Here’s Why Every Streaming Service Should Be Worried About Amazon

June 5, 2017

2:30 pm

In the video streaming service battles, Netflix is head and shoulders above everyone else. Time spent on the service is up 669 percent since 2010. Not only do they account for a full third of the internet traffic in North America, but they’re projected to pass up ESPN in 2018 as the media producer with the absolute largest budget in television. But Amazon Prime Video — which is finally coming to Apple TV — is a strong runner up, and now one statistic from media analytics firm BTIG Research hints that Amazon Video might not as far behind Netflix as it appears.

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Amazon’s Secret Weapon: Channels

One of many benefits available to Amazon Prime members: “Channels,” which function as subscriptions to Showtime, Starz, HBO Now and other streaming entertainment channels, which can be seen directly through Amazon Video. While paying for additional channels can bloat your monthly bill, it offers an easy way for people to flip through the smaller streaming video options — now you don’t have to pull up an entirely new app just to watch that new Silicon Valley episode on Sunday night. And Amazon loves it because you still stay on their platform.

But a new estimate of Channels’ impact is what makes this concept a game changer.

Amazon Channels Accounts for Half of HBO Now’s Subscriptions

All these streaming services are incredibly reliant on Amazon’s platform, as BTIG Research explains in a recent blogpost:

“We believe that half of HBO Now subs are coming via Amazon Prime Channels, upwards of 75 percent of Starz, with the vast majority of Showtime via Amazon and Hulu add-ons. While it is phenomenal that premium channels such as HBO, Showtime and Starz are adding paying subscribers, they are not building a direct-to-consumer relationship.”

By letting Prime members check out rival services through Amazon’s platform, Amazon is quietly collecting data on their viewing habits and — more importantly — building a direct relationship with consumers that HBO Now, Starz, and Showtime are missing out on. The blog post goes on:

“Amazon controls the data, consumers are using Amazon’s apps and maybe worst of all, Amazon is learning what shows interest consumers the most and is building their own video service utilizing that data to compete with the third-party channels they offer. Legacy programmers simply do not have the stomach for the pain (cost) of acquiring subscribers and mitigating churn. Whereas, Amazon has an existing bundle that it can add other subscriptions onto with relative ease; as Amazon talked to on their last earnings call.”

Cable networks may have strong streaming services, but when it comes to direct-to-consumer relationships, Amazon is eating their lunch. And as Amazon grows stronger, it’s got Netflix in its sights. No wonder, as BTIG notes, Netflix CEO Reed Hastings last week labeled the company “awfully scary.”

Read more about video marketing here on Tech.Co

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Adam is a writer with an interest in a variety of mediums, from podcasts to comic books to video essays to novels to blogging — too many, basically. He's based out of Seattle, and remains a staunch defender of his state's slogan: "sayWA." In his spare time, he recommends articles about science fiction on Twitter, @AdamRRowe

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