Complete Coverage: NAB Show 2016
Las Vegas — Unlike Netflix, whose strategy relies on scaling a single, stand-alone TV app, Amazon is poised to threaten both traditional and skinny MVPD bundles with a cable-esque portfolio of multiple streaming apps, said VP of digital video Michael Paull during a NAB Show keynote session Tuesday.
Paull asserted that the company’s Streaming Partners Program, which launched last December, has quickly become a viable option because of centralized payment and more frictionless user experience. NBCUniversal’s Seeso comedy app and History Vault, from A+E Networks, just came aboard, joining apps from Showtime and Starz and bringing the tally to roughly 30 SVOD channels out of the 100 or so available in the U.S. market. “Dozens more” will be added in the coming months, he added.
“We think it can go mass market with consumers,” he said. Amazon’s “unified, simple experience, leveraging our billing, customer service and hundreds of devices we are currently supporting” makes the company a viable alternative, he argued. “We have a massive number of [customers], with their credit cards on file.”
Moderator Will Richmond, founder of online video consultancy Broadband Directions, said, “We haven’t seen a third-party platform try to aggregate all of these [OTT] services or give choice to consumers so they can be aggregated under one umbrella.”
Another key advantage enjoyed by Amazon, Paull said, is that data mining enables more effective show promotion on its own platform. A recent push for Starz’s Outlander, which yielded the company’s best day yet for new subscribers to the premium network’s new OTT app.
Instead of blasting out promos for shows based on rough demographics, as MVPDs do, Amazon pursues a targeted, algorithmic strategy that took shape back in its e-commerce days selling books in the 1990s. “Since I have all this consumption data and I know how to use it, I can promote the right show to the right customer,” he said. “And it’s working.”
The Streaming Partners arm of the business is distinct from the Prime Video business, which launched a stand-alone subscription version last weekend and continues to roll out a robust slate of original TV series and films. But the two objectives are set up as mutual beneficiaries.
“The more programming that’s in our ecosystem, the more time people are going to spend there and the more likely they will be to be a Prime member,” Paull said.
Data on Amazon subscribers, churn rate or other key metrics that are shared by MVPDs on their quarterly earnings calls, was predictably scarce during the session. But the one area of marketplace data that Paull focused on was what he termed the “20-plus-million households that are not currently being served by pay-TV providers, 50% or 60% of which have broadband.” Research suggests that population will grow by 35-40% by 2018, he added.
The fact that this population, along with current pay-TV subscribers, is a focus means larger networks like Showtime or Starz see more upside than risk when balancing the opportunity with Amazon with the need to preserve their status within the traditional pay-TV ecosystem. “This feels very incremental to them,” Paull said.
Even so, the “unlimited capacity” on the Amazon platform to serve on-demand content could entice traditional programmers to create more brand-new SVOD services. Amid the overall content boom, which has curtailed the profit potential of all ad-supported TV, customers also expect a lot more. “The need to refresh content is much higher,” Paull said. “The bar for having great TV shows and movies is rising.”
A major, often overlooked piece of the puzzle is advertising. While rumors continue to swirl about Netflix possibly adding an ad-supported tier, a similar question seems inevitable for Amazon. Asked directly if the company was contemplating an ad-supported option, Paull responded, “I have nothing to say on that.”
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