Monday, November 4, 2013, 12:07 PM ET|Posted by Will Richmond
Amazon's PR machine is gearing up to support the company's imminent push into original programming, with a high-profile piece on Saturday in the Wall Street Journal and today in the NY Times. In both, Amazon video executives are quoted explaining the process by which Amazon selected its first crop of originals, with a particular focus on Garry Trudeau's "Alpha House," the first series that will launch on November 15. No doubt we'll see lots more PR around Amazon's subsequent originals' release.
The PR emphasis is a departure for famously reticent Amazon, but its presence is a sign of how strategic original video has become for the company, and how high the stakes are for it to succeed. Over the past 2 years Amazon has become much more competitive with Netflix in licensing hit TV programs from networks and studios to be included for its Prime members. Now the battleground is shifting to originals.
In fact, Amazon's originals initiative follows a well-worn TV industry game plan. In the past 20 years, both premium and ad-supported TV networks have transitioned from mainly licensing movies and older TV shows to creating their own series as well. While HBO has been the most recognized winner, there are plenty of recent successes like AMC Networks, Discovery, History and others. In pursuing its own originals, Netflix was simply following suit.
As all of these networks can attest, a successful original series can drive enormous branding value that can in turn lead to audience/subscriber growth. Just think what "House of Cards" has done to broaden Netflix's positioning. What's different for Amazon though is that its originals are really being made in service to two of its most critical consumer-facing commerce businesses, Prime and Kindle. In fact, in Amazon's Q2 '13 earnings call, CFO Tom Szkutak said "new Prime members come to Amazon largely because of video."
Now, as it rolls out its slate of originals, Amazon is going to up the ante further, betting that its own exclusive series can further help Prime and Kindle. Financially, Amazon's investments in originals are small potatoes; even if they don't work, the write-offs won't be material. The bigger risk is that the shows are critical failures and are perceived as flops. That would undermine the company's novel, data-centric process for selecting which shows to pursue. An inability to translate data's value into the trickier business of choosing original series to produce would mean Amazon might have to fall back to the traditional and highly inefficient TV pilot process.
Of course, while the critics may snipe, the likelihood that the public will ever know whether Amazon's originals resonated for audiences and helped its core business is practically zero. Just as Netflix has been opaque about audience sizes for its originals and barely more transparent in explaining how they affected its subscriber growth, I don't expect Amazon will ultimately reveal anything about how well its originals actually performed. Remember, years since their debut, Amazon has never said how many Kindles it has sold.
Categories: Indie Video