Wednesday, November 17, 2010, 8:54 AM ET|Posted by Will RichmondLast night when I read about Amazon getting into the movie-making business through a new crowd-sourcing project called Amazon Studios, my first reaction was, "huh, what's up with that?" Now, having had a night to sleep on it, my reaction is still, "huh, what's up with that?" I must be missing something here. I just can't figure out what strategic value Amazon gains by vetting scripts and financing $2.7 million in prizes to aspiring film-makers.
It would be different if a video-centric, like YouTube, Hulu or Netflix were pursuing such a project, as it would feed them potentially exclusive, or at least a first window distribution opportunity for feature films, while also strengthening their bonds with their users. But for Amazon, which is first and foremost an e-commerce that competes on price, availability and service, creating new films doesn't quite add up. That said, I do get the value for Amazon's partner Warner Bros.; for them it's another chance to get first dibs on projects that look promising.
What would have been more strategic for Amazon to me is if it finally got into the subscription business, invading turf that Netflix has had virtually to itself. With its millions of users and "Prime" accounts, as well as its toehold in download to rent/own with Amazon Video on Demand, it is a natural expansion for the company to make deals with studios to offer a subscription service.
That neither Amazon (nor Apple) have made such a move into subscriptions has confounded me. If Amazon wants to have a bigger presence in digital entertainment, it will need to do a lot more than finance a few projects a year submitted by users.
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