Why Amazon’s Streaming Deal Is Primed for Success
Amazon inked a content deal that will bring many hit TV shows, as well feature films, to its Prime service, strengthening its position in the digital streaming and tablet markets.
The Seattle, Wash.-based company sealed a deal with the video-on-demand service Epix, which is controlled in part by large content owners like Lions Gate, Viacom, Paramount Pictures and Metro-Goldwyn-Mayer Studios. Amazon joins Netflix as the only other premiere video streamer to have access to Epix’s content, making its biggest move yet to level Amazon Prime’s playing field with the competition.
Terms of the deal were not announced publicly, but a press release between the two companies called it a “multi-year licensing agreement.”
“We are investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers. We have now more than doubled this selection of movies and TV episodes to over 25,000 titles in just under a year,” said Amazon’s vice president of video and music Bill Carr.
How it Affects Video Stream Competition
Before this little deal went down, the threat of Amazon’s Prime Instant Video services likely barely registered in the Netflix corporate offices. Netflix far exceeds Prime in subscriber numbers, hours of content and name recognition.
However, in the streaming game it’s all about content, and Amazon’s deal with Epix hits Netflix on two levels. First, it doubles the amount of content on Prime’s service, and second, it marks the end of Netflix and Epix’s exclusive deal. What once was content that could only be found on Netflix is now also available at one of the company’s primary competitors, leveling the ground between the two and forcing them to compete on other factors.
Amazon’s agreement with Epix doesn’t mean the death of Netflix, but it is a sign that its reign as the only major video streamer is coming to a close. In the past year, Amazon signed agreements with nearly every big Hollywood studio and cable network. NBC Universal programming like “Friday Night Lights” and “Parks and Recreation” is making its way over to Prime and a newly inked, revised deal with ESPN will make Amazon’s service a hot choice for sports fans looking for documentaries and film series.
The Epix agreement will also help fill Prime’s dearth of blockbuster movies with films like “The Avengers,” “The Hunger Games,” the “Mission Impossible” series, “Iron Man 2” and others, all slated to hit the service in the future. Netflix’s stock price takes minor hits with every new deal Amazon signs, and if the Prime service continues to grow, subscriber numbers could be the next thing to fall. Netflix currently costs customers $95 a year for streaming-only subscription, but Prime is $80 and includes perks when making purchases on Amazon.com, as well access to the Kindle e-book rental program.
How it Affects The Fire Line
Netflix has a leg-up on access to customers in people’s homes because many Blu-ray players, the Xbox 360, PlayStation 3 have long supported it, and Netflix also is exclusively available on the Apple TV. However, Amazon is in a strong position to attack the mobile market. The Netflix app on iOS and Android is shaky at best, and Amazon’s Kindle Fire line is a ripe opportunity to grow the Prime user base.
Amazon leadership said it wants to make money on its line of Fire tablets after people bring it home from the store or receive it at their front door. In other words, revenues will be driven by people using their tablets to purchase content through Amazon and subscribe to its services. The company already has the largest selection of e-books there is, which will attract millions to the devices. Now, thanks to the company’s deal with Epix, those buyers will be even more apt to take the plunge into a service like Prime.
The deal comes at the perfect time for Amazon as it preps the November 20 launch of its next-generation devices, the Fire HD 4G, Fire HD 8.9 and regular Fire HD. Each of these devices are marketed around the content that they offer. Building the library of Prime makes the tablets more attractive, and the more tablets sold, the more potential Prime subscribers there are. It’s a vicious cycle, and Amazon is fueling it nicely leading into the release of these new products.
Primed for Growth
Prime Instant Video is no longer something that Netflix can shake off as a non-factor in the video streaming market. A year ago Prime could be discounted. Because its small library, no availability on Xbox 360, PS3, or many other devices and little name recognition, Prime wasn’t even mentioned in the same sentence as an established name like Netflix. Now, the service doubled its library overnight, and it’s available on game consoles, the iPad, and hundreds of smart TVs and other devices, all while having a mobile presence on the Fire line that Netflix can’t possibly match.
After spending an entire year increasing Prime’s platform, Amazon is turning its attention to content, and its deal with EPIX suggests its willing to go dollar for dollar with Netflix in order to compete. All of this might not be enough to make customers want to drop Netflix for Prime at this very moment, but if Amazon keeps this pace it will be changing people’s minds very shortly.
