Amazon Bridging the Netflix Divide?
January 16, 2018
Reed Hastings’ “awfully scary” competitor – Amazon – is gaining traction, narrowing the divide with the subscription streaming video pioneer, according to some observers.
With more than 100 million subscribers worldwide and growing, Netflix wouldn’t appear to have concern about any competitor. But Amazon is much more than over-the-top video. It is an ecommerce behemoth capable of treating video as a loss leader.
“How are they doing so many business areas so well?” Hastings told CNBC last May. “They are trying to repeal the basic laws of business. They are awfully scary I would say.”
Indeed, there were about 44 million subscribers to Prime Video, with a little more than 30 million from the United States and 11 million from Germany, Japan and the United Kingdom, according to IHS Markit.
Prime Video subscriptions are projected to grow to 78 million by 2021.
More importantly, Amazon Prime, which includes video, music and other services, is now available in 16 countries. Prime members account for almost 99% of the total Prime Video subscription user base.
In fact, Amazon’s attempt at standalone Prime Video internationally has struggled as due to geographic content license challenges. IHS says Prime Video offering are not consistent across countries, with details of both Prime and Prime Video modules differing significantly by country.
Yet, Prime Video boasts a higher subscriber count in a few select markets than Netflix – due primarily to the perceived value of the bundled Prime ecosystem.
Using the value of the Prime bundle, Prime Video have already managed to surpass Netflix subs in Germany, India and Japan, according to IHS.
Prime Video has grown beyond catalog TV shows and movies. It now features à la carte third-party video services through Amazon Channels, live sports and user-generated content.
This diversity of content enables Amazon to tap into markets and customers that global rival Netflix has yet to reach.
“Although predominantly an e-commerce company, Amazon is making full use of its video services to spread its brand name across the world, push its Prime product in localized markets and draw people into the Amazon ecosystem,” Max Signorelli, research analyst, home entertainment, IHS Markit, said in a statement.