Amazon Prime Video Undercuts Netflix in Worldwide Rollout

Amazon has officially launched Prime Video in 200+ countries and territories.

  • Prime Video will be included for Amazon Prime members in Belgium, Canada, France, India, Italy and Spain.
  • In countries with no “physical goods” or Amazon warehouse presence, Prime Video is being offered for either $2.99 or 2.99 Euros per month for the first 6 months.
  • It will then revert to the standard rate of $5.99 or 5.99 Euros per month.
  • The price point is radically less than Netflix’s $8-10 / month.

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Content

  • Amazon said that all of its expanding pipeline of originals such “The Grand Tour” (estimates of production budget: +/-$250 Mn) and “The Man in the High Castle” would be available internationally.
  • It did not specify which of its licensed programs and movies would be available.
  • Amazon’s goal is to negotiate worldwide rights for all content.
  • In addition to English, subtitles will be added in French, Italian, Portuguese and Spanish along will dubbing of certain content.

Amazon Physical Presence

These countries have physical operations (local url, warehouses, shipping, etc) and prime video is available free as part of the regular Amazon Prime subscription:

  • United States (Amazon.com)
  • United Kingdom (Amazon.co.uk)
  • Germany/Austria (Amazon.de)
  • Japan (Amazon.co.jp)
  • Canada (Amazon.ca)
  • France/Belgium (Amazon.fr)
  • Italy (Amazon.it)
  • Spain (Amazon.es)
  • India (Amazon.in)

Hybrid Model

  • My big Takeaway is that Prime has become a “physical digital hybrid membership program that is unlike anything else,” according to Amazon founder / CEO Jeffrey Bezos.
  • Video helps drive new Prime memberships and retention, and Prime members are more loyal to Amazon, purchasing more products.
  • Amazon therefore blends data from video usage with customer purchase behavior to evaluate video investments as drivers of the hybrid Prime model.
  • Amazon’s video competitors rely on a much simpler data set based on subscriptions or advertising. They lack the massive e-commerce dimension of Amazon’s business model.
  • Although a case can be made that a cable operator like Comcast also has a dual business model. Comcast can absorb the decline of its channels businesses because they serve as loss leaders for its highly profitable Internet / Telephone businesses.market cap

Netflix On The Defense

  • According to Kinonation’s Roger Jackson, the big Takeaway is that Amazon is aggressively undercutting Netflix on price worldwide.
    • “The vast majority of potential customers in the developing world will lean towards Amazon over Netflix.”
    • Amazon is even more aggressive in pricing in India. Amazon offers video + free shipping for $15/year versus Netflix’s video-only offer is $120/year.
  • Although there are benefits for Netflix and other SVOD players like niche Curiosity Stream, which is also available worldwide. Competition between the two big players will raise awareness of SVOD as an alternative or supplement to Broadcast and Cab/Sat.
  • Watch this newsletter for updates on the implications for documentary and unscripted rights-holders.

Read More

  • Will Richmond’s VideoNuze newsletter expertly covers Amazon’ strategic advantages versus Netflix.

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