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Tuesday, September 16, 2014

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  • Amazon's 15-Month Content Licensing Blitz Raises the Stakes for Others

    Back in February, 2011, when Amazon unveiled Prime Instant Video, I noted that the service's Achilles heel was its minimal content selection. And since the video service was embedded in the larger Prime free shipping offer - rather than getting its own standalone brand - I sensed  hesitancy that Amazon would spend big bucks to license lots of premium-quality video. That indeed seemed to be the case as Amazon didn't announce a single content licensing deal to support Prime Instant Video until July, 2011.

    However, since then, things have changed markedly; Amazon has been on a content licensing blitz over the last 15 months, announcing at least 14 different deals, culminating in today's with EPIX (see below for links to all). Despite the slow start, Amazon's huge content investment shows the company is quite serious about achieving content parity, or better, with its closest rival, Netflix, while leaving others like Google, Apple, Wal-Mart/VUDU, Verizon/Redbox and others playing catch-up in user-friendly subscription OTT services. Including the EPIX content, Amazon says it now has 25,000 titles/episodes, up 5-fold from its February, 2011 launch.

    Amazon's content deals, with many of the major studios and networks like CBS, NBCU, Disney/ABC, Paramount, Discovery, Fox, Viacom, PBS and others, are all non-exclusive. The exception is the recent Warner Bros. deal with temporary exclusivity for shows like "Fringe" and "The West Wing." Beyond these deals, Amazon also announced back in May plans to ramp up its slate of original programming to include comedy and children's series. Prime Instant Video is integrated with numerous connected/mobile devices now, including new apps for Xbox 360 and the iPad. In addition to the 2-day free shipping in the $79/year Prime service, Amazon also introduced and grew its Kindle Owners' Lending Library as another strong benefit.

    The company most at risk with Amazon's content surge is clearly Netflix. Although it still has clear advantages over Prime Instant Video in user interface/ease of use, content selection and branding, the road ahead looks pretty clear. Amazon will continue to use its financial muscle to license most, if not all, the content Netflix has, and then some (like the Warner Bros. series). It will bide its time as Netflix's remaining exclusives expire (so, yes, expect "Mad Men" and "Breaking Bad" in Prime Instant Video at some point too). And it will continue to add value with other non-video features and device integrations, making the $79/year seem like an ever-greater bargain. All of this will make it increasingly blurry for Netflix to stand out.

    The biggest open question is how aggressively Amazon will push video to support its Kindle devices. An early indicator may come later this week as the company unveils its new Kindle lineup. Already Kindle Fire owners get a 1-month free trial to Prime to whet their appetites. What if Amazon becomes even more aggressive? For example, carving out movies and TV shows and making them even more accessible to Kindle owners.

    The idea of premium content being completely in service to selling devices has of course been Apple's playbook. But Amazon could further up the ante. This is the nightmare scenario for Netflix, and why investors are justifiably skittish about the company's ability to compete for subscribers in the land of giants. Meanwhile, for all other competitors, Amazon's content focus is continuing to raise the stakes.

    Following are the content licensing deals Amazon has announced since July, 2011, in chronological order:

    CBS - 7/19/11 (including "The Tudors," "Medium," "Star Trek," "Cheers," "Fraser")

    NBCU - 7/28/11 (including Universal movies, "Elizabeth," "Gosford Park," "Babe," "Flipper," others)

    Fox - 9/26/11 (including "Speed," "Mrs. Doubtfire," "9 to 5," others)

    PBS - 10/19/11 (including "NOVA," "Masterpiece," "Antiques Roadshow," Ken Burns' documentaries, others)

    Disney/ABC - 10/31/11 (including "Lost," "Grey's Anatomy," "Phineas & Ferb," others)

    Fox - 12/9/11 (including "Glee," "Sons of Anarchy")

    Viacom - 2/8/12 (including "The Hills," "Jersey Shore," "iCarly," "Dora the Explorer," others)

    Discovery - 3/14/12 (including "Dirty Jobs," "Whale Wars," others)

    Paramount - 5/23/12 (including "Star Trek," "Top Gun," "The Truman Show," others)

    MGM - 6/13/12 (including "The Silence of the Lambs," "Dances with Wolves," "Rain Man," others)

    Warner Bros. - 7/20/12 (exclusive, including "Fringe," "The West Wing")

    ESPN - 8/21/12 (including "30 for 30" series)

    NBCU - 8/24/12 (including "Parks and Recreation," "Parenthood," "Friday Night Lights," "Heroes," others)

    EPIX - 9/4/12 (including "The Avengers," "The Hunger Games," "Iron Man 2," others)

     


     

     
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