Last month, Amazon launched its standalone prime video service. For about $9 a month, you can now forgo the free shipping option and cut straight to the company’s TV shows and movies, putting it in more direct competition with Netflix.
On the film side, Amazon is positioning itself almost as a specialty studio. It bought a slew of movies at Sundance in January and has three films premiering at the Cannes Film Festival this month.
If that wasn’t enough, yesterday Amazon launched its bid to outdo YouTube with a plan to allow user- and professionally generated videos to be uploaded on the shopping site. It already has commitments from video content producers like Conde Nast Entertainment, The Guardian and Mashable.
The Frame's John spoke with Spencer Soper, a technology reporter at Bloomberg News who wrote about Amazon’s latest service, about how the company's latest venture into original content could transform the business.
What are the requirements to upload a video to Amazon's platform? I assume I can't just upload a video of a goldfish swimming around a fish tank.
So Amazon is saying that it's geared toward professional content creators, but the only requirement is that the videos be in high-definition and that they be close-captioned. So if you shot your goldfish video in high-definition and close-captioned it, that would meet those requirements.
If your fish is talking, this is going to be a great video.
Exactly. But that was one of our questions and the lack of firm response from Amazon on that or these kind of vague guidelines seems like they're open-minded. If you post something that doesn't meet the typical thought of a professional-grade program but it's a hit with their viewers, why get in the way? So I'm not sure that even Amazon knows exactly how this will manifest itself.
One of the big questions obviously is how Amazon and the content creators are gonna make money out of this. What are the different models and how might it play out?
There's a variety of models and it's up to the person posting the content. They can choose to put the video in an ad-supported format which would be similar to YouTube where any Amazon customer can go and watch it and then there's a revenue share on the advertising viewed by people watching those videos. You can put the videos on Amazon and allow access to Amazon Prime subscribers and then Amazon will pay you a royalty based on the number of people viewing that. Or you can offer it as an option for people to rent the program for one time viewing or even purchase it as a download. So there's a variety of ways to make money off of it.
Is there a parallel with this video service to what Amazon has done with some book authors, that is to let Authors bypass traditional publishing houses and sell directly to Amazon customers through their Kindle app. Is this essentially the video equivalent to some content creators?
That's exactly what it is. It's a way to bypass the traditional channels of a production studio. There's a lot of people who can create high quality content without a huge investment and this is a way to bring more content to the market at a lower cost.
What is the step-back perspective here. Amazon stock is at an all-time high. It famously doesn't make a lot of money yet, but does Amazon want to be a multidimensional media company? Is there some new model they're going after? What is this whole thing gonna look like going forward?
That's the main challenge, figuring out what it looks like. That's the challenge for analysts who try to model it. Generally, when they price a stock they'll look at other similar companies and model it based on how those companies have performed. There really isn't a comparable company to Amazon and so it's all about engagement and satisfying customers. They're looking for any way for people to buy books and buy electronics and clothes or giving them videos that they like to watch. It's all about how we can increase our engagement with them. The more you have those shoppers stuck in your ecosystem the less time they're spending with any competitor.
So more time on Amazon or on Facebook or with your family or other members of the real world? That seems to be the model.
Yeah, and other merchants. A big part of it is search. You think about Amazon as an e-commerce platform but it's also just a big search engine for if you want to buy something. People think of Google as a search engine, but Amazon is an e-commerce search engine. Now with this video move, they want to be a video search engine. With YouTube you might think of it as, how can I fix this or accomplish that. Amazon wants to be the search engine for that as well.