While assessing the coverage of the launch of Amazon Video Direct — Jeff “Mr. Everything Store” Bezos’ gutsy challenge to YouTube — the figure $3 billion jumped out at me. That’s how much industry analysts estimate Amazon spends on video each year in its relentless drive to dominate on a playing field where YouTube, Facebook, Hulu and myriad others have plenty of pixels in the game.
Amazon’s multibillion-dollar appetite for video supremacy also includes cable companies as rivals. The product delivery giant recently began to offer its Amazon Prime streaming service, initially available only to those paying $99 a year for a Prime membership, as a standalone, for a $9 monthly fee, a buck less than Netflix. It’s also been cutting deals with myriad players and is eventually expected to offer a tailored bundle of programming services in a so-called “skinny bundle” package to lure the cord-shavers and cutters.
Yesterday’s Amazon Direct launch is a typically straight shot from the Bezos playbook. It puts a laser focus both on those who create the content, and on the customer experience. In contrast to YouTube, Amazon Direct is allowing those who make the videos to distribute and profit in a variety of ways, including: making their content available to Prime Video subscribers and receiving a per-hour royalty fee; offering them as rentals or sold as subscription through its Streaming Partners Program; and putting the videos up for digital rental or purchase. Producers can also opt to offer videos free in an ad-supported model with a 55% share of revenues—same as YouTube.
A bunch of content partners have already thrown down with Amazon Direct, including Conde Nast Entertainment, Machinima, Samuel Goldwyn Films, Business Insider, The Guardian, Mashable and Mattel. Expect a plethora of big media brands to join in the weeks to come. Not that producers aren’t concerned about Amazon’s massive clout, but it’s still a big plus to have another player in the marketplace to play off YouTube, Netflix and Facebook Video.
Plus e-commerce is Amazon’s sweet spot, making it an ideal place for brands, such as Mattel, which also is already producing series for Prime Video. Amazon has millions upon millions of shoppers and the algorithms to help producers reach the consumers they wish to. That’s Amazon Direct’s unique selling proposition, and it’s a damn good one.
In a column last February, I wrote about the impact of Amazon Prime’s streaming service and data showing that 54 million people had access to it—10 million more than the number of Netflix subscribers. I postulated that Amazon might one day in the not-too-distant future overtake Netflix or at the very least come close to parity in users.
Some astute readers took issue with that prognostication. Fred Siebert, the creative wizard behind Frederator Networks, who was at MTV and Nickelodeon almost from Day 1, commented that the “huge difference” between Amazon and Netflix behind the “obviousness of e-commerce” was that when it came to video, Netflix was “all in.” Amazon, meanwhile, had a long history of “spending big” on projects, only to “abandon them.” I respect Fred and took his advice about being too quick to drink the Bezos video Kool-Aid. He had a point: Do you know anybody who owns an Amazon phone?
Still, I do see Amazon Direct as a big deal, and getting bigger—one more savvy move in Bezos’ push to be the “Everything Video Everywhere Store.” Face it: $3 billion is huge. We’re not talking regular “huge,” we’re talking Donald Trump “huuuge.” YouTube, Netflix and Facebook are places where top execs are used to saying they’re not watching the competition. But something tells me that in this latest move in the video game, they are.