated services like CuriosityStream, led by Discovery founder John Hendricks.
- To understand the scale of these niche SVOD content providers, think of your corner bookstore versus Amazon itself.
Netflix Is a Formidable Competitor
- Netflix’s ’Content Obligations’ rose to $12.3 billion as of 1Q2016, up 26% from a year earlier.
- Content Obligations are payments for licensed or produced programming that are due over several years.
- Netflix is a global platform: It recently expanded to 130 new countries, and now reaches more than 190 territories.
- It now has 81.5 million users around the globe.
- But its financial scale is around one tenth of Amazon’s.
Sunny Side of the Doc
La Rochelle, France
What the Video On Demand Boom Means for Documentaries
Wednesday, 22 June
- Established channels everywhere report that they are losing viewers to online video services.
- Netflix original documentaries are opening Sundance and winning Academy Award nominations.
- Amazon is launching documentary channels as well as commissioning originals.
- Niche players like CuriosityStream are racing to market, and so are regional VOD services like Australia’s STAN.
- In this session, a panel of SVOD market participants will first define the VOD market, and then analyze the Opportunities, Success Factors & Deal Terms across the VOD sector.
- The experts will respond to questions from Sunny Side delegates on key topics such as how to work with these new players and what they are looking for on the international market.
- The analysis will uncover the success factors across the online video landscape.
- Elizabeth Hendricks North & PeterNorth, CuriosityStream
- David Royle, Smithsonian Networks
- Moderator: Peter Hamilton
- Producer: Laura Longobardi
Original Analysis for Documentary Producers & Executives
Opportunities, Success Factors & Deal Terms
for Netflix, Amazon, YouTube, Vimeo and other OTT/VOD Platforms
From DocumentaryTelevision.com with
distributor Kinonation’s Roger Jackson
Read More Here.
Download Now: $39.95