• Amazon’s New Anime Strike is the First of More Branded SVOD Services to Come

    Last Thursday Amazon announced Anime Strike, its own branded SVOD service, available to Prime members in the U.S. for $4.99/month. Anime Strike is the first SVOD service from Amazon (aside from its flagship Prime Video service), and based on an interview I did with Michael Paull, VP for Amazon’s Channels program, it won’t be the last. Rather, Anime Strike is the latest signal of Amazon’s ever-expanding video ambitions.

    The Channels program itself (which launched in December, 2015 and was originally called the Streaming Partners Program), has grown by leaps and bounds, and now includes over 100 different SVOD services that Prime members can easily add, with all video viewable in the Prime Video app across devices. For content providers, Amazon handles all hosting, delivery and billing, in exchange for a revenue share.

    Michael said Amazon is constantly evaluating what additional content choices Prime subscribers value and considers Channels open to all potential partners. When there are gaps in certain genres, Michael said Amazon will curate its own service, as with Anime Strike. Further, Michael emphasized an “and” strategy, meaning that even when there are already SVOD services in a genre in Channels, Amazon might still launch its own branded service.

    I asked if Channels partners might see such moves as competitive, but Michael believes the opposite is the case. He sees upside for partners in promoting their service to Prime members already subscribing to other services in the genre. So for example, if you already subscribe to a fitness service, you’re a ripe target for additional fitness services. Michael would not comment on what additional categories Amazon would pursue, but Anime Strike is definitely the first of others to come.

    On the one hand, Amazon’s strategy of trying to grow SVOD categories by targeting existing viewers makes sense (from my cable TV days I remember the saying that the best target for Showtime was an existing HBO subscriber). Michael confirmed Amazon sees some of the same dynamic already with subscriptions to entertainment SVOD services it offers (e.g. HBO Now, Showtime, Starz, etc.)

    But on the other hand, if you believe that consumers have a finite budget for SVOD services (most early surveys have shown few people subscribe to more than 2-3 services), then at some point, they’re likely to make tradeoffs rather than keep adding new ones. So that would mean if Amazon launches a new SVOD service that competes with existing Channels partners, it could detract from them.

    My sense is that it’s still too early to know exactly how this will play out, but with the company’s vast trove of customer data and e-commerce expertise, if any company can figure out how to expand SVOD spending, it will be Amazon. In addition, since cord-cutters are avoiding expensive pay-TV, in theory they have more to spend on multiple SVOD services.

    No question, part of why the Channels program has grown so quickly is Amazon has a unique ability to drive new subscribers for partners. Michael said that for partners that send prospects to Amazon to subscribe to their SVOD service within Channels (vs. sending traffic to their own sites or other partners), the conversion rate is “meaningfully higher.” Michael attributed this to the huge number of people that already have Amazon’s app installed and a credit card on file, which in turn streamlines the sign-up process.

    Further, while he hasn’t discussed with partners, Michael believes that partners’ per subscriber profitability is higher via Channels than when sold and supported through any other alternative, including direct. Still, he encourages all Channels partners to have their own direct SVOD services, so they can better understand how the ecosystem works.

    But it’s not just adding new subscribers where Amazon adds value; Michael said the company is actively sharing lots of viewership data with its partners including what they’re watching, on what devices, for how long, etc. Amazon is even working with partners to help them curate new offerings themselves that could be introduced to Prime members.

    As VideoNuze readers know, I’ve been bullish on the Channels program from the start. The momentum keeps on growing and the Anime Strike launch shows how Amazon will continue expanding its role in the ecosystem.

    (Note: I will interview Michael in a keynote session at the NABShow Online Video Conference in Las Vegas on Tuesday morning, April 25th.)