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Amazon's Sleeping Giant Reminds Everyone It's Very Large, Increasingly in Charge

Amazon Prime Video original 'Without Remorse'
Amazon Prime Video original movie 'Without Remorse' (Image credit: Amazon)

Amid all the conversations about whether Netflix is flagging, Disney Plus is taking off, HBO Max and Peacock are finding their feet, or Discovery Plus and Paramount Plus will matter, few seemed to take notice of what's happening over at Amazon Prime Video

But this past week provided lots of reminders that no one should discount the SVOD side hustle from the super-sized Seattle e-commerce and cloud-computing giant, which is coming off a notable week. 

First, the company's shows grabbed two technical Oscars (the gripping Sound of Metal, for Best Sound and Film Editing), among 12 nominations across four fine films. Its features and series previously had picked up three Golden Globes, including Best Actor for John Boyega's turn in Steve McQueen's extraordinary limited-run series Small Axe, and two comedy/musical  awards (which the Oscars don't recognize and seldom notice) for Sacha Baron Cohen's Borat Subsequent Moviefilm

Awards certainly aren't everything. But they are something. As Netflix suggested earlier in awards season, even nominations can drive a big bump in viewership, especially for smaller projects (If Anything Happens I Love You, which went on to win Best Animated Short, saw a four-digit jump in viewership in the week after it was nominated, Netflix said.  

Just as importantly, awards attention helps shine up the prestige of that catalog, so subscribers and potential customers know they're getting some quality with their quantities of viewing experiences. 

And after wrapping up a solid awards season, Amazon finally clarified one of the biggest questions in streaming: how many people actually watch the decade-old Amazon Prime Video?

The company has regularly disclosed the number of subscribers to Amazon Prime, which entitles you to free shipping and has been a crucially sticky part of Amazon's rise to primacy in e-commerce. But it's been much more more difficult to find out how many of those subscribers also dialed in to Prime Video or even took advantage of free music, books, magazines and video game assets that are also part of Prime. 

Well, it’s a secret no more. After a locked-down year sent pandemic shoppers flocking to Amazon Prime, most of them also checked out Prime Video shows such as The Boys, Jack Ryan, Them, Coming2America, Invincible, and The Expanse.The service also rolled out a raft of international originals, such as La Templanza, Guerra de Likes, Paatal Lok, and We Children From Bahnhof Zoo. 

And unlike fellow FAANG Apple, Amazon has invested heavily in catalog content to fill out its spending on originals, so customers have something to watch after they plow through the marquee shows. 

The results, disclosed in this week's earnings call and Jeff Bezos' last investor letter as CEO (he moves to executive chairman in July), are startling. The service has 175 million users, second only to long-time competitor Netflix (at 208 million), and well ahead of Disney Plus,  at something over 100 million. 

And those customers are using the services a lot. CFO Brian Olsavsky said during the earnings call this past week that streaming hours on Prime Video were up more than 70% over the past year. Clearly, for all the horrible things the pandemic has done to the country and world, it's been very good for Amazon in this area too. 

Olsavsky also suggested Amazon soon may start attracting even more viewers, thanks to its burgeoning investments in live sports. The decade-long, $10 billion deal with the NFL to show 15 games a year rightly has garnered attention even as the league renewed (at double the price) deals with long-time partners among legacy broadcast and cable networks. 

The NFL deal won't take effect until 2023, but gives Amazon exclusive access to what has been one of the most popular shows on traditional TV, Thursday Night Football. Amazon executives are also trying to figure out how to put the company's stamp on those broadcasts, now that it's not merely retransmitting something produced by Fox or another broadcaster. 

It's not hard to imagine a much tighter nexus between game cast and online commerce. There's even the potential to connect to a younger audience by pairing up at least one version of telecasts featuring, say, star Twitch personalities who may also be very good at the Madden NFL football video game. 

Amazon Prime Video also will show 21 Yankees baseball games this season in the New York region, one of the benefits of its investment in the YES regional sports network alongside the Yankees and Sinclair Broadcasting. Other live sports will include more Premier League soccer matches in England, plus tennis and swimming championships. It's not ESPN, but gives subscribers more reason to stick around. 

And that's exactly the point, as Dave Fildes, Amazon's head of investor relations, said during the earnings call. 

"We look at Prime Video as a component of the broader Prime membership and making sure it's driving adoption and retention as it is," Fildes said. "It's a significant acquisition channel in Prime countries. And that we look at it and see that members who watch video have higher free-trial conversion rates, higher renewal rates, higher overall engagement."

Prime Video also may be one of Amazon's secret weapons as it extends Prime around the world, Fildes said. Prime Video was offered in Brazil as a stand-alone service, and then helped recruit customers into the parent offering. 

"...That was, as an example, a great way to expose people to Amazon," Fildes said. "And as we launched the broader Prime in Brazil, it was a great mechanism to (bring) folks into that program."

That Prime Video, an undersung part of the Prime team of services, could ultimately become, in sports parlance, a two-way player capable of both attracting new customers for the parent offering and keeping others around, has to be more than a bit discomfiting for all the traditional studios and their subscription services. None of them has anything like what Amazon also has to offer. Indeed, some of them rely on its AWS cloud services to reach their customers, and generate substantial subscription revenues through Amazon Prime Video's add-on Channels program. 

The numbers this week, in awards, subscriber households, and viewership all suggest, however, that Amazon Prime Video is now ready to be taken seriously for what it is: one of the biggest, strongest, and most strategically positioned, services in the business. Everyone else can figure out how to work with them. Or they better hope Congress gets hopping on those antitrust breakup bills.