CES 2016 provided one of the most significant recent announcements in the video space as Reed Hastings stated Netflix was going global. Almost 12 months on, Amazon announced the immediate availability of its Amazon Originals video service in over 200 countries, fuelling the battle for global share and solidifying its position within the video service eco-system.
This move by Netflix and now Amazon is indicative of the trend towards the increased globalisation of the content sector, as service providers seek to benefit from economies of scale across technology, content rights and the ability to increase the return on their original production investment across a larger user base.
This latest move is also illustrative of the continued emergence of the OTT channel business, enabling consumers to effectively build a Pay-TV package with direct to consumer services, although it is mainly Pay-TV subscribers who take SVoD; this is particularly true outside of the USA. In the UK for example, almost one-third of Pay-TV customers subscribe to Netflix, twice as high as free-to-air viewers, according to Futuresource’s recent Living with Digital consumer research survey.
The emergence of OTT channels is a proposition that is further enhanced by Amazon in the USA with its virtual aggregation of these third party services on Amazon Channels, with Roku also developing a similar offering of late.
As much as Amazon is a household name in key markets such as the US, UK and Germany, its retail business is only available in around a dozen countries. Streaming video was available in just 5 markets until its move in mid-December to launch its Originals App worldwide. Where it was previously present, it has become a key rival to Netflix. In Germany, there are currently approximately twice as many Amazon video users than Netflix users; more as a result of the strength of its retail (including Prime) business than video service however.
Amazon’s global deployment now means it must rely on the quality and interest in content alone and more specifically its own content. However, with an estimated USD$3 billion earmarked on spend per year – and rising, led by Top Gear re-incarnation, The Grand Tour, its commitment to offer quality and differentiation is clearly visible. And it is perhaps this differentiation which is resulting in consumers opting to take multiple services, with little overlap in content offering. In the US over 50% of Netflix subscribers also use Amazon Prime Video.
Like Netflix, Amazon’s Originals App is not expected to significantly change the subscription video landscape in many “new” countries immediately, largely due to the relatively limited nature of the offering. But with the investment it is placing in its overall Amazon service in India, including additional Bollywood content on Prime Video, it is evident that Amazon has a very targeted approach for future global growth, as its impressive momentum continues.