Amazon Punts on Ad-Supported Prime Video

As early pioneers of subscription video-on-demand, Netflix, Amazon Prime Video and Hulu command a lions share of North American over-the-top video consumers.

Yet other than Hulu’s basic subscription plan, none of the services feature advertising – despite collectively having more than 100 million domestic subs.

With original content costs skyrocketing, industry analysts contend it’s only a matter of time before Netflix & Co. welcome Madison Ave.’s fiscal largess.

When asked on the July 25 fiscal call whether Amazon (i.e. Prime Video) might become a “bigger player” in video advertising, Dave Fildes, director of investor relations, largely avoided giving a straight answer.

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“We’ve taken some steps with live sports and [ad-supported subsidiary] IMDb TV, but we’ll continue to do things like add more OTT video supply, things like Amazon Publisher Services integrations and simplifying access for third-party apps and add more inventory through things like Fire TV apps and IMDb TV,” Fildes said.

Translation: Don’t expect to see ads on Prime Video anytime soon.

Instead, Amazon plans to focus ad-revenue growth through a suite of cloud-based platforms such as Publisher Services, which feature “transparent” ad marketplaces for mobile apps and intel “insights” on third-party consumers, among other features.

“It’s a matter of continuing to work with advertisers and brands and kind of building up not only awareness, but how things like sponsored products interact with customers and how they [perceive] them,” Fildes said.

Indeed, Netflix contends subscribers would react negatively to ads.

“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction,” CEO Reed Hastings said on the SVOD behemoth’s recent call.

At the same time, NBC Universal is rolling out a branded ad-supported streaming service next April for Xfinity subscribers. Non-subs will be able to pay for access.

“Our service is … a very innovative way of coming into the market,” Steve Burke, CEO of NBC Universal, said on Comcast’s July 25 fiscal call.

 

 

Amazon Management Nixs Discussing ‘Prime Channels’ as Pay-TV Substitute

Amazon’s head of investor relations Dave Fildes refused to speculate whether the e-commerce giant plans to roll out Prime Channels as a standalone competitor to linear pay-TV.

Speaking July 26 on the company’s fiscal call, Fildes said the Channels platform continues to attract mainstream content providers.

“We’re really pleased with the growth we’re seeing, [and] we’ve seen some really good channels come online in the past few quarters,” he said.

Launched in December 2015, Channels offers Prime members access to third-party over-the-top video services such as HBO Now, Showtime, Starz, Dove Channel, Acorn TV, BritBox, Sundance Now, Shudder, Cheddar, Fandor and PBS Kids, among more than 100 services.

Subscriptions are processed and billed through the Prime membership, similar to ecommerce purchases using an Amazon credit card.

Channels accounts for 55% of all a-la-carte OTT video subscriptions, according to The Diffusion Group – reportedly generating more than 70% of all new subs for Showtime OTT and Lionsgate-owned Starz.

Indeed, digital subscriptions that provide Prime members unlimited viewing (Prime Video) or usage rights from third parties (via Channels) generated $3.4 billion in second-quarter revenue (ended June 30), up 57% from revenue of $2.1 billion last year.

“It’s clear to us that customers want that option as part of their Prime membership,” Fildes said.

Separately, Prime original pro soccer series, “All or Nothing: Manchester City,” will become available on Aug. 17.

The series follows the team’s coach, Pep Guardiola and the stories that unfold within the players’ lives. It chronicles Manchester City’s 2017/18 season from the training facilities, to interviews with the manager and executive meetings.

Additional Prime Originals coming to the service in August include, the series premieres of “Agatha Christie” (Aug 10) and “Tom Clancy’s Jack Ryan” (Aug 31), as well as the second season of “The Stinky & Dirty Show” (Aug 14) and the premiere of original movie, Gringo (Aug 17).

Licensed content includes seasons one and two of “True Tori”, and movies A Cinderella Story (Hilary Duff) and The Blair Witch Project (Heather Donahue). Available to rent or purchase on Prime Video is Deadpool 2, starring Ryan Reynolds.