21 Nov 2016

How Amazon’s Video Streaming Play is Biting at Netflix’s Heels

In January of this year, Netflix spread its streaming wings into 190 countries, all with one full swoop. Amazon has been on Netflix’s heels ever since, as one would expect. And while the Bezos-run company took eleven months to catch up, it looks like Prime Video will expand from only streaming in the US, UK, Germany, and Japan, to 200 countries in December, including India, which was announced this past July.

The new broke from the hosts – James May, Richard Hammond, and Jeremy Clarkson - of the newly launched The Grand Tour, an Amazon Original Series formally known as Top Gear on BBC. The series first aired on November 18 after the teaser video gave the ‘going global’ news in true Top Gear fashion (sorry, the new name will take some getting used to), including a bit of self-deprecation and sarcasm along with a few informative facts.

One important note that wasn’t included in The Grand Tour video was that this Amazon show is the only one that will go global in December. No idea on what’s happening from there or when.

It may be due to the pesky issue of domestic versus international licensing, which is not an issue for Original content but is one that becomes more of a pain when ‘going global’ with movies and TV shows acquired from studios. Why Amazon isn’t opening the gates on their other Original shows like Transparent in December also goes unanswered.

Amazon’s 200-country number exceeds Netflix’s reach by 10 countries, and it’s not exactly clear which countries Amazon will open up in over time with their SVOD full library. One can’t help but wonder if China may be in the mix, a country that has thus far, eluded Netflix, and one where Amazon began offering its Prime shipping service this past October.

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The Cost of Being Original

The Wall Street Journal referenced Ampere Analysis’ estimated $4 to $5 billion in spend on video by Amazon, but whether that’s on a combination of acquisition rights and Original content, or only on new Original Amazon Studio content is also unclear. That said, the $250 million Amazon spent on The Grand Tour alone is significantly more than the approximate $130 million Netflix spent on The Crown, the UK-based production (Sony Pictures UK, Left Bank Productions) of which the company received a big 'wow' from the press as the most expensive TV show ever made.

WSJ made a point to state, “Amazon has been building up its video service deliberately in just a handful of markets by hiring local teams and investing heavily in regional original series,” giving the impression that this local approach differs from Netflix’s content strategy.

While it’s true that Netflix COO, Ted Sarandos, laid out the company’s plan to either acquire or create shows and movies that can “appeal to all audiences,” they’ve also made moves to produce and make shows and movies in all parts of the world in an effort to expand their worldwide appeal, while also acquiring local-language content overseas. At an event in Seoul this past June, Sarandos announced plans to buy the rights to the Korean drama, or K-drama, Descendants of the Sun, which was a hit not only in Korea but within the massive Chinese audience.

Netflix will also produce an Original film, Okja, in South Korea with a budget of $50 million, directed by Bong Joon-ho (Snowpiercer). Additional plans include a Korean version of the forthcoming Sylvester Stallone-produced reality show Ultimate Beastmaster, and an international licensing agreement with Next Entertainment World to release Pandora, the “nuclear disaster blockbuster" from CAC Entertainment by award-winning screenwriter turned director Park Jung-Woo known for the science fiction horror film, Deranged, according to Hollywood Reporter.

There’s also Club de Cuervos, a Spanish language Netflix Original comedy-drama series filmed in the Mexican city of Pachuca and directed by Gary Alazraki, which is releasing its second season on December 9.

Ampere also predicts that Netflix is on a trajectory to hit the 50/50 mark of Original content versus acquired content by 2021, so they’re just getting started.

 

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Could Amazon's (Live) Streaming Pursuits Land Them in the Trillionaire's Club?

One major differentiator between the two streaming platforms: sports. Netflix has vowed to stay away from that game (no pun intended) but just this week, Amazon has apparently been in talks (according to the WSJ’s “people”) with all the big leagues, including the NFL (which also has an agreement with Twitter to live stream Thursday Night Football), the NBA, MLB, MLS, and other smaller leagues in lacrosse, surfing, and college sports (not including the Big 10 Conference).

Without an Amazon representative willing to go on record in regards to their sports licensing plans, it’s all speculation at this point, including whether the sports service will be included for free with Amazon Video, or if it will be a premium service, or if it will end up being a licensing channel deal resembling what Sling may have with NBCSN and Fox.

While we’re at this crystal ball guessing, why not dig up the Live TV rumor from two years ago, that rose again last year, and then again this past February. If and when that comes to fruition, Amazon will then compete with the current cable-less, satellite-free live streaming TV services Sling, AT&T’s DirecTV Now, and CBS Interactive, in addition to premium networks Showtime and HBO, and possibly YouTube Red, (with Comcast vowing NOT to offer virtual MPVD, according to their statement).

Throwing music streaming into the mix (no pun intended), the cloud server company/SVOD company/e-commerce company/bookseller/electronics and secret robotics maker/kitchen sink repairer is also expanding on its Amazon Music Unlimited service with a family plan for $15 a month that allows up to six family members to share one subscription. It’s also opened up the music streaming service in Austria and Germany, adding country reach beyond the US and the UK while enhancing how Music Unlimited communicates with the Echo, including an “extensive range of voice controls that allow users to search for songs based on the title, artists, lyrical content, and even the mood of the song,” according to The Next Web.

One of my favorite futurists and no-bullshit state-of-the-market dude from L2, Scott Galloway, added a fifth horseman (the other four include Apple, Amazon, Google, and Facebook) who checks all the boxes (great CEO, visionary capital, category OS, good citizen, close to university, vertical distribution and other factors), Netflix, stating the worldwide streaming company “has a real shot at becoming the operation system for the joy and relaxation in our life.”

And in the last week, Galloway predicted, “Amazon will become the first trillion-dollar market cap company.”

Time will tell.

 Side note: I have some live streaming-related appearances coming up in the months ahead, including the moderation of the XLIVE session on December 6, “We’ll Do It Live — Challenges and Opportunities in Festival Live Streaming,” and a SXSW 2017 “Livestreaming Music and Amplification Workshop” (dates, times TBA) with John Petrocelli of Bulldog Digital Media. If you’d like more information on what to expect from these events, get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it. , or find me on Twitter @Kaffeinebuzz.

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