Amazon Prime Challenges Netflix With Monthly Subscriptions / SVOD Shakes Up Aussie Viewing

The SVOD market just became much more competitive.

Amazon announced two new monthly subscription options for its Prime SVOD service:

  • $8.99 monthly for a new video-only version of its Prime service.
  • $10.99 a month for access to the full Prime service, including video streaming, free two-day shipping on Amazon orders, music streaming and other services.

Refocus on Video

  • The monthly options refocuses the Amazon package on video, and  away from its confusing hybrid offer of ‘free shipping PLUS video streaming’.
  • These options replace the annual $99 subscription that was a turnoff to the large audience of ‘toe-dippers’ and potential ‘unsubcribers’ who we covered in last week’s post.
  • Subscribers to the video-only service will pay $8.88 more a year while losing valuable benefits, like free two-day shipping.

Netflix

  • Amazon’s dominant competitor Netflix offers several plans ranging from $7.99 to $11.99 a month.
  • Netflix enjoys more than 75 million subscribers worldwide.
  • Amazon is estimated to reach around 60 million Prime subscribers.

Takeaways

  • A monthly subscription package removes a significant barrier to the consumer experience.
  • That is likely to translate to a closing of its gap behind Netflix, which we reported last week.

OTT subs

  • Amazon can bring its vastly superior financial and operational resources to its Video product line.

Cap

  • Netflix’s market cap is around $47 million, a fraction of Amazon’s.

Programming

  • We expect Amazon to double down on commissioning original content, featuring scripted drama series, and including FactEnt and Documentaries.
  • And Netflix will ramp up its investment in original content to stay in the game.
  • Niche SVOD services will also have to step up their investment in original content.

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SVOD DISRUPTS AUSTRALIAN CHANNELS

Australia is considered a weather vane for trends in the global video marketplace.

Programmers everywhere will learn from recently published data on Aussie TV viewing.

  • ‘The Age’ reports that Australian prime time audiences have tumbled 5% in 2016 year-to-date.
  • Free-to-air viewing is “dropping faster among the key advertising youth demographic, with audiences down 14.8 per cent among 16-to-39-year-olds.”
  • Cable operator Foxtel’s prime time viewing is also down, by 5.3 per cent.
  • SVOD services Netflix and STAN are reported to earn nearly 100,000 viewers in prime time.
  • The successful rollout of SVOD is skewing all program decision-makers towards Scripted Drama series, with promoteable documentaries somewhere in the mix.
  • Read more here.

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Speaking Engagement

WESTGRO, Film & Media Promotion, Cape Town
Time: 3h30 – 5h30

Trends in Factual Television / The Rise of Netflix and VOD

“Peter Hamilton is returning to Cape Town to visit his daughter who is studying at UCT. He offered to share his Takeaways on trends in the documentary and unscripted television sector, including his analysis of the VOD Boom and its meaning for factual producers.” (Contact WESTGRO for details.)