Commentary

Amazon Set For Net-Net Dominance

by J. Max Robins , Featured Columnist, February 3, 2016

It’s only a matter of time before Amazon Prime’s video service seriously challenges Netflix’s dominance of the streaming game. The service that Jeff Bezos’ “Everything Store” launched in its current incarnation a scant five years ago is now suddenly poised for primacy.

Amazon Prime grew 35% last year and now has an estimated 54 million subscribers, almost 10 million more than its archrival Netflix, according to a recent study from Consumer Intelligence Research Partners. I know: Subscribers are one thing, and viewers are another. (Sorta like the comparison between polls and votes this caucus season.) But the CIRP survey estimated that about 40% of Amazon Prime members, who pay a yearly $99 for free two-day shipping and assorted discounts, are using the streaming service that comes with the package.

Granted, it’s no secret that despite a spate of acclaimed originals, such as “Transparent,” “Mozart in the Jungle” and my latest binge-ing obsession, “Man in the High Castle,” Amazon still lags way behind Neflix, the home of “House of Cards,” “Orange Is the New Black” and “Making a Murderer.” But a smart money bet is that the gap closes fast.

Look at the landscape of recent Amazon Prime moves. Just this week, it struck a programming pact with Mattel’s “American Girls” behemoth doll franchise, starting with four live-action specials exclusive to the streaming service. Think of the sales and marketing strategies, given the reach and mail-order dominance of Amazon. The deal will also bolster Amazon Prime’s kids video business, a key component to the company's blueprint for continued streaming success.

The “American Girls” deal came in the wake of a wild shopping spree for Amazon and Netflix at the 2016 Sundance Film Festival that ended Sunday. But the big-bucks bidding wars got bloody even before Sundance began. Netflix made a preemptive run on festival entries “Fundamentals of Caring,” starring Paul Rudd, and “Tallulah,” starring Ellen Page, paying $7 million for the former and $5 million for the latter. It also pulled out the checkbook for “Brahman Naman,” “Norman Lear: Just Another Version of You,” and “Audrie & Daisy.”

Not to be outdone, Amazon bought rights pre-festival to indie fave director Whit Stillman’s Jane Austen adaptation “Love and Friendship," starring Kate Beckinsale and Chloe Sevigny, and ponied up $2 million for “Complete Unknown, starring Rachel Weisz and Michael Shannon.

Knowing that a theatrical release before the streaming debut can be a big lure to indie directors, Amazon partnered with Roadside Attractions to do just that with “Love and Friendship.” Amazon then backed up the Brink's truck and paid $10 million for writer/director Kenneth Lonergan’s “Manchester by the Sea,” with Michelle Williams and Casey Affleck. Likewise, it got domestic theatrical and streaming rights to the comedy “Wiener-Dog” by award-winning writer/director Todd Solondz, and picked up Brett Ratner’s documentary “Author: The JT Le Roy Story.”

This is all playing out like the earlier days of premium cable, when HBO and Showtime both jockeyed for big releases.

Speaking of which, the buying battle comes on the heels of much speculation that Amazon will soon launch a standalone subscription service that bundles in select networks, along with its original programming and other offerings. BTIG analyst Rich Greenfield predicted as much in a recent report, noting that last December Amazon announced it was offering add-ons to Prime such as Showtime, Starz, TriBecA Shortlist and Lifetime Movie Club, among others. Industry sage Greenfield noted that part of the gambit would be live-streaming, too, with partners such as the WWE Network.

The upshot of all this action? The Amazon Prime/Netflix cage match is just heating up. And in the near horizon, Amazon will not only outpace Neflix in subscribers, but it will match or exceed it in viewers.

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5 comments about "Amazon Set For Net-Net Dominance".

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Eric Cabot Steed from Singulus Fine Print Productions, February 3, 2016 at 4:08 p.m.
" I was just thinking how much Television has change over the last 90 years, and.
I use Comcast's xFinity as well as my new Amazon Fire HD 8 ( 2015 ). Well Written and useful summary, by the way."

Do you have any idea what the current cost-of-production of a series like 'The Black List' or 'Extant/ Extinct' ( depending on how you read the logo ?
Reply

Fred Seibert from Frederator Networks, February 4, 2016 at 5:08 p.m.

Max, there's a huge difference between Amazon Prime and Netflix, besides the obviousness of e-commerce. Amazon has a loooonnnggg history of spending big on projects that dead end and are then abandoned. Not suggesting that Prime is a dead end, but unlike its major video competitors, Amazon's center is not very focused. No matter the size of their investment and their current theory of the case, they could easily up and disavow any knowledge of the effort.

Netflix, on the other hand, is all in on the video business. So, their brand is meaningful to viewers, their tech is dedicated, their mission is clear.

Sure, the next couple of years will see some skirmishes, and Amazon will inevitably win a few. A few. But a media conflation of the two businesses won't result in war, Amazon has other fish to fry.

Justin Bellinger from TAM Media Co., February 5, 2016 at 3:16 a.m.

The number of subscribers to Amazon Prime is not, in and of itself, a useful metric. The number of those subscribers who also regiularly watch the video sub-offering are likley to be substantially smaller.

Currently this artile talks about people who are subscribing to an inclusive shipping service, that happens to incluse video and music streaming, and Netflix's pure video play.

Therefore, I am not so very sure that either the headline or article premise makes any real sense.

Ed Papazian from Media Dynamics Inc, February 5, 2016 at 8:34 a.m.

Quite right, Justin. Also, how many temporary subs are being counted in the Amazon tally who are actually trying the service on a trial basis?

ida tarbell from s-t broadcasting, February 6, 2016 at 4:34 a.m.

One of the Business sections of a major newspaper, possibly the WSJ, pointed out some time ago that despite all the hype, HBO, sheltered by cable system access history, is far more profitable than Netflix, which, despite its rising appearance outside the US, has a lousy set of movies on the streaming side, and is cutting back both there and on the real disks. Its all a hype to keep the stock up, which, of course, is one of Bezo's tricks from the kit bag too. I think all the programs that both Prime and Netflix stream and hype, are crap. Amazon's streamed film selection is way better than Netflix's. Bezos runs all kinds of loss leaders, has for years, he's been in the losing game far longer than Netflix and will best that service in the end. That is while he does the opposite of hype: He heralds the losses instead! Plays a longer game and will beat netflix. Of course, there'll be other players over time, HBO certainly one of them.